The state-owned Power Finance Corp (PFC) has received legal approval to extend a ₹15,000 crore loan to the Shapoorji Pallonji (SP) Group. The loan is secured by the SP Group’s 18.37% stake in Tata Sons Ltd.

What Happened: The SP Group has been in discussions with lenders to secure $1.2 billion (₹10,008 crore) to refinance a part of its ₹20,000 crore debt, reported Moneycontrol. This debt was due to mature in the last week of May. This development is significant as Tata Trusts have informed lenders that the articles of association do not permit the sale of Tata Sons shares to a third party by lenders in case of a default by the SP Group.

See Also: Mastek Shares Shoot Up 9% After Announcing Tie Up With Nvidia

The loan from PFC is crucial for the SP Group, which has been grappling with high debt and steep interest rates for its existing loans. The SP Group had previously sought approval from bondholders to postpone the repayment date of a part of its debt from May 26 to September 30, citing difficulties. The SP group had offered an extra ₹400 crore payment to debt investors. Making a total payment of ₹1.800 crore.

Tata Sons has consistently maintained that its shares are not freely transferable. If the SP group defaults on its debt obligations, the lenders would not be able to sell the collateral, Tata Sons shares, to recover dues since Tata Sons is a private company.

Read Next: This Defence Stock Is Gaining On ₹500 Cr Order From DRDO