Future Enterprises to Redeem Bonds to Cut Finance Costs
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