The Reserve Bank of India-constituted KV Kamath committee has given its green signal for a banks proposal to restructure loans to Kishor Biyani Group’s Future Retail and Future Enterprises, according to news reports. Sources told the Economic Times that the plan has been approved and the plan will be implemented on 24 April.
Under the new plans, the repayment of loans will be extended up to two years, while the unpaid interest to be converted into a funded interest term loan, according to a report in Moneycontrol.
In its stock exchange filing, Future Retail had said, “The board of directors of the Company, at its meeting held on April 17, 2021, has approved a resolution plan to restructure existing secured financial debt from the company’s bankers as permitted under the Reserve Bank of India’s Resolution Framework for COVID 19 related stress.”
Last week, a consortium of 28 banks had approved a resolution plan for debt restructuring of the Kishore Biyani-led group's flagship firm Future Retail Ltd, under the resolution framework for COVID-19-related stress announced by the Reserve Bank of India (RBI).
The boards of both the companies -- Future Enterprises and Future Supply Chain Solutions -- have approved the lenders' plan to restructure the existing secured financial debt, the firms said in separate regulatory filings.
"The said resolution plan has been in principle agreed by the lenders to the Existing Debt of the Company after assessing the viability of resolution plan," said Future Supply Chain Solutions.
Future Enterprises has 19 lenders, including HDFC Bank, IDBI Bank, Indian Bank, Axis Bank, Canara Bank, Central Bank of India, Indian Overseas Bank, Punjab National Bank, Bank of India, State Bank of India and Bank of Baroda.
The company has not specified the total debt under the restructuring.
However, according to a December 2020 report from Care Ratings, Future Enterprises has a loan of Rs 1,777 crore. This includes long-term term loans of Rs 550 crore, long-term fund-based bank facilities of Rs 625 crore, and short-term non-fund based bank facilities of Rs 602 crore.
Under the scheme, the lenders have approved "repayment of short term loans, term loans, NCDs, overdue working capital loans/CPs (converted into Working Capital Term Loans) to be extended upto a maximum of 2 years." There would an interest moratorium between March 1, 2020 to September 30, 2021 and all penal interest and charges, default premiums, processing fees unpaid between the period is to be waived off fully.
"The resolution plan shall be implemented after execution of necessary agreements, deeds, undertaking and other relevant documents inter-alia between the Company and the lenders which shall be executed on or before April 24, 2021," said Future Enterprises Ltd.
On the reason for restructuring debt, Future Enterprises said COVID-19 has deeply impacted the long-term business viability and led to significant financial stress across industries.
"The debt burden has become disproportionate relative to the cash flow generated by the Company since pandemic surfaced and consequent lockdowns, posing significant financial stability risks to the business. Hence, restructuring of debt was very much crucial and essential," it said.
Future Enterprises Ltd operates retail stores. Future Supply Chain Solutions Ltd is the group's logistics company. It provides warehousing, distribution and other logistics solutions.