The debt restructuring of the two Future Group flagship companies — Future Retail and Future Enterprises — has received approval from the RBI-constituted expert panel headed by K V Kamath, according to an industry source. The Expert Committee under the chairmanship of veteran banker K V Kamath has approved the debt resolution plan as permitted under the Reserve Bank of India’s resolution Framework for COVID 19-related stress, said the source. According to him, debt resolution plans for two more Kishore Biyani-led Future Group companies — Future Consumers and Future Lifestyle — are also expected to be cleared by the consortium of lenders.
RBI has set up a five-member expert committee under Kamath to suggest financial parameters for resolution of coronavirus-related stressed assets and all debt having aggregate exposure of Rs 1,500 crore or above have to be validated by it. The lenders and the board of both Future Group companies have already approved the respective restructuring plans. Now the companies and the lenders would have to complete other formalities and submit it finally before the RBI, he added. Earlier this week, lenders of Future Supply Chain Solutions Ltd also approved the debt restructuring plan of the company, but as its total debt was below Rs 1,500 crore, it does not require approval from the Kamath panel. Future Supply Chain Solutions Ltd is the group’s logistics company. It provides warehousing, distribution and other logistics solutions.
A reply from Future Group regarding the development could not be ascertained by the time of filing of the story. Future Retail Ltd (FRL), which operates retail chain stores under several formats including Big Bazaar, fbb, HyperCity etc, has a consortium of 28 lenders. While Future Enterprises Ltd (FEL), has 19 lenders, which include – HDFC Bank, IDBI Bank, Indian Bank, Axis Bank, Canara Bank, Central Bank of India, Indian Overseas Bank, Punjab National Bank, Bank of India, State Bank of India and Bank of Baroda. Though both the companies have not specified their total debt under the restructuring in their regulatory filing but according to reports from Care Ratings, FRL has a loan of Rs 6,278 crore as on October 2020, and FEL has a loan of Rs 1,777 crore as on December 2020. FEL’s loan includes long-term term loans of Rs 528 crore, long-term fund-based bank facilities of Rs 3,250 crore, and short-term non-fund based bank facilities of Rs 2,500 crore.
While FRL debt includes long-term term loans of Rs 528 crore, long-term fund-based bank facilities of Rs 3,250 crore, and short-term non-fund based bank facilities of Rs 2,500 crore. The restructure would cover FRL’s working capital demand loans, term loans, cash credit, short term loans, Non-Convertible Debentures (NCDs), purchase bill discounting limits, other working capital loans and unpaid interest, which became overdue, it added. Explaining the reasons, FRL has said that the pandemic has deeply impacted the long-term business viability and led to significant financial stress. After the loan structure exercise, FRL expects to recover with the timeframe. As per the guidelines issued by the market regulator SEBI, FRL has received the written consent of its all NCD holders to amend the terms and conditions as per the resolution plan approved by the other lenders of the existing debt. Meanwhile, in August last year, the Future group had announced to sell its retail and wholesale business in a Rs 24,713 crore deal to Reliance Retail Ventures Ltd (RRVL), the retail arm of billionaire Mukesh Ambani-led Reliance Industries Ltd.
The deal is being contested by the e-Commerce major Amazon, which had invested in Future Coupons in August 2019, with an option of buying into the flagship Future Retail after a period of three to 10 years. Amazon has challenged the scheme of arrangement entailing the consolidation of Future Group’s retail and wholesale assets into one entity Future Enterprises Ltd and then transferring it to RRVL, at several forums including arbitration at SIAC and before the Supreme Court of India. It has already received clearance from CCI, SEBI and bourses, and the scheme of arrangement is now awaiting the nod from NCLT and shareholders. On October 25, 2020, an interim order was passed in favour of Amazon with a single-judge bench of V K Rajah barring Future Retail from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party. Reliance Retail has also extended the timeline for the deal to be completed by six months to September 30, 2021. The Supreme Court on Monday stayed the ongoing proceedings before the Delhi High Court in the case related to the amalgamation of FRL with Reliance Retail.