Future Retail lenders may approve debt recast soon
The plan will entail a 2-year moratorium on repayments without interest rate change
MUMBAI: Lenders to Future Retail Ltd are hopeful of approving a debt recast plan by the end of this month, with the final draft being circulated among lenders for approval, two bankers aware of the development said.
The plan will entail a twoyear moratorium on repayments without any changes in the prevailing interest rate, the bankers said on condition of anonymity. This is similar to what lenders have also agreed on for Future Lifestyle Fashions Ltd, a group company that runs the Central and Brand Factory outlets.
“There were some disagreements over working capital limits under the restructuring deal, but those have been sorted now. We have circulated a final copy of the one-time recast proposal and hope to close it soon,” said one of the two bankers cited above. The second banker also said the plan is in the final stages of approval and is likely to be approved by the end of April.
The recast will be done under the Reserve Bank of India’s (RBI) special window for pandemic-hit borrowers.
A third person aware of the development said Future’s assets are promising, and lenders will try and resolve the matter soon. “Reliance Industries Ltd (RIL) is not only helping Future with its operations but has also extended the timeline for the deal, as it knows the strength of Future’s assets,” the person said.
Emails sent to spokespeople for State Bank of India (SBI) and Future Retail remained unanswered.
Future Retail owes banks ₹6,278 crore, showed data from Care Ratings. On an aggregate basis, Future group owes $3 billion in loans, and lenders are trying to figure out a way to ensure the least possible hit on asset quality.
The group also owes mutual funds that had invested in securities sold by group entities, including Rivaaz Trade Ventures, NuFuture Digital India and Future Ideas Co.
For Indian banks with bad loans of ₹7.38 trillion, a soured asset of that size will only make matters worse.
Reliance Retail is the largest retailer in India, with a network of 12,200 stores. On 1 April, Reliance Retail Ventures Ltd, a subsidiary of Reliance Industries, said it has extended the longstop date for completion of its ₹24,713 crore deal with Kishore Biyani’s Future Group by another six months as the latter is engaged in a legal battle with Amazon.
Long-stop refers to a time frame in which all the conditions precedent for the deal are met for the transaction to be completed. The transaction was to be completed on March 31.
Reliance Retail Ventures had last August entered into an arrangement to buy Future Group’s retail assets on a slump sale basis.
Amazon and Reliance Industries have been engaged in a legal battle, each eying a stake in the retail giant to gain a stronger foothold in the Indian market.
The matter is pending before the Supreme Court and is scheduled to be heard on April 27.