Tata Sons’ bid to block fundraising plans vindictive, says SP Group

Rajesh Kurup Mumbai | Updated on September 11, 2020

The Shapoorji Pallonji Group, which is locked in a bitter battle with Tata Sons, has accused the latter of trying to block its ₹11,000-crore fund-raising plans through an urgent petition filed before the Supreme Court.

On September 5, Tata Sons moved an application before the apex court seeking to restrain SP Group promoters from raising capital. SP Group was looking to raise capital against security of its shares in Tata Sons, an SP Group spokesperson said.

The petition was moved a day after SP Group signed definitive agreements with a marquee global investor to raise ₹3,750 crore, the spokesperson said, terming the move as “an oppressive and vindictive act, intended to cause irreparable harm”.

The promoters of SP Group are in the process of raising about ₹11,000 crore from global investors, with ₹3,750 crore being raised in the first tranche, against the security of shares that their investment companies own in Tata Sons. “These funds are intended to mitigate the severe stress caused by the pandemic, deleverage the group’s balance sheet, support its financial obligations and protect the livelihoods of its workforce,” the spokesperson added.

SP Group’s mainstay, construction and real estate, was significantly impacted by the pandemic.

This vindictive move by Tata Sons is solely aimed to create delays and roadblocks that will jeopardise the future of 60,000 employees and over 1 lakh migrant workers who draw sustenance by working at various SP Group facilities. This calculated move by Tata is intended to inflict irreparable damage on the SP Group.

“These actions are a departure from the values and ethos of Tata Group’s founders and are an unfortunate reflection of the mindset of the present leadership. We will vigorously contest these frivolous and misguided claims in the Supreme Court,” he added.

In its petition, Tatas have also sought to restrain a direct or indirect pledging of shares. “This is against Tata Sons’ Articles of Association (AoA), which only regulate the transfer of shares, with Tata Sons’ board having a right of first refusal to buy at fair market value. There is no provision in the AOA to restrict pledging or encumbrance of shares,” the spokesperson said.

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Published on September 11, 2020
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