Mumbai: the Shapoorji Pallonji (SP) group, which owns 18.4% of the shares of Tata Sons, presented a separation scheme in the Supreme Court on Thursday, under which it has proposed to reduce its stake in the latter in exchange of participation in the listed entities of the Tata group.
“As a non-cash settlement, SP Group will receive pro rata shares in Tata Group’s publicly traded entities where Tata Sons currently owns a stake,” the SP Group said in a note. This would cover the value of Tata Sons’ listed companies, unlisted companies, and the brand.
The settlement will help reduce the possibility of any additional debt in the Tata group, the Mistry family said in the petition filed with the Supreme Court.
Mint has reviewed excerpts from the Mistry family app.
On September 22, the Mistry family, which owns a minority stake in Tata Sons through their two investment companies, announced that they were willing to part ways with the Tata group, which means they would like to sell their stake in the Tata Sons holding. .
The statement followed a long and drawn-out legal battle between the two groups, which began in December 2016, after Cyrus Mistry was removed from the post of chairman of Tata Sons in October of that year.
The Mumbai National Company Law Court in July 2018 had summarily dismissed Mistry’s petition that minority investors were oppressed because the Tata Sons affairs were poorly managed. Then, in December 2019, the National Company Law Appeals Court (NCLAT) ruled in favor of the Mistry firms. The battle had finally landed on the Supreme Court.
The final separation came after the Tata Sons, on September 5, objected that the SP group cannot commit its shareholding to increase debt, as the Tatas have the first right of refusal.
The stock swap solution, according to the SP group, will minimize the valuation dispute, be faster to implement, ease pressure on Tatas to collect a large amount of debt, be beneficial to Tata companies, and ensure that they do not end. losing control. about group companies.
Disputes over valuation can be eliminated by making a prorated division of listed assets (the share price value is known) and the prorated brand share (brand valuation already done by Tata and published). A neutral third-party valuation can be made for unlisted assets adjusted for net debt, the SP group added in the note.
“A selective capital reduction by extinguishing Tata Sons shares held by minority shareholders by exchanging them with shares of publicly traded companies (eg Tata Consultancy Services) would be a simple solution to provide liquidity to Tata companies and fair compensation for the SP group “said the SP group in the lawsuit filed in the Supreme Court.
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