Mistry firms offer to swap Tata Group stake for shares in group firms

The Mistry family controlled Shapoorji Pallonji (SP) group, which owns 18.4 per cent stake in Tata Sons, on Thursday moved the Supreme Court proposing a scheme of separation by swapping its entire holding in the group holding company for equivalent shares in listed entities of Tata group along with a pro-rata share of Tata brand value (adjusted for net debt against) payable by cash or listed securities. 

For unlisted companies of Tata group, the SP group has sought independent valuation, also payable in cash and or in listed securities. 
While 72 per cent of Tata Consultancy Services Ltd owned by Tata Sons, the SP Group owns  18.37 per cent. The group claims stakes varying from 0.4 per cent in Rallis India to 13.5 per cent in Tata Investment Corporation Ltd.
As per the proposed formula, SP Group’s stake in Tata Sons translates to 13.22 per cent (worth Rs130750.4 crore) shareholding of TCS, which is to be transferred to SP Group.
The Mistry group also claims 13.5 per cent (worth Rs574.8 crore) in Tata Investment Corporation Ltd. 
"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," reports citing the application filed by SP group in the Supreme Court said.
The SP group, which earlier was considering staggered payments from Tata Sons over an extended period of time, said the cashless settlement would help reduce the possibility of any additional debt on Tata group.
The Supreme Court will be hearing the case next on 3 November.
The Mistry family, which is in a protracted legal battle with the Tata Group, said on 22 September that a separation from the Tata Group was necessary due to the potential impact this continuing litigation, even as it sought an early resolution and a fair and equitable solution based on the tangible and intangible value of the assets.  
The statement was seen as a move to end the legal battle, which started in December 2016, after Cyrus Mistry was unceremoniously removed from the post of chairman of Tata Sons in October that year. In December 2019, the National Company Law Appellate Tribunal (NCLAT) ruled in the favour of Mistry firms.
Later, on 5 September, Tatas objected to SP group’s move to pledge Tata Sons shares with lenders to meet its debt obligations. 
Tatas would require Rs1,75,000 crore for a complete buyout of Mistry family’s stake, which in turn would significantly increase the debt burden on Tata group.