SP Group Offers Unprecedented 6x Security Cover for Rs 15,000 Crore Loan
The Shapoorji Pallonji Group has offered a massive security cover exceeding six times the loan value to refinance existing liabilities and retire debts.
Shapoorji Pallonji GroupPower Finance CorporationTata SonsReal EstateInfrastructureReal Estate MumbaiAug 07, 2024
The group has offered land parcels in Mumbai and other places, and a portion of Tata Sons shares owned by the promoters, as collateral against the loan amount. This provides a security value in excess of six times the loan value, giving PFC a significant claim over the group's assets in case of a default.
The cash flows from the real estate franchise will ensure a full repayment of the loan over the tenor of three years, according to SP Group director (real estate) Venkatesh Gopalakrishnan. However, Tata Sons shares are not transferable to third parties without the permission of the company, as its articles of association prohibit such a move.
In the past, the SP Group had offered Tata Sons shares as collateral to secure loans from financial institutions. The group has been servicing its liabilities from its cash flows and proceeds from asset sales, including the sale of its data centre construction business and port facility.
The Rs 15,000 crore PFC loan gives the SP Group the time to implement its ongoing real estate projects as well as to pare debt. The group's real estate franchise plans to develop some of the land parcels it owns in major cities.
PFC, the largest NBFC in the country and the most profitable, has sanctioned about Rs 82,000 crore to the infrastructure sector as of March 31, 2024. The SP Group has been working with PFC over the last nine months to craft a unique proposal that has a twin security structure leveraging the strength of its large real estate franchise and a portion of the Tata Sons shares owned by the Mistry family.
The Shapoorji Pallonji Group is a 160-year-old conglomerate with interests in construction, real estate, and infrastructure. Power Finance Corporation is a state-owned NBFC that provides financing to the power and infrastructure sectors.
Shapoorji Pallonji Group is a leading Indian business conglomerate with a rich history of over 160 years. The group has a diverse portfolio of businesses, including construction, real estate, and infrastructure. Power Finance Corporation is a state-owned non-banking financial company that provides financing to the power and infrastructure sectors.
Frequently Asked Questions
What is the loan amount sanctioned by Power Finance Corporation to the Shapoorji Pallonji Group?
Rs 15,000 crore
What is the purpose of the loan sanctioned by Power Finance Corporation?
To refinance existing liabilities of promoter entities and to retire debts of group operating companies.
What is the security cover offered by the Shapoorji Pallonji Group to obtain the loan?
Land parcels in Mumbai and other places, and a portion of Tata Sons shares owned by the promoters, providing a security value in excess of six times the loan value.
How will the loan be repaid by the Shapoorji Pallonji Group?
Through cash flows from the real estate franchise over the tenor of three years.
Can Tata Sons shares be transferred to third parties without permission?
No, Tata Sons shares are not transferable to third parties without the permission of the company, as its articles of association prohibit such a move.
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