Debt
Debt

Lenders to two more Future group firms -- Future Enterprises and Future Supply Chain Solutions -- have approved a resolution plan to restructure the existing secured financial debt of the companies, as per regulatory filings.

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 said its restructuring plan would be subject to approval from the Expert Committee formed by RBI under the chairmanship of K V Kamath.

"The said resolution plan, which remains subject to the approval of the Expert Committee (under the chairmanship of the Mr K V Kamath) constituted by the RBI, has been approved by the lenders to the Existing Debt," it said.

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. In August last year, Future Group had announced selling its retail, wholesale business, logistics and warehousing assets 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 was contested by 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 3 - 10 years.

Amazon has challenged the deal at several fora, including the Singapore International Arbitration Centre (SIAC) and the Supreme Court of India.

The deal has already received clearance from CCI, SEBI and bourses, and the scheme of arrangement is now awaiting 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.

The Supreme Court had on Monday stayed the ongoing proceedings before the Delhi High Court in the case related to the amalgamation of Future Retail Ltd (FRL) with Reliance Retail.

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