Fu­ture En­ter­prises to Re­deem Bonds to Cut Fi­nance Costs

The Economic Times - - Smart - Mar­ket In­tel­li­gence

Mum­bai: Kishore Biyani-led Fu­ture En­ter­prises (FEL) is par­ing its debt. The com­pany has de­cided to re­deem bonds worth ₹ 600 crore ma­tur­ing in 2019 via ex­er­cise of call op­tion. The com­pany had is­sued these bonds in 2014 and was pay­ing an in­ter­est of 11.5% on them.

In a stock ex­change fil­ing, FEL said it had fixed Fe­bru­ary 16 as record date for the re­demp­tion. FEL was carved out from Fu­ture Group re­struc­tur­ing. Erst­while Fu­ture Re­tail, the flag­ship group com­pany was split into two sep­a­rate en­ti­ties — Fu­ture Re­tail and FEL. Fu­ture Re­tail is into re­tail trade but all its as­sets are owned by FEL. FEL s h a r e s h ave d o u b l e d since Novem­ber 2016 from a low of ₹ 14 to ₹ 30 on Fe­bru­ary 10.

A com­pany of­fi­cial said that the re­demp­tion of bonds was to en­sure re­duc­tion in fi­nance cost and im- prov­ing debt ser­vice cov­er­age ra­tio. The of­fi­cial fur­ther said the com­pany may is­sue non-con­vert­ible deben­tures at lower in­ter­est cost of around 9.5% for fu­ture re­quire­ment and to lower fi­nance cost.

“The2%re­duc­tion­intheen­tiredebt re­fi­nanc­ing may add be­tween ₹ 50 core­and ₹ 80crore­toFEL’sbot­tom­line straight­away given that it has a debt of over ₹ 4,000 crore,” said Arun Ke­jri­wal, founder, KRIS Re­search. “It is sig­nif­i­cant trans­for­ma­tion con­sid­er­ing that FEL would be­come highly prof­itable from losses.” As on De­cem­ber 2016, FEL had around ₹ 4,500 crore worth of in­vest­ments and a debt of equal amount. The com­pany plans to mon­e­tise all its in­vest­ments over the years, the of­fi­cial said. HIGHS & LOWS

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