Mistry family to raise ~4,000 cr, reduce debt

Funds being raised via debt, sale of part stake in Sterling and Wilson Solar

The billionaire Mistry family is in talks with several investors to raise up to ~4,000 crore by selling part of its stake in Sterling and Wilson Solar (SWSL), and also with Canadian financial powerhouse, Brookfield, to raise debt against its Tata Sons shares.

The proceeds of the funds raised will be used to reduce the group’s debt and repay dues to SWSL, said a source close to the development. The group was earlier planning to raise funds by selling its land parcels across India, but due to the Covid-19 pandemic, the land sale plan has been postponed till valuations improve, the source said.

The fund-raising exercise has become urgent as the Mistry family entities failed to repay part of their debt to SWSL, which was due in June.

The Mistry family owns an 18.5 per cent stake in Tata Sons, the holding company of Tata Group, and a 50.6 per cent stake in SWSL, which had a total market capitalisation of ~3,610 crore as on Friday. A 71 per cent crash in this company’s stock since the listing has led to increased pressure on the promoters.

According to the submissions made by the Mistry family to the courts in its litigation with Tata Group, its stake in Tata Sons is valued as high as ~1.5 trillion. Bankers said talks between the Mistry family and Brookfield were at an advanced stage and the family will be able to raise funds in the next few weeks. An email to the Mistry family did not elicit any response.

The Mistry family is under pressure to repay debt to its listed entity SWSL. They had repaid ~1,000 crore of loans by December 2019 and another ~500 crore by March 31 under the revised repayment schedule.

However, the family failed to repay another tranche of ~500 crore, which was due on June 30. The repayment was part of the ~2,644-crore loans which the promoter entities had taken from SWSL before the listing. These loans were to be repaid by the promoters within 90 days of its listing on

August 20 last year.

But the promoters sought an extension and promised to repay the loans in tranches.

Bankers became concerned when SWSL informed the stock exchanges that its promoters had failed to repay ~500 crore due in June. The listed company said its board (excluding the promoter directors) had insisted that the promoters provide the necessary security for the June instalment in an expeditious manner. The promoters have assured the board they will do so as quickly as possible.

Bankers said that, to avoid any default, the Mistry family will now sell part of its SWSL stake and raise debt from Brookfield. The group’s flagship company, Shapoorji Pallonji & Co, on a standalone basis, reported debt (excluding mobilisation advances) of ~9,533 crore as on December last year, which declined to ~9,284 crore as on February 29.

Further, as on December 31, 2019, the financial guarantees given by Shapoorji Pallonji had reduced to ~2,333 crore, from ~2,943 crore as on March 31, 2019.

During 2018-19, the fund infusion from promoters in Shapoorji Pallonji, along with monetisation of assets, contributed to over ~2,550 crore, which was largely used towards recapitalising and meeting the commitments of various group companies.

Shapoorji Pallonji repaid ~3,000 crore of dues by March 31, with the help of operational cash flows, refinancing of part debt, and promoter infusion amounting to ~1,904 crore. At the consolidated level, Shapoorji Pallonji’s debt was high at ~33,407 crore (including mobilisation advances of ~4,095 crore) as on March 2019, against ~25,692 crore (including mobilisation advances of ~2,743 crore) as on March 2018, according to a CARE Ratings report dated April 27 this year. Its latest figures were not available with the rating firm.