Debt-ridden Future Group is now focusing on saving and rebuilding firms such as — Future Lifestyle Fashions, Future Supply Chain Solutions, Future Consumer and Future Enterprises, after the ₹24,713-crore deal with Reliance Retail was rejected by secured creditors, news agency PTI reported quoting industry sources.
However, Future Group’s flagship firm Future Retail Ltd (FRL), which has nearly ₹18,000 crore debt, is bound to face the corporate insolvency resolution process before the National Company Law Tribunal (NCLT).
Other companies like Future Enterprises Ltd (FEL), Future Lifestyle Fashions Ltd (FLFL), Future Supply Chain Solutions Ltd (FSCSL), Future Consumer Ltd (FCL) can sustain on their own and can be rebuilt by restructuring their liabilities with the help of current lenders and investors, PTI report said.
“FEL has over ₹5,000 crore loans and since the company is selling its stake in Future Generali India Insurance business. Now it is getting around ₹3,000 crore from it. The deal is almost complete. So that will leave a small amount of debt and that can be managed by FEL,” PTI report said citing a source.
FMCG company FCL has assets such as a 110-acre food park at Tumkur, Karnataka, which can be leveraged to rebuild the company, the source added.
Reliance Industries Ltd., on Saturday informed the exchanges that its scheme of arrangement involving the sale of retail and wholesale business of Future Group to its subsidiaries cannot be implemented, a day after majority of secured creditors of Future Group voted against the deal.
The vote has proved to be a setback to Reliance Retail Ventures Limited’s (RRVL), a subsidiary of RIL, nearly two-year bid to acquire the retail and wholesale business and the logistics and warehousing business of Future Group.
On Friday, Future Retail failed to secure the necessary 75% approval from secured creditors to proceed with the deal with RIL. While more than 75% of shareholders and unsecured creditors voted in favour of the deal, secured creditors showed their disapproval with 69.29% voting against the plan and 30.71% in favour, according to a regulatory filing by Future Retail Ltd (FRL).
In terms of unsecured creditors, 78.22% voted in favour of the deal and 21.78% against. Besides, 85.94% shareholders of the company voted for the deal while 14.06% voted against.
Future Retail’s 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.
In August 2020, Reliance Retail agreed to buy Future Group’s retail, wholesale, logistics and warehousing assets on a slump sale basis for Rs24,713 crore. The deal has however faced various hurdles including Amazon’s objection to the sale of Future Group’s assets to RIL.
Future Lifestyle Fashions Ltd (FLFL), which handles the flagship fashion business of Future Group, has not defaulted on any loan repayments so far and here the group would raise money after divesting some of the few key brands under its portfolio.
FLFL has in-house retail chains Central and Brand Factory, exclusive brand outlets (EBOs) and other multi-brand outlets (MBOs of nearly a dozen apparel labels including — Lee Cooper, Champion, aLL, Indigo Nation, Giovani, John Miller, Scullers, Converse and Urbana in its portfolio.
Moreover, FLFL has also shown very good recovery in business post COVID and and cost of operation of its remaining stores has come down by over 20 per cent, source added.
Bank of India, a financial creditor of FRL has already filed a petition before the Mumbai bench of the NCLT requesting to initiate insolvency proceedings against the company. The public sector lender has also suggested the name of a resolution professional and put the company under a moratorium.
The insolvency tribunal is yet to start hearing against FRL, which operates retail chains under the brand name of Big Bazaar, fbb, Foodhall, Easyday and Nilgiris.
Besides, FRL is also facing an insolvency petition by some of its operational creditors such as Hindustan Coca-Cola Beverages Ltd (HCCBL).
HCCBL, the bottling arm of Coca-Cola in India, an operational creditor of FRL, has filed a plea under the section 9 of the Insolvency & Bankruptcy Code (IBC).
HCCBL’s petition is listed on May 2, before the Mumbai bench for the next hearing.
Lenders of FEL have also plans to take on FEL, which had last week, defaulted on repayment of ₹2,911.51 crore loan repayments to its lenders, to the insolvency tribunal, he added.
The due date for payment of ₹2,835.65 crore was March 31, 2022. FEL had a review period of 30 days as per the scheme of One Time Restructuring (OTR) for Covid-hit companies with its consortium of banks and missed it. Livemint