Cyrus Mistry’s SP Group submits plan in Supreme Court to separate from Tata Sons
The Shapoorji Pallonji Group proposed to swap its 18.37% stake in Tata Sons for shares in the Tatas’ listed companies.
The Shapoorji Pallonji Group on Thursday filed an application in the Supreme Court proposing to swap its entire stake in Tata Sons for shares in the Tatas’ listed companies, the Hindustan Times reported. The SP Group is the single largest shareholder in Tata Sons with an 18.37% stake through two investment companies. Tata Sons is the holding company of the Tata Group.
The Shapoorji Pallonji Group had informed the Supreme Court in September that it would exit the Tata Group, ending a relationship that spanned over 70 years, due to the impact that “continuing litigation could have on livelihoods and the economy”. Cyrus Mistry is from the Shapoorji Pallonji family.
Besides a pro-rata division of all assets, the SP Group has also sought a pro-rata share of the Tata brand value to be adjusted for net debt in cash or in listed securities, according to the application detailing the scheme of separation filed in the Supreme Court. The application has also proposed that the valuation of all unlisted assets be done by a neutral third-party.
“A selective reduction of capital by extinguishing shares of Tata Sons held by minority shareholders by swapping them with shares of listed companies (say Tata Consultancy Services) would be a simple solution of providing liquidity to Tata companies and fair compensation for the SP group,” the application in the Supreme Court said.
“By proposing this remedy the SP group seeks to propose resolution that would take care of the best interests of both shareholders and all the stakeholders of Tata Sons,” the application added, according to Bar and Bench. “A separation of interest would equitably give the SP group, as shareholders in Tata Sons, access to their proportionate share of value in Tata Sons and would not let the two warring shareholders to have to live with each other only under the fiat of a Court.”
This move is a culmination of a prolonged legal battle between the groups, which began in 2016 after Cyrus Mistry was removed as Chairperson of Tata Sons. The two sides have also been locked in a legal tussle at the Supreme Court over Tata Son’s decision to restrain the Mistry family from raising capital against the shares it holds in the company.
The SP Group said in September that the Mistry family were in the midst of raising funds against the security of their personal assets to meet the crisis arising from the global pandemic. This included a plan to transfer or pledge Tata Sons shares. But the Tatas opposed this move, following which the Supreme Court in September barred the SP group from pledging or selling its stake and asked it to maintain status quo till October 28.
The Tata Group had at that time informed the top court that it was open to buying out the 18% stake owned by the Mistry family’s cash-strapped Shapoorji Pallonji Group, if the latter needed to raise money to pay-off debts.
Mistry, who is from the Shapoorji Pallonji family, took over as the sixth chairperson of Tata Sons from Ratan Tata in 2012. However, the two reportedly fell out over key investment decisions. Mistry stepped down from all Tata Group companies in December 2016, two months after being sacked as chairperson. He accused Ratan Tata of staging “an illegal coup” while the Tatas alleged Mistry had misled the 2011 selection committee set up to appoint Tata’s successor.