Lenders in talks to sell some non-core assets of Future Group

MUMBAI Lenders at Future Retail Ltd are in initial talks on whether they should take a more active role in offloading some of the group’s non-core assets in an effort to recoup their loans, a person familiar with the development said.

“The sales of non-strategic assets planned as part of the debt restructuring process have not borne fruit. The banks are wondering if they would like to take control of the process and push it. However, discussions are still at a preliminary stage, “said the person quoted above, on condition of anonymity.

Future Retail lenders include Union Bank of India, Bank of India, Bank of Baroda, State Bank of India, Indian Bank, Central Bank, Axis Bank and IDBI Bank.

According to data from Care Ratings, the company owes banks ??6,278 crores. The Future group owes around $ 3 billion in loans on a global basis. The moratorium on loan repayments ended on September 30 and if the company did not pay its contributions by the end of December, it would be classified as in default on January 1 and would ultimately be classified as non-performing.

“Even if the company did not repay this month, the banks would still have 90 days before the loans became non-performing,” the person said.

Reuters reported on December 8 that Italy’s Generali was in talks to increase its stake in two Indian insurance companies, with its local partner, Future group, seeking to withdraw from the deal.

Generali wants to increase its stake to 74% in life and non-life insurance companies, from 49%, according to the report.

Lenders, meanwhile, are hopeful that the recent Indian Competition Commission (ICC) decision to suspend Amazon’s 2019 deal with Future Coupons Ltd, a unit of the group, will pave the way for Future’s deal. Retail with Reliance Retail.

On December 17, the competition watchdog suspended Amazon’s purchase of a 49% stake in Future Coupons and ordered a fine of ??202 crore for allegedly not being candid about the actual scope and purpose of the agreement.

In August 2019, Amazon had purchased the 49% stake in Future Coupons, which holds 7.3% of the capital of Future Retail through convertible warrants, with the right to purchase the flagship product Future Retail after 3 to 10 years.

“This deal with Future Coupons was the premise of Amazon’s legal battle. We have to wait for the final verdict. Unless there are more legal delays, the Future-Reliance deal could now be finalized within next few months, and repayments would be forthcoming, ”said the person quoted above.

A spokesperson for Future Retail did not immediately respond to questions.

Amazon opposed the Future Group’s deal with Reliance Retail Ventures Ltd, citing a violation of its investment agreement with the group which prohibited it from selling its assets to other entities.

A feud over the assets of the Future Group between two of the world’s richest men, Mukesh Ambani of Reliance Industries Ltd and Jeff Bezos of Amazon, has prompted lenders to scramble to collect their loans to the Indian conglomerate.

Last August, Reliance Retail, a unit of Reliance Industries, agreed to purchase the retail assets of the Future Group on the basis of a discount sale for ??24,713 crores.

The cash-strapped Future Group is trying to speed up the deal with Reliance Industries to pay off creditors and save the Big Bazaar retail chain from possible collapse.

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