Future moratorium ends; lenders plan to meet soon
MUMBAI: Future Retail Ltd’s lenders will meet soon to take stock of the company’s repayment plans after a 19-month moratorium ended on Thursday, although a decision on referring the retailer to a bankruptcy tribunal would be taken later in case of a default, a banker aware of the development said.
The banker said while the moratorium ended on September 30, repayments would be due by end-december. That is because Future Retail will have to repay by the end of December its dues for the October-december period. If it fails to make the payment, it would become a defaulter on January 1. Banks will still have another 90 days before classifying the loans as non-performing, he said.
“The company has informed that it is generating profits and is performing better after the debt recast. However, it is yet to sell non-core assets as part of its commitment to infuse cash into the company, and that is a key constraint,” the banker cited above said.
He said lenders would meet again in December to look into the possibility of referring Future Retail to the National Company Law Tribunal (NCLT) for resolution. “That would not only make things difficult for the company, but also lenders,” the banker said, adding that debt recast under the Reserve Bank of India’s guidelines was seen as ‘Plan B’ if the deal with Reliance Retail Ventures Ltd (part of Mukesh Ambani’s Reliance Industries Ltd) did not materialize. Amazon.com Inc. is contesting the sale in the Supreme Court.
Spokespeople for Union Bank of India, Future Group and Reliance Industries did not respond to emails seeking comments on the story. However, a Future Group official said the NCLT’S September 28 decision to allow the Kishore Biyani-led group to hold meetings of shareholders and creditors to seek approval for the sale of assets to Reliance Retail is a step in the right direction. Amazon had filed an application, objecting to the NCLT decision, considering the scheme is pending completion of the arbitration proceedings against Future Retail.