Shapoorji Pallonji Group (SP Group) is in the final stages of concluding its One Time Resolution (OTR) plan, which was invoked by its lenders on October 26, 2020, following the group’s inability to repay its debt.
However, a timetable for the OTR, which was to safeguard the financial interests of all stakeholders and protect the livelihoods of the group’s employees and contractors, was not immediately available.
Shapoorji Pallonji and Company Private Ltd (SPCPL), the 150-year-old holding company of the SP Group, had approached the OTR for its obligations under the Reserve Bank of India’s (RBI ). The company had requested relief under the provisions in September of last year. Almost a month later, all of the lenders had unanimously approved the OTR.
The impact of the Covid
Following the outbreak of the pandemic, the activities of SPCPL, like many global and national companies, were also affected in 2020. The construction and real estate activities of the SP group, which is its mainstay, were severely affected by the pandemic. “We are currently finalizing the plan in consultation with our lenders,” said a spokesperson for the SP Group.
In September last year, the SP Group requested relief to restructure its debt of 10,900 crore yen as part of addressing stress from the pandemic. The framework was approved by RBI, based on the KV Kamath panel report, which allows financially troubled companies to rebuild their debt for two years.
The move came after Tata Sons took the case to the Supreme Court on September 5, 2020, seeking to prevent SP Group from raising capital against the shares it held in the company. The SP group, which owns an 18.37% stake in Tata Sons, was in the process of raising 11,000 crore and had also signed agreements to raise 3,750 crore from Canadian asset manager Brookfield.
The SP group had called Tata’s decision to block its fundraising plans a violation of Articles of Association (AoA), which only regulates the transfer of shares and contains no provisions to restrict pledging or charging of shares. The group also called the decision “vindictive” and “intended to inflict irreparable damage to the SP group”.