SP Group seeks more time to repay bonds nearing maturity

Mumbai: The Shapoorji Pallonji Group has cut the first tranche of its proposed ₹28,500 crore refinancing programme by ₹3,500 crore and is planning to seek more time from bondholders to address near-term maturities, people familiar with the matter said.

"The SP Group has scaled down the fundraise size and sought another two-month extension on ₹14,300 crore of maturing bonds, as delays in executing the debt raise force the conglomerate to seek additional time from creditors," said a person close to the matter.

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, another person said.

The refinancing is being arranged by Deutsche Bank under the SP Group's Project Ascent fundraising and refinancing programme. The first part of the deal, initially expected to be priced by the end of May, is now likely to close around June 30 or by mid-July, according to people aware of the matter.

The second tranche is likely in September, the second person said.

The delay in fundraising has resulted in the Mistry family-controlled group seeking additional time from existing creditors.

An SP spokesperson did not immediately respond to a request for comment.

The conglomerate 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. It is now planning to seek another two-month extension, as it works to complete the fundraising deal, the people said.

Separately, 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, ET reported last week. Prospective lenders have sought greater certainty that the Porteast bonds will not face covenant pressure while the refinancing is being completed.

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. 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.

Market conditions have since improved. According to debt capital market bankers, hedging costs for private sector borrowers have eased to around 3%, although they remain significantly higher than the roughly 1.5% available to eligible state-owned companies under the RBI's dollar-rupee swap facility.

In April, Porteast bondholders approved a temporary increase in the LTV threshold to 40% from 34% after the group cited heightened market volatility. Under the bond terms, an LTV ratio above 34% for five consecutive trading days would trigger an event of default.

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. 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%.