Mumbai Lenders of Future Retail Ltd.: Lenders are in early talks on whether they should take a more active role in offloading some of the group’s non-core assets to salvage their debts, a person privy to the development said.
“The planned non-core asset sale as part of the debt restructuring process has not materialised. Banks are discussing whether they want to take control of the process and insist on it. However, the discussions are still at an early stage,” said the person above, requesting anonymity.
Lenders to Future Retail include Union Bank of India, Bank of India, Bank of Baroda, State Bank of India, Indian Bank, Central Bank, Axis Bank and IDBI Bank.
According to CARE Ratings data, the company owes banks 6,278 crores. Overall, Future Group has a debt outstanding of about $3 billion. The moratorium on loan repayment ended on September 30, and if the company fails to pay its dues by December-end, it will be termed a defaulter on January 1 and will eventually be classified as non-performing .
“Even if the company defaults on repayment this month, banks will have another 90 days before the loan becomes non-performing,” the person said.
Reuters reported on 8 December that Italy’s Generali is in talks to increase its stake in two Indian insurance businesses as its local partner Future Group looks to exit the arrangement.
The report said Generali wants to increase its stake in both life and non-life insurance companies from 49% to 74 per cent.
Meanwhile, lenders expect the recent Competition Commission of India (CCI) decision suspending Amazon’s 2019 deal with Future Coupons Ltd, a conglomerate entity, paving the way for Future Retail’s deal with Reliance Retail. Will happen.
On December 17, the competition watchdog blocked Amazon’s purchase of a 49% stake in Future Coupons and ordered a fine. 202 crore reportedly for not being clear about the actual scope and purpose of the deal.
In August 2019, Amazon bought a 49% stake in Future Coupons, which holds a 7.3% equity in Future Retail, through convertible warrants, with the right to buy into the flagship Future Retail after 3 to 10 years.
“This deal with Future Coupons was the basis for Amazon’s legal battle. We will have to wait for the final verdict. Unless there are further legal delays, the Future-Reliance deal may now be finalized in the coming months, and repayment will be forthcoming,” said the person above.
A Future Retail spokesperson did not immediately respond to questions.
Amazon has objected to Future Group’s deal with Reliance Retail Ventures Ltd, citing violations of its investment agreement with the group, which had barred it from selling its assets to other entities.
A dispute between two of the world’s richest men – Reliance Industries Ltd’s Mukesh Ambani and Amazon’s Jeff Bezos over the assets of the Future group has left lenders in a scuffle to recover their loans to the Indian conglomerate.
Last August, Reliance Retail, a unit of Reliance Industries, had agreed to buy Future Group’s retail assets on bearish grounds. 24,713 crores.
Cash-strapped Future Group is trying to expedite the deal with Reliance Industries to pay off creditors and save the Big Bazaar retail chain from a possible collapse.
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