Future: Lenders Allow FRL to Pay $14 Million in Interest to Foreign Bondholders

Future Retail Ltd (FRL) lenders have authorized the company to pay $14 million in interest to holders of $500 million bonds raised overseas during the grace period which ends Feb. said people familiar with the matter. The decision was taken Thursday evening during a meeting between promoter Kishore Biyani and domestic lenders. Biyani sought their consent on the grounds that a default would further complicate the closing of the ₹24,713 crore asset sale agreement signed with Reliance, the people said. At the meeting, Biyani also assured lenders that Future would win the legal battle against Amazon over the sale by the end of March, the people quoted above said. The company did not respond to ET’s questions.

The development comes less than a month after FRL defaulted on payment of a ₹3,495 crore debt to domestic lenders.

This was under the terms of a one-off restructuring plan signed in April last year. The company has debt of Rs 17,300 crore – a domestic component of Rs 13,800 crore from 27 lenders and Rs 3,500 crore in overseas bonds. The company had raised 5.6% secured bonds of $500 million due 2025 in January last year.

Agencies

Lenders agreed to pay the coupon to foreign bondholders in part because they now control the company’s cash flow and have withheld 5% of revenue generated by the company, one of the people said. quoted. This is set at Rs 60-80 crore, which would be split among the lenders, the same person said. Since Future Retail raised the offshore debt, all semi-annual coupons have been paid within the respective one-month grace periods. However, it will be the first time that a payment to foreign bondholders has been made despite defaulting on payment to domestic lenders.

Amazon has alleged breach of shareholder agreement between the e-commerce company and Future Coupons Pvt Ltd (FCPL) over the proposed sale of assets to Reliance Retail, part of Reliance Industries Ltd (RIL). Amazon is seeking to block the deal and has argued that its prior agreement with FCPL prohibits Future Retail from selling its assets to Reliance Group entities.

Although the company is said to be confident of winning against Amazon, even in this scenario lenders will still have to consider a debt overhaul as it would take at least three months to implement a deal with Reliance after receiving all legal clearances. , the person said. Cited above. A debt overhaul will prevent the company from entering bankruptcy and provide a six-month window to implement a proposed stimulus package, provided it is approved by 75% of lenders by value. Biyani informed lenders that Future will present a debt overhaul plan by the end of the month, people present at the meeting said.

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