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Willing to assist FRL, including proposed infusion of Rs 7,000 cr: Amazon

US e-commerce giant Amazon has written to the independent directors of Future Retail (FRL), including Gagan Singh, Ravindra Dhariwal, and Jacob Mathew, reiterating its willingness and ability to assist FRL in addressing any financial concerns, within the framework of the agreements. This includes the solution proposed in the term sheet between Samara Capital, and FRL, which contemplated an infusion of Rs 7,000 crore in FRL.

The letter has also been sent to the top executives at Union Bank of India, Bank of India, State Bank of India, Bank of Baroda, Central Bank of India, Punjab National Bank, UCO Bank, and Indian Bank.

“We write further to our earlier letters, including ones dated December 2, 2020, April 23, 2021, and December 15, 2021, addressed to the independent directors of FRL,” said Amazon’s letter to FRL’s independent directors, dated January 19, which Business Standard has reviewed.

According to sources, as early as June 2020, Amazon-backed private equity firm Samara Capital had signed a non-binding term sheet with FRL that entailed a Rs 7,000 crore investment. This was two months prior to Kishore Biyani-led Future Group announcing its Rs 24,713 crore (or $3.4 billion) merger deal with Reliance Industries (RIL) at the end of August 2020.

“Without prejudice, Amazon reiterates that FRL is bound by valid and subsisting injunctions issued by the arbitral tribunal, and enforced by Indian courts. Amongst others, FRL is prohibited from “directly or indirectly taking any steps to transfer, dispose, alienate or encumber FRL’s retail assets without Amazon’s consent”, read Amazon’s letter.

Amazon has said in the letter that it has also become aware, from certain media sources, that FRL is proposing to sell its small-format stores, comprising Easyday and Heritage Fresh brands.

“Any sale of small-format stores without obtaining the consent of Amazon would be in violation of the injunctions, which continue to operate and are binding on FRL and the directors of FRL, including its independent directors,” said the letter.

Amazon said it has consistently emphasised its willingness to assist FRL before the arbitral tribunal and Indian courts. Amazon, through its counsel, reiterated its commitment to finding solutions for FRL before the Supreme Court (SC), as recently as January 11, 2021.

It has nominated Abhijeet Muzumdar (head of Amazon Smbhav Venture Fund and corporate development) to lead any and all such engagements with interested stakeholders and decision-makers in FRL, including independent directors, to find a commercial solution for FRL.

“We are more than willing to explore effective solutions to assist FRL,” said the letter.

A query to Future Group and Amazon remained unanswered till the time of going to press.

This issue goes back to August 2019, when Amazon acquired 49 per cent stake in Future Coupons (FCL), the promoter entity of FRL, for around Rs 1,500 crore. A year later, in August 2020, Future Group struck a $3.4-billion asset-sale deal with RIL.

In October 2020, Amazon had sent a legal notice to Future for striking a deal with RIL. It alleged that Future’s $3.4-billion asset sale deal with RIL breached an agreement with Amazon. It cited its non-compete agreement with the Biyani-led chain. The deal specified any disputes would be arbitrated under the Singapore International Arbitration Centre (SIAC) rules. The same month, Amazon got a favourable ruling for its plea in SIAC against the deal.

In November 2020, Future moved the Delhi High Court against Amazon, alleging interference by the US firm in the deal with RIL. Since then, Amazon has been fighting a legal battle with FRL to stop Future’s $3.4-billion deal with RIL.

Last year in December, the Competition Commission of India (CCI) suspended Amazon’s 2019 deal worth Rs 1,500 crore with FRL, citing the company’s alleged deliberate design to suppress information about the scope and purpose of the deal. The antitrust regulator had imposed a penalty of Rs 200 crore on Amazon to be paid within 60 days of receipt of the order.

This month, Amazon filed a legal challenge at the National Company Law Appellate Tribunal (NCLAT) against CCI’s suspension of Amazon’s 2019 deal with FRL. Parallelly, Amazon’s Indian unit also approached the SC against a halt on an arbitration case against FRL’s asset sale to RIL.

Later this month, NCLAT agreed to hear Amazon’s plea, challenging CCI’s suspension of approval to the 2019 transaction with Future Group on February 2, 2021. The appellate tribunal had directed CCI and FCL to file their reply in 10 days and Amazon to file a rejoinder. Business Standard

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