KV Kamath panel clears SP Group’s Rs 10,900 crore debt recast package plan

NEW DELHI:  The RBI-constituted K V Kamath committee  has given its green signal to a Rs 10,900cr debt recast package plan for Shapoorji Pallonji Group, a move that will provide big relief to the cash-strapped group in servicing its debt obligations.

The Reserve Bank of India (RBI) in August last year had said that the Kamath panel will vet all resolution plans of entities hit by the vagaries of the coronavirus-induced disruption and having exposures of at least Rs 1,500 crore. 

“The Committee has vetted the process adopted for resolution...and has found the same acceptable,” stated Indian Banks Association in a letter to the State Bank of India. According to the plan, SP group will not have to make principal payments for two years while the interest payments will be suspended till September this year. There is no relief on the interest rate, however, and the group will have to pay the previously agreed rate set with the lenders.

The plan entails conversion of due interest into a term loan. The SP Group has decided to monetise assets worth Rs 10,334 crore. According to people aware of the matter, the beleaguered group plans to pare stake in companies like Sterling & Wilson Solar, Eureka Forbes and Afcons Infrastructure over the next one year to retire some of the debt on its books.

The group has a total debt of over Rs 22,000 crore. Its debt recast proposal has received the necessary RP4 rating from Care Ratings which is the minimum required for the one-time restructuring mechanism. The liquidity position of Shapoorji Pallonji & Company Private Limited, the holding company of SP Group, is stretched and the company has a free cash balance of around Rs 181.1 crore as of November, 2020, noted ICRA.

In talks with foreign lenders to raise money

Shapoorji Pallonji & Co., run by ousted Tata Sons chairman Cyrus Mistry and family is reportedly in talks with a few foreign banks, including Barclays and Deutsche Bank to raise fund.