Tata Trusts Chairman Noel N. Tata has tabled a proposal from the Shapoorji Pallonji Group (SP Group) to monetise a portion of the Tata Sons shareholding held by Sterling Investments Corporation Private Limited (SICPL) and Cyrus Investments Private Limited (CIPL).
The proposal was placed before the Board of Tata Sons Private Limited at its meeting on September 17, following earlier meetings and discussions between Noel N. Tata, N. Chandrasekaran and Shapoor Mistry.
Under the proposed transaction, SICPL and CIPL would sell a portion of their Tata Sons shares at a minimum valuation determined under Rule 11UA of the Income Tax Rules, 1962. The transaction is expected to generate a gross consideration of Rs. 25,000 crore.
The SP Group has indicated that the buyout could be undertaken in two tranches over an 18-month period. As part of the proposed structure, Tata Sons would also initiate a selective capital reduction process through the National Company Law Tribunal (NCLT), while the Tata shares would be valued based on their Income-tax fair value.
At the Board meeting, Noel N. Tata outlined several potential avenues for raising the funds required for the transaction. These include using internal cashflows, selling listed shares, bringing an investor into some of the newer businesses and listing some businesses through an offer for sale.
He also requested the Board to initiate the necessary steps for the NCLT process and authorise the operating teams of Tata Sons and Tata Trusts to continue discussions with the SP Group and its bankers, with the matter to be reported back to the Board.
The proposal is part of the Tata Trusts’ continuing efforts to arrive at what it described as a fair and equitable solution for the SP Group in relation to its holdings in Tata Sons.
