Future gets NCLT nod to hold EGMS
Will seek shareholder approval to sell assets to Reliance Retail
The National Company Law Tribunal’s (NCLT’S) Mumbai Bench has allowed Future Group firms to hold extraordinary general meetings (EGMS) of their shareholders and creditors to seek approval for selling assets to Reliance Retail Ltd.
In an order on Tuesday, the NCLT asked the company to fix a suitable date for the meeting and gave its go ahead. “The company is pleased to update the stock exchanges that the National Company Law Tribunal, Mumbai Bench, has passed an order allowing the company to hold meetings of its shareholders and creditors to seek approval for the scheme. The NCLT has further rejected the intervention application filed by Amazon,” Future Retail said in a statement.
Both Reliance and Future Group had announced in August last year Reliance Retail Ventures Ltd would acquire the entire retail, wholesale, logistics, and warehousing businesses from Future Group as a going concern for ~24,713 crore.
But the transaction was delayed due to litigation by American retail giant Amazon.
Amazon, which holds 50 per cent in a holding company of Future Retail, moved arbitration court, saying the deal would convert FRL into a shell company while the businesses would be hived off and sold to its arch rival Reliance Retail. The matter is currently pending in the Supreme Court.
While both Amazon and Future were litigating, the financial metrics of Future Group have deteriorated. All Future Group companies have reported massive losses, a fall in sales, and a substantial rise in debt in FY21 as compared to the previous financial year.
With the NCLT clearing the way for the EGM, one of the hurdles for Future-reliance Retail has been removed.
The deal, once closed, will consolidate Reliance Industries Chairman Mukesh Ambani’s position in the Indian retail industry, which is witnessing huge investment by multinational players in e-commerce such as Amazon and Walmart.
The merger would help Future promoter Biyani to get rid of debt, both at promoter and company levels, which rose during the pandemic, resulting in the closure of several stores.
According to the plan, various Future group companies such as Future Retail, Future Consumers, Future Supply Chain Solutions, Future Lifestyle Fashion, Future Brands, and Future Market Network are to merge into Future Enterprises Ltd (FEL) first.