The Shapoorji Pallonji group has said that a loan it availed from Power Finance Corporation (PFC) to refinance other loans should not be viewed as a ‘bailout from default’. PFC had reportedly sanctioned around ₹15,000 crore to the SP group in June.

“We are fortunate to have worked with PFC over the last nine months to craft a unique proposal that has a twin security structure leveraging the strength of the SP group’s large real estate franchise, as well as a portion of the Tata Sons shares owned by the Mistry family. This provides a security value in excess of six times the loan value,” it said in a statement.

The cash flows from the real estate franchise would ensure full repayment of the loan over the tenor, it said, adding that the proposal had been validated by “reputed third party consultants”. It also noted that it had received a formal sanction letter from PFC on June 14.

Several media reports have said that independent directors of PFC have questioned the loan approval to the SP group and are likely to raise this in the board meeting scheduled for today. The reports said the independent directors have questioned the value of the collateral compared to the loan amount and whether the proceeds of the loan are being used to repay the SP group’s foreign lenders as a bailout from default.

“The facilities raised by the SP group from foreign lenders have also helped in the creation of infrastructure assets,” said the statement from the group, adding that the refinancing is being done well ahead of its scheduled maturity and is part of the routine course of business. To term it as a bailout from default is “not only grossly inappropriate but also factually incorrect,” it said.

“The SP Group takes pride in following the highest levels of corporate governance. We have always respected and fully adhered to the process outlined by our lenders including PFC.”

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