- Noel Tata proposed a Rs 25,000 crore liquidity lifeline to SP Group by monetising Tata Sons stake
- The buyout involves purchasing SP Group shares at income tax fair value in two tranches over 18 months
- Tata Sons will initiate a selective capital reduction process via NCLT to execute the transaction
In a major move to resolve a long-standing overhang, Tata Trusts Chairman Noel Tata has tabled a proposal to provide a Rs 25,000 crore liquidity lifeline to the Shapoorji Pallonji (SP) Group by monetising a portion of its stake in Tata Sons.
The proposal was presented during Thursday's crucial Tata Sons board meeting, following earlier discussions between Noel Tata, Tata Sons Chairman N Chandrasekaran, and SP Group's Shapoor Mistry.
According to the official statement, the transaction envisages buying out a portion of Tata Sons shares held by SP Group entities—Sterling Investments and Cyrus Investments. The shares would be purchased at a minimum valuation determined in accordance with Income Tax rules, yielding a gross consideration of Rs 25,000 crore.
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The proposed buyout would be structured in two tranches spread over an 18-month period. To execute the massive transaction, Tata Sons would initiate a selective capital reduction process through the National Company Law Tribunal (NCLT), with the shares valued at their income-tax fair value.
To fund the buyout, Noel Tata outlined several potential avenues for the board to explore. These include utilising internal cash flows, selling listed shares, bringing strategic investors into newer businesses, or raising funds through an offer for sale by listing some of the conglomerate's businesses.
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During the meeting, Noel Tata requested the board to immediately take the necessary steps to initiate the NCLT process. He also sought authorisation for the Tata Sons operating team and Tata Trusts to continue formal discussions with the SP Group and bankers to finalise the deal.
The statement emphasised that the multi-crore proposal is a continuation and reaffirmation of Tata Trusts' desire to offer a "fair and equitable solution" to the SP Group regarding their substantial shareholding in the Tata Group's holding company.
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