Home / Companies / News /  Shapoorji Pallonji group misses deadline to repay Sterling dues

Shapoorji Pallonji group on Wednesday said it has missed a deadline to repay dues to group company Sterling and Wilson Solar Ltd, raising doubts about the group’s ability to service its debt amid a faltering fundraising plan.

In a regulatory filing, Sterling and Wilson, controlled by construction tycoon Pallonji Mistry and his family, said that the promoters have repaid only 103 crore of the 1,000 crore it owed to the company, the deadline for which ends this month.

In the filing, Sterling and Wilson said its promoters will repay the rest of the dues by September 2021.

The repayment is part of 2,644 crore dues that the promoters owe Sterling and Wilson.

Sarvesh Kumar Sharma/Mint
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Sarvesh Kumar Sharma/Mint

The loan was to be repaid within 90 days of Sterling and Wilson Solar’s IPO, which ended mid-November, but was extended to September 2020, as the group blamed “significant and rapid deterioration in the credit markets".

“The group is facing one of its worst crises," said a senior banker directly aware of the development. “The Mistry family has been desperately looking to raise cash to meet its debt obligations but hasn’t had much success so far."

The promoters were banking heavily on pledging their 18.4% stake in Tata Sons, estimated to be worth about 1.5 trillion, a second person said. “But the recent developments surrounding the pledges have derailed those plans, leaving the promoters in deep trouble," the person, also a banker, said.

On 11 September, Mint reported that Tata Sons had moved an ‘urgent’ application before the Supreme Court to restrain the Shapoorji Pallonji Group promoters from raising capital by pledging their shares in Tata Sons. According to the application, Tata Sons has sought to prevent the creation of any direct or indirect pledge on its shares. Tata Sons argued that any pledge will amount to transfer of shares and under the company’s articles of association (AoA); the board of Tata Sons has the first right to buy the shares at fair market value.

The move by Tata Sons has scuttled Mistry family’s efforts to raise funds from Canadian alternative investment manager Brookfield. The Mistry family was in advanced talks to borrow 3,750 crore from Brookfield by pledging its shares in Tata Sons, the people cited above said.

The money was to be used to service some of the existing promoter debt.

“The Mistry family had raised close to $200 million from several foreign lenders last year by pledging Tata Sons’ shares," said the first person cited above. “The group is already behind repayment schedule in one of the loan facilities availed from Deutsche Bank,’’ the person said. “The latest developments with regard to the pledging of Tata Sons shares will put the foreign lenders in a spot because they may not be able to access the collateral," the person added.

Deutsche Bank, Shapoorji Pallonji Group and Brookfield declined to comment.

According to the latest corporate filings, the Shapoorji Pallonji group has an overall debt of around 30,000 crore across promoter entities and operating companies. The group has been in discussions to sell some of its assets, including the Eureka Forbes range of water purifiers and home appliances, solar and real estate assets to raise funds. So far, the group has managed to sell 317 megawatts (MW) of solar projects to private equity firm KKR and Co. for around 1,554 crore and another sale of 194MW of solar assets to Sprng Energy (owned by PE firm Actis).

Mint reported on 1 August that Shapoorji is also seeking buyers for 300-350MW of planned solar projects and has held discussions with a few buyers including Brookfield.

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