Lenders plan open tender for Future Retail if RIL, Amazon stimulus plan fails

Future Retail lenders plan to widen the net of bidders beyond Amazon and Reliance to recoup their loans, subject to a court ruling, if the two suitors fail to come up with a plan to revive the retailer, said bankers familiar with the developments.

“Lenders are clear on the way forward,” a banker involved in the turnaround process told ET after a meeting of lenders on Saturday. “If Reliance can’t bid on Future for whatever reason and Amazon can’t buy due to FDI rules, then let’s hold an open auction and sell it to the highest bidder. Deliberations are still ongoing. course and since the case is pending, it may take time.”

Some of the lenders have classified Future Retail’s account as a bad loan, as required by regulations, even though recovery of the Rs 17,000 crore loans is stuck in legal disputes over whether Future Retail’s proposed plan to selling its assets to Reliance Industries was in violation. of the agreement of the group led by Kishore Biyani with the American distribution giant Amazon.

Although the issue has gone back and forth, lenders are now forced to declare the account as defaulted due to Reserve Bank of India (RBI) guidelines. It is unclear how many of the 27 members of the consortium said it was a bad loan, as a petition ordering the lenders not to do so is pending before the Supreme Court.

“Discussions are ongoing, but we cannot say there is progress because it is still in the discussion phase,” said a senior executive at a large public sector bank. “But the account is now an NPA according to RBI classifications.”

Another public sector bank executive said the banks were waiting for a green light from the Supreme Court before the bidding process could officially begin.

‘In standby and watch mode

“Earlier this week, during a Supreme Court hearing, Future’s attorney said he needed 10 more days to put another plan in place,” the executive said. “The court allowed them that, so it all depends on what happens in court. The banks are waiting and watching.” Future Retail did not respond to ET’s email by press time on Saturday.

Last Thursday, lenders had suggested to the court that there should be an offer between Amazon and Reliance Retail for the retailer so that creditors could recover their outstanding loans of around Rs 17,000 crore. “There are two suitors for FRL, and we have an interest against that. My suggestion is that all of FRL’s assets – which we are now allowed to sell – can be put out to an open bid by Amazon and (Reliance) “, Rakesh Dwivedi, a senior lawyer representing the lenders, told the court. “Why wait a year? Let these two people who are full of money…make a sealed offer…in front of Your Lordship,” he suggested.