Lenders of the debt-ridden Future Retail Ltd have approved a plan to restructure the existing financial debt of the company under an RBI announced resolution framework for COVID-19 related stress.
The restructuring plan would now be forwarded for approval to an expert committee, formed by RBI under the chairmanship of K V Kamath, Future Retail Ltd (FRL) said in a late-night regulatory update on Saturday.
As part of the resolution plan, the debt raised through the non-convertible debentures issued by FRL is also part of the existing debt and is proposed to be restructured, it added.
The board of the company, which now expects to recover from the financial stress with the resolution timeframe, has also approved the restructuring plan in its meeting held on Saturday, it added.
"Board at its meeting held on April 17, 2021, has approved a resolution plan to restructure the existing secured financial debt from the bankers of the company as permitted under a resolution framework for COVID-19 related stress announced by the Reserve Bank of India," the filing said.
The said resolution plan which has supported by 28 lenders, which remains subject to the approval of the expert committee, under the chairmanship of K V Kamath constituted by the RBI, has been approved by the lenders to the existing debt of the company, it added.
The company has not specified the total debt under the restructuring.
However, according to a report from Care Ratings, FRL had loans of Rs 6,278 crore as of October 2020. This includes a long-term loan of Rs 528 crore, long-term fund-based bank facilities of Rs 3,250 crore, and short-term non-fund based bank facilities of Rs 2,500 crore.
The restructure would cover FRL's working capital demand loans, term loans, cash credit, short term loans, NCDs, purchase bill discounting limits, other working capital loans and unpaid interest, which became overdue, it added.
Explaining the reasons, FRL said the pandemic has deeply impacted the long-term business viability and led to significant financial stress.
"The debt burden has become disproportionate relative to the cash flow generated by the company owing to the multiple lockdowns since the pandemic surfaced, posing significant financial stability risks to the business. Hence, the restructuring of the debt is crucial and essential," it said.
After the loan structure exercise, FRL expects to recover with the timeframe.
"Pursuant to the implementation of resolution plan of the existing debt (including the NCDs), the board expects that the company would recover from the financial stress caused by the COVID 19 pandemic, within the resolution timeframe," it said.
As per the guidelines issued by the market regulator SEBI, FRL has received the written consent of its all NCD holders to amend the terms and conditions as per the resolution plan approved by the other lenders of the existing debt.
"The board took these consents on record, in the aforementioned board meeting, and approved the restructuring of the NCDs, in line with the resolution plan approved by the other lenders of the existing debt," it said.
Meanwhile, FRL informed that 5.6 per cent US Senior Secured notes 2025 issued by the company and non-convertible debentures issued by the company to certain trusts are not part of the resolution plan.
According to updates, there are total 28 banks, which have lent money to the Kishore Biyani-led group retailing firm and are part of exercise.
The lenders include -Union bank of India, Bank of India, Bank of Baroda, State Bank of India, Indian Bank, Central bank of India, Punjab National Bank, UCO Bank, Axis Bank, IDBI Bank, HDFC Bank, Barclays , Qatar National Bank, RBL Bank , DBS Bank India and Shinhan Bank.
In August last year, the Future group had announced selling its retail and wholesale business in a Rs 24,713 crore deal to Reliance Retail Ventures Ltd (RRVL), the retail arm of billionaire Mukesh Ambani-led Reliance Industries Ltd.
The deal is contested by the e-Commerce major Amazon, which had invested in Future Coupons in August 2019 with an option of buying into the flagship Future Retail after a period of three to 10 years.
Amazon has challenged, the scheme of arrangement entails the consolidation of Future Group's retail and wholesale assets into one entity Future Enterprises Ltd and then transferring it to RRVL, at several forum including arbitration at SIAC and before the Supreme Court of India.
It has already received clearance from CCI, SEBI and bourses, and the scheme of arrangement is now awaiting the nod from NCLT and shareholders.
On October 25, 2020, an interim order was passed in favour of Amazon with a single-judge bench of V K Rajah barring Future Retail from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party.
Reliance Retail has also extended the timeline for the deal to be completed by six months to September 30, 2021.