Tata Trusts Chairman Noel N Tata has proposed a Rs 25,000 crore liquidity plan to the Tata Sons Board for the Shapoorji Pallonji (SP) Group. The proposal involves monetising part of SP Group's shares in Tata Sons to resolve liquidity issues.
Tata Trusts Chairman Noel N Tata on Thursday placed before the Tata Sons Board a proposal to provide at least Rs 25,000 crore of liquidity to the Shapoorji Pallonji Group (SP Group) through monetisation of part of its shareholding in Tata Sons.
The proposal, received from the SP Group, relates to Tata Sons shares held by Sterling Investments Corporation Private Limited and Cyrus Investments Private Limited and was discussed at the Tata Sons Board meeting on Thursday.
Proposal Details and Structure
According to Tata Trusts, the proposal followed earlier discussions involving Noel Tata, Tata Sons Chairman N Chandrasekaran and Shapoor Mistry. “The transaction envisages a sale of such number of Tata Sons shares held by SICPL and CIPL as would, at a minimum valuation, as determined in accordance with Rule 11UA of the Income Tax Rules 1962, yield a gross consideration of Rs. 25,000 crores,” Tata Trusts said.
The proposed buyout would be completed in two tranches over an 18-month period. Under the structure suggested by the SP Group, Tata Sons would initiate a selective capital reduction process through the National Company Law Tribunal, while the Tata Sons shares would be valued according to income-tax fair value.
Funding the Buyout
Noel Tata also suggested several avenues through which Tata Sons could raise the funds required for the proposed transaction. These included using internal cash flows, selling listed shares, bringing an investor into some of the group’s newer businesses and listing some businesses through an offer for sale.
Next Steps and Rationale
He asked the Tata Sons Board to initiate the necessary NCLT process and authorise the operating team of Tata Sons and Tata Trusts to continue discussions with the SP Group and bankers before reporting back to the Board.
Tata Trusts said the proposal was part of its efforts to provide a “fair and equitable solution” to the SP Group regarding its holdings in Tata Sons.
The SP Group owns an estimated 18.37 per cent stake in unlisted Tata Sons.
The liquidity proposal comes as the future structure of Tata Sons has come under renewed focus following the RBI’s September 11 communication rejecting the company’s request to surrender its registration. Tata Trusts has separately maintained that Tata Sons should remain unlisted and has asked the company to explore alternatives to a public listing. (ANI)
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