Noel, SPG mull share swap for Tata Sons stake sale

The Tata Group is engaged in discussions with its largest minority shareholder, SP Group, regarding potential share-based proposals to unlock liquidity, according to sources familiar with the matter. Noel Tata, the patriarch of the Tata family, is exploring a swap of shares from SP Group's portfolio, including companies such as Tata Power Co., in exchange for some or all of SP Group's 18.4% stake in the privately-held Tata Sons Pvt., sources said, requesting anonymity due to the sensitive nature of the talks.

Two other alternatives have also been suggested: a direct buyout of SP Group's stake by Tata Sons, funded by overseas banks, or a sale to an external investor, preferably a global one. A resolution to this long-standing dispute between the Tatas and SP Group could significantly benefit SP Group's debt holders, including Cerberus Capital Management LP, Davidson Kempner Capital Management, and Farallon Capital Management.

Noel Tata, who is the chairman of Tata Trusts, holds considerable influence as the majority shareholder in Tata Sons, with his wife, Aloo Mistry, being the sister of SP Group's chairman, Shapoor Mistry. Despite reports that the ongoing negotiations may not result in a deal, both parties are actively evaluating the legal and regulatory implications of the various options being considered.

SP Group has been updating its stakeholders on the progress of the talks, while advisers are examining the legal aspects of the proposed structures. A resolution within the next 18 months is necessary, as this timeline aligns with the date when SP Group's recently closed bond issue will require its first payout.