Tag: Future Retail

Future Group stocks plunge after Reliance deal falls through

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Future Group companies fell sharply on Monday, some as much as 20 percent, after India’s biggest retailer Reliance Industries (RIL) called off its $3.4 billion (Rs 24,713 crore) deal with the group over the weekend, pushing its flagship Future Retail towards a possible bankruptcy process.

Shares of Future Supply Chain Solutions, Future Retail, Future Lifestyle Fashions, Future Consumer and Future Enterprises fell between 5 percent and 20 percent.

With Reliance calling off the deal, Future, once one of India’s biggest retailers, now faces the prospect of a bankruptcy process.

“There is nothing much left for the company (Future Retail). They don’t have money, shops. Whatever Reliance has not taken over yet have already been shut down. Future Retail is likely to file for bankruptcy,” said Deepak Shenoy, founder and chief executive of Capitalmind in Bengaluru.

Reliance said on Saturday the deal, at the centre of many legal battles since 2020, “cannot be implemented” after Future’s secured creditors rejected it.

Future has been in a long-drawn legal battle with US e-commerce giant Amazon over the $3.4 billion sale of its retail assets to Reliance Industries. Amazon had obtained legal injunctions that stalled Future’s deal with Reliance, sparking a series of legal battles in various forums, including an arbitration panel in Singapore.

However, Reliance took control of hundreds of Future stores in February, citing non-payment of rent, after assuming many of the leases held by cash-strapped Future.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Future Retail’s secured lenders vote against deal with Reliance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The secured lenders of Future Retail Limited (FRL) have voted nearly 70:30 against Future Group’s Rs 24,713 crore deal to transfer its retail, wholesale, logistics and warehouse assets to Reliance Retail Ventures Limited (RRVL) after the voting process came to an end on Thursday.

According to a statement issued by FRL, 69.29 percent of its secured lenders voted against the deal; 21.78 percent of unsecured credited too voted against the deal, while 85.94 percent shareholders voted in favour of the deal.

FRL is one of 20 entities that comprise Future Group. Of the other Future Group companies, 81.63 percent of secured creditors and 99.51 percent of unsecured creditors of Future Supply Chain voted in favour of the deal; 82.75 percent of secured lenders of Future Lifestyle Fashion voted against and  93.93 percent unsecured creditors voted for the deal. Further, 81.91 percent of Future Lifestyle Fashion’s shareholders voted in favour.

One-hundred percent of Future Consumer’s secured creditors voted against the deal, while 77.44% unsecured lenders voted in favour. The company’s 99.85% shareholders too voted in favour.

The voting results of the 16 other companies of the Kishore Biyani-led group are awaited as of 12.17 pm on Saturday.

Earlier on Friday, CNBC-TV18 had reported that, as per sources, prominent public sector banks (PSBs) were among those that voted against the deal. According to the sources, Union Bank of India, Bank of India, State Bank of India, and Bank of Baroda are among the lenders that have voted against the deal. The sources, who did not want to be named, added that the banks were against the deal due to a lack of assurance from RRVL on debt repayment and deal valuation after renegotiation.

CNBC-TV18 had on Thursday reported on banks viewing FRL’s proposed deal with RRVL unfavourably due to lack of clarity on certain levels.

“We are not privy to negotiations between Future and Reliance, and after the store takeover, we want comfort from Reliance that it will settle dues,” a senior executive at a large public sector bank had told CNBC-TV18 earlier.

Another banker expressed reservations that the value of the deal may come down significantly as over 800 of Future Retail’s stores have already been taken over by Reliance, which leaves no clarity as to how RIL may value the deal.

The voting was conducted as per an order of the National Company Law Tribunal (NCLT) issued on February 28 after the Supreme Court allowed Future Group companies to convene a meeting of shareholders, and secured and unsecured creditors to seek their approval for the deal.

Meanwhile, US e-commerce giant Amazon has been contesting the deal, and terming the meetings to secure approvals “illegal”.

Future Retail owes over Rs 17,000 crore to lenders including Bank of India, SBI, BoB, Union Bank, and Axis Bank.

After a series of defaults by Future Retail even after a one-time debt restructuring package was approved by lenders, Bank of India last week filed an insolvency petition against the company at the National Company Law Tribunal to recover dues.

Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Top News Podcast: LIC IPO likely next week, EV battery fire kills one, British PM Boris Johnson on India visit, and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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LIC’s initial public offering could be launched as early as next week, sources told CNBC-TV18 on Thursday, adding that the IPO size has been trimmed down from earlier Rs 55,000-60,000 crore to close to Rs 30,000 crore.

LIC was yet to respond to CNBC-TV18’s query on the news.

