Lenders seek to sell Future Retail’s smaller stores to recoup over Rs 3,000 crore in dues
Banks run by the State Bank of India may soon invite expressions of interest for smaller format chains – Easyday in northern India and Heritage Fresh in southern India – they said.
Lenders can take this action since the account would be classified as a non-performing loan if payment did not occur during the grace period which ends on January 30, in accordance with the unique restructuring plan signed between them and Future Retail in April. 2021.
Future Retail was unable to sell these stores to a third party as it had agreed to sell them to companies related to Reliance Industries under an agreement dated August 29, 2020. However, the agreement has been delayed due to a series of disputes between Future group and Amazon.com over allegations of violation of the shareholders’ agreement.
Due to the litigation, the long termination date of the agreement with Reliance has been extended until March 31, 2022. Until then, the Future Group is bound by the 2020 agreement with
and therefore cannot sell the stores to others. But that’s not stopping lenders from trying to sell small-format stores since they’re part of the collateral against the loan, the people said.
Amazon may attempt to block any attempts to sell small-format stores by seeking a stay order. Currently, he is seeking to block Future Group’s proposed deal with Reliance Industries, claiming that its prior agreement with Future Coupon prevents Future Retail from selling its assets to Reliance Group entities.
“For the lenders, this is a last ditch attempt to prevent the account from sliding into the NPA on January 30,” said one banker.
Future Retail did not respond to request for comment.
In a January 1 stock exchange notice, the company said it would “cooperate to complete the monetization of the specialty business within 30 days in accordance with the banks’ instructions to resolve the current issue.” Future has 800 to 850 small-format stores across India, contributing around 20% of Future Retail’s revenue, a third person said.
On February 2, NCLAT will hear Amazon’s appeal against India’s Competition Commission suspending its approval of the e-commerce giant’s $200 million investment in Future Coupon. Although the NCLAT did not grant interim measures to Amazon, it asked both parties to file a response within 10 days.
Separately, on January 11, the Supreme Court reserved a verdict on appeals filed by Future Group companies against a February 2021 Delhi High Court order by Justice JR Midha putting Rs Reliance-Future deal on hold. 24,713 crore by enforcing the Interim Emergency Arbitration Award of Singapore International Arbitration. Center (SIAC).
SIAC, however, suspended arbitration proceedings in the Amazon-Future dispute, scheduled for January 5-8, until further notice. This follows an order by the Bench Division of the Delhi High Court which on January 5 suspended Amazon-Future arbitration proceedings regarding appeals filed by Future Retail and its promoters.
The RBI had allowed lenders to enter into an OTR scheme with companies hit by Covid-19 on the condition that if the company defaults on its payment obligations, the account would have to be graded from the date the account would be became NPA if the OTR was not signed.