Kamath panel okays Future debt recast
NEW DELHI: The debt restructuring of the two Future Group flagship companies—Future Retail Ltd (FRL) and Future Enterprises Ltd (FEL)—has received approval from the RBI-constituted expert panel headed by KV Kamath, according to an industry source.
The Expert Committee under the chairmanship of veteran banker Kamath has approved the debt resolution plan as permitted under the Reserve Bank of India’s resolution Framework for Covid-19-related stress, said the source.
According to him, debt resolution plans for two more Kishore Biyani-led Future Group companies—Future Consumers and Future Lifestyle—are also expected to be cleared by the consortium of lenders.
The RBI has set up a fivemember expert committee under Kamath to suggest financial parameters for resolution of coronavirus-related stressed assets and all debt having aggregate exposure of ₹1,500 crore or above have to be validated by it.
The lenders and the board of both Future Group companies have already approved the respective restructuring plans.
Now the companies and the lenders would have to complete other formalities and submit it finally before the RBI, he added.
Earlier this week, lenders of Future Supply Chain Solutions Ltd also approved the debt restructuring plan of the company, but as its total debt was below ₹1,500 crore, it does not require approval from the Kamath panel.
Future Supply Chain Solutions Ltd is the group’s logistics company. It provides warehousing, distribution and other logistics solutions.
A reply from Future Group regarding the development could not be ascertained by the time of filing of the story.
FRL, which operates retail chain stores under several formats including Big Bazaar, fbb, HyperCity etc, has a consortium of 28 lenders.
While FEL, has 19 lenders, which include—HDFC Bank, IDBI Bank, Indian Bank, Axis Bank, Canara Bank, Central Bank of India, Indian Overseas Bank, Punjab National Bank, Bank of India, State Bank of India and Bank of Baroda.
Though both the companies have not specified their total debt under the restructuring in their regulatory filing but according to reports from Care Ratings, FRL has a loan of ₹6,278 crore as on October 2020, and FEL has a loan of ₹1,777 crore as on December 2020.
FEL’s loan includes longterm term loans of ₹528 crore, long-term fund-based bank facilities of ₹3,250 crore, and short-term non-fund based bank facilities of ₹2,500 crore.
While FRL debt includes long-term term loans of ₹528 crore, long-term fund-based bank facilities of ₹3,250 crore, and short-term non-fund based bank facilities of ₹2,500 crore.
The restructure would cover FRL’s working capital demand loans, term loans, cash credit, short term loans, Non-Convertible Debentures (NCDs), purchase bill discounting limits, other working capital loans and unpaid interest, which became overdue, it added.
Explaining the reasons, FRL has said the coronavirus pandemic has deeply impacted the long-term business viability and led to significant financial stress.
After the loan structure exercise, FRL expects to recover with the timeframe.