Amazon confirms FRL funding plan
„Says Samara ready to invest `7,000 cr
Amazon has informed the independent directors of Future Retail Limited (FRL) that private equity firm Samara Capital is willing to invest Rs 7,000 crore in the firm as per a term sheet signed in 2020 to acquire Future's retail assets. Amazon said that this would be an "antidote" to Future Retail's indebtedness.
"Samara Capital has once again reiterated to us that they remain interested and committed to lead and take forward the term sheet dated June 30, 2020, signed amongst Samara, FRL and the promoters of FRL, which contemplates a purchase consideration of Rs 7,000 crore, with the assistance and cooperation of the independent directors," Amazon said in its letter to independent directors Gagan Singh, Ravindra Dhariwal and Jacob Mathew.
The directors had written to Amazon on January
21, 2022 seeking to confirm its willingness to fund Rs
3,500 crore to repay lenders. Future Retail has to pay its lenders Rs 3.500 crore by January 29, failing which it would be classified as a non-performing asset. Amazon had written four letters between December 2020 and January
19, 2022 expressing its willingness to offer financial assistance to FRL.
The Samara term sheet provides for acquisition of all retail assets of FRL,
including the "small store formats" comprising the Easy Day, Adhaar and Heritage brands, through an Indian owned and controlled entity structure led by Samara and supported by Amazon.
"The transaction envisaged in the Samara Term Sheet would ensure availability of funds in FRL at the earliest, through an asset sale and an equity infusion, which would be a direct antidote to FRL's indebtedness," Amazon said. The independent directors should provide Samara the opportunity to conduct due diligence of FRL. Samara is ready to commence the due diligence exercise from January 23, the letter reviewed by Financial Chronicle said. The letter has been copied to the Sebi, Competition Commission of India, Enforcement Directorate and a few banks.
Among the conditions laid by Amazon, the engagement "should, in no
manner, affect the binding nature of the injunctions passed in the Arbitration Proceedings and by Indian courts. Further, the proposed Rs 24,700-crore deal entered with Reliance Industries for the sale of retail and wholesale assets as well as logistics and warehousing assets would not proceed and not be acted upon.
It also reiterated that FRL's retail assets cannot be alienated/transferred/ encumbered/disposed of in any manner without Amazon's consent.
Amazon also requested the directors to consider recovering/generating up to Rs 4,303 crore by unwinding the transactions relating to outstanding advances and security deposits as per the financial statements of FRL.
Earlier this month, Future Retail had said it had missed the due date for payment of Rs 3,494.56 crore to lenders as it could not sell assets due to its litigation with Amazon.