In this episode of Top News Podcast, CNBCTV18.com’s Kanishka Sarkar shares the latest on markets, electric vehicle fires, the pandemic, what happened at the Supreme Court hearing on demolition in Delhi’s Jahangirpuri and more from around the world.

Sensex and Nifty recovered for a second straight session today amid buying across sectors. The rally was boosted by strength in heavyweights Reliance, Infosys, and the HDFC twins. Investors’ wealth increased by Rs 3.5 lakh crore as the market capitalisation of BSE-listed companies increased to Rs 271.8 lakh crore, according to provisional exchange data. They made Rs 5.7 lakh crore in two days.

In an update from the auto sector, NITI Aayog has issued a draft battery swapping policy in which it has proposed measures including incentives for EVs with swappable batteries, a new battery-as-a-service business model, standards for interoperable batteries, and subsidies to the swappable battery manufacturers.

Meanwhile, there was an explosion in an electric vehicle (EV) battery in Hyderabad that killed one person and others were injured. The incident took place two days ago and it follows at least six cases of fires in EVs that were reported in less than a month. The owners of the scooter had put the detachable battery on charge but it exploded after a few hours of charging.

The police have registered an FIR against the e-scooter manufacturer Pure EV. This is the third incident of fire involving Pure EV.

The company said that it did not have any record of the sale of the vehicle or service by the user in the database and that it was exploring if the scooter was purchased through a second-hand sale.

Tune in to Top News Podcast for more

In case you have any queries or suggestions, please write to us at cnbctv18podcast@nw18.com

Disclaimer: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Future-RIL Deal: Lenders wary of terms ahead of end of voting process

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Lenders to Future Retail will conclude voting on its proposed deal with Reliance Group’s Reliance Retail Ventures Limited (RRVL) at 5 pm today. The voting is being conducted as per an order of the National Company Law Tribunal (NCLT) issued on February 28 after the Supreme Court allowed Future Group companies to convene a meeting of shareholders, and secured and unsecured creditors to seek their approval for the Rs 24,713 crores deal with RRVL.

The voting is taking place amid US e-commerce giant Amazon contesting the deal, and terming the meetings to secure approvals “illegal”, in breach of 2019 agreements when the company made investments into FRL’s promoter firm, and in violation of Singapore arbitral tribunal’s injunction on the sale of retail assets to Reliance Group.

Three banking executives from banks with exposure to Kishore Biyani’s Future Retail expressed concerns about the deal, indicating they may not view it favourably unless certain conditions are met.

“We are not privy to negotiations between Future and Reliance, and after the store takeover, we want comfort from Reliance that it will settle dues,” said a senior executive at a large public sector bank.

Another banker expressed reservations that the value of the deal may come down significantly as over 800 of Future Retail’s stores have already been taken over by Reliance, which leaves no clarity as to how RIL may value the deal.

Earlier in February, Future Retail had said in a stock exchange filing, “The company has received certain termination notice(s) in respect of sub-leased properties from Reliance entities… So far notices have been received in respect of 342 large format stores (such as Big Bazaar, Fashion@ Big Bazaar (fbb)) and 493 small-format stores (such as Easyday and Heritage stores) of the company… received termination notices for 34 ‘Central’ stores and 78 ‘Brand Factory’ stores… These stores have been historically contributing approximately 55 percent to 65 percent of retail revenue operations of the company. As of now, these stores are not operational for stock and inventory reconciliation.”

“How can we approve a deal where we don’t know how much money we will recover?” asked one of the bankers quoted earlier. Last week, State Bank of India had also sought accountability from Future Retail on the takeover of stores by Reliance.

“You are requested to advise us what steps have been taken by you to safeguard lenders’ interest in this matter and efforts taken by you to get back the company’s asset taken over by RRPMSL,” SBI wrote in the letter dated April 18.

Although Reliance has extended the long stop date of the scheme of arrangement between itself and Future Retail by six months up to September 30, 2022, there is no clarity on the closure of the deal given the litigation involving Amazon.

After a series of defaults by Future Retail even after a one-time debt restructuring package was approved by lenders, Bank of India last week filed an insolvency petition against the company at the National Company Law Tribunal to recover dues.

Separately, CNBC-TV28 has also learnt that if no reassurance is given on debt recovery, lenders are also mulling moving the Debt Recovery Tribunal (DRT) to invoke guarantees on loans given to Future Retail, as they have rights over the company’s stocks and moveable fixed assets as secured creditors.

Future Retail is understood to have a debt of over Rs 17,000 crores owed to a consortium of banks including Bank of India, State Bank of India, Axis Bank, Bank of Baroda and others.

CNBC-TV18 reached out to Future Retail and Bank of India for their comments on the story, but no response was received.

Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fitch Ratings affirms Future Retail at ‘RD’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Fitch Ratings affirmed Future Retail Limited’s long-term issuer default rating (IDR) at ‘RD’ (Restricted Default) on Friday.

The ‘RD’ rating reflects the uncured default in meeting repayment obligations on the bulk of FRL’s onshore debt, which was restructured under the Reserve Bank of India’s (RBI) August 2020 One Time Restructuring (OTR) framework.

(The ‘RD’ IDR on the international scale indicates an issuer that, in Fitch’s opinion, has experienced an uncured payment default or a distressed debt exchange on a bond, loan, or other material financial obligation, but that has not entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, and has not otherwise ceased business.)

Fitch had downgraded FRL to ‘RD’ in April 2021 after it completed the restructuring as it viewed it as a distressed debt exchange (DDE). However, the resultant debt structure and maturity profile remained unsustainable and did not meaningfully address FRL’s financial stress, which is required for an upgrade after the completion of a DDE, the rating agency said.

It has also affirmed FRL’s $500 million 5.6 percent senior secured notes due 2025 at ‘C’, with a Recovery Rating of ‘RR5’.

Fitch gave Future Retail an‘ RD’ rating as the firm failed to repay Rs 88 billion in recast obligations under the OTR, comprising Rs 35 billion due on December 31, 2021, for which the grace period expired in January 2022, and Rs 53 billion due on March 31, 2022.

This followed persistent operating losses since the financial year ending March 2020 and ongoing litigation that has hampered FRL’s ability to generate funds from alternative sources, Fitch said.

The risk of FRL undergoing a deeper restructuring or formal insolvency proceedings has risen in view of its default and the ongoing uncertainty in completing an announced business sale to an indirect subsidiary of Reliance Industries Ltd, the rating agency said.

Also Read: ‘Amazon committed fraud’: CCI defends order suspending Future deal

It added that a more conservative approach by onshore lenders, particularly after the closure of stores that accounted for 55-65 percent of revenue in March due to non-payment of sub-lease rentals to RIL entities, can limit FRL’s ability in managing its daily liquidity needs, including servicing debt outside the OTR.

It must be noted that Fitch’s rating comes with the assumptions that Future Retail’s sales shall drop by 51 percent in FY23 in view of store closures and poor liquidity, and EBITDAR margin shall remain negative at -16.2 percent in the fiscal.

Also Read: Future Retail lenders issue notice, claim charge over company’s assets

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

‘Amazon committed fraud’: CCI defends order suspending Future deal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Competition Commission of India (CCI) on Monday defended its order suspending approval for Amazon’s investments in Future Coupons in 2019 and maintained that the e-commerce giant indulged in misrepresentation to secure approval for the deal.

Amazon committed an act of fraud on CCI, the competition regulator told the National Company Law Appellate Tribunal (NCLAT). It held that the firm indulged in misrepresentation, wilful omission, suppression and false representation to secure approval for its deal with Future group.

Amazon has shown no respect to the sovereign and statutory authority, CCI alleged, adding that the e-commerce giant made a strategic purchase in Future Coupons to exercise “strategic” control over Future Retail. Amazon investments were designed to enjoy control over Retail assets, it said.

The arguments, which the NCLAT will continue hearing on March 22, come against the backdrop of CCI’s order in December 2021 suspending over-two-year-old approval for Amazon’s deal to acquire a 49 percent stake in FCPL and FRL promoter and also slapped a penalty of Rs 202 crore on the e-commerce major. CCI fined Amazon Rs 2 crore for suppressing information and Rs 200 crore for failure to notify combination in terms of the obligation.

Amazon has been objecting to the sell-off plans, accusing the Future Group of breaching its 2019 investment pact.

“Amazon had suppressed the actual scope of the Combination and had made false and incorrect statements in relation to the BCAs, which are intertwined into the scope and purpose of the Combination,” the order read.

Also Read: SC seeks Future’s response on Amazon’s plea on resumption of arbitration & FRL assets

The regulatory body had again asked Amazon to file a detailed Form 11 for the transaction and deemed the then approval as invalid.

Amazon and Future Group have been engaged in a legal battle for more than a year now. Future has decided to sell its Big Bazaar retail business to Reliance Retail, a subsidiary of Reliance Industries (RIL). Amazon, however, has been trying to block the sale of Future’s retail, wholesale, and logistics business to RIL Ltd for Rs 24,713 crore for allegedly violating contracts.

The e-commerce giant argues that its 2019 deal with a Future unit contained clauses prohibiting the group from selling its retail assets to anyone on a “restricted persons” list that included Reliance.

Also Read: Amazon-Future-RIL saga: A look back at when and how the battle began

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow