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Shapoorji Pallonji Group plans to raise Rs 6,600 crore via debentures against Tata Sons shares: Report

The dispute between the Tatas and the Mistrys broke out in 2016 after Cyrus Mistry was expelled as Chairman of Tata Sons
Last Updated 05 October 2021, 10:00 IST

The Shapoorji Pallonji Group plans to raise Rs 6,600 crore by selling debentures to investors that will be secured against shares of Tata Sons, The Economic Times reported, citing documents filed with the Registrar of Companies by a Mistry family entity.

According to the report, legal experts have called the planned move ‘potentially controversial’ as Tata Sons had earlier objected to similar moves by the Mistrys.

The Mistry family owns an 18 per cent stake in Tata Sons, the holding company of the Tata Group.

The dispute between the Tatas and the Mistrys broke out in 2016 after Cyrus Mistry was expelled as Chairman of Tata Sons.

The promoters of Shapoorji Pallonji Group intend to use the money raised from the debenture to make advance payments on loans of group companies and for working capital needs of firms that are engaged in construction of high-value infrastructure projects.

Documents filed by Sterling Investment, which owns 9.18 per cent stake in Tata Sons, show that promoters plan to raise the amount by pledging Tata Sons shares through Evangelos Ventures, the ET mentioned.

Tata Sons shares held by Sterling Investment were pledged with Standard Chartered Bank against outstanding loans of Shapoorji Pallonji worth Rs 2,800 crore, said the report. However, the loans have been prepaid and the shares have been released by the bank, it said.

The apex court has remained silent on the issue of whether the Tata Sons shares held by the Mistry family can be pledged.

“There is no mention of whether Tata Sons shares can be pledged in the company’s articles of association. Moreover, there is a process for obtaining fair value of the shares which is defined. This implies the shares are very much tradeable,” a lawyer aware of the matter told ET on condition of anonymity.

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(Published 05 October 2021, 08:32 IST)

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