The Shapoorji Pallonji Group has reduced its proposed ₹28,500 crore refinancing programme by ₹3,500 crore and is planning to seek additional time from bondholders to address near-term maturities, according to reports from The Economic Times. The group, which was planning to raise ₹28,500 crore in two tranches, has reduced the first part to about ₹22,000 crore from ₹25,500 crore. The refinancing, arranged by Deutsche Bank, is now expected to close later this summer, with the second tranche likely in September. As per people familiar with the matter, the delay in fundraising has resulted in the Mistry family-controlled group seeking additional time from existing creditors.
The conglomerate has scaled down the fundraise size and sought another two-month extension on ₹14,300 crore of maturing bonds, as reported by The Economic Times. The group had earlier secured a two-month extension on repayment of ₹14,300 crore of bonds issued by its Goswami Infratech unit, from April 30 to June 30. The delays in debt raising, initially impacted by rising hedging costs, are forcing the Mistry family-controlled group to negotiate more time with creditors. An SP spokesperson did not immediately respond to a request for comment.
The refinancing plans were disrupted earlier this year, after Reserve Bank of India measures on the offshore foreign exchange market led to a sharp increase in hedging costs. According to The Economic Times, hedging costs had surged to more than 5% from around 2.5-3%, making the economics of a large offshore borrowing unattractive and delaying the fundraising exercise. However, market conditions have since improved, with hedging costs for private sector borrowers easing to around 3%, though they remain significantly higher than the roughly 1.5% available to eligible state-owned companies under the RBI's dollar-rupee swap facility.
The group has sought bondholder approval to extend a temporary relaxation of a key loan-to-value (LTV) covenant on Porteast Investment's 19.75% notes until September 30 from July 15, as reported by The Economic Times. In April, Porteast bondholders approved a temporary increase in the LTV threshold to 40% from 34% after the group cited heightened market volatility. The covenant has come under pressure following a decline in the shares of Tata Consultancy Services, which account for roughly half of the collateral backing the Porteast notes, and a general decline in other Tata Group listed stocks due to the geopolitical situation. Both the Goswami and Porteast debt facilities are secured against SP Group's 18.38% stake in Tata Sons. Prospective lenders have sought greater certainty that the Porteast bonds will not face covenant pressure while the refinancing is being completed.
The Goswami and Porteast bonds, originally issued at yields of 18.75% and 19.75% respectively, have since increased to as high as 21.75%. According to The Economic Times, the bonds are secured against SP Group's 18.38% stake in Tata Sons. Under the bond terms, an LTV ratio above 34% for five consecutive trading days would trigger an event of default, with the current LTV ratio above 34% due to the decline in Tata Consultancy Services shares.
