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Saturday, October 31, 2020

Kishore Biyani’s Future Retail averts default; inches closer to deal with Mukesh Ambani’s Reliance Retail

Future Group is in talks with Reliance Retail to sell its flagship Future Retail to pay mounting debts; companies have supposedly reached an agreement regarding certain terms and conditions, and a deal worth Rs 24,000-27,000 crore could be signed soon.

Future Group is inching closer to a deal with Mukesh Ambani-led Reliance Retail as the Kishore Biyani firm crossed its first major hurdle by repaying Rs 100 crore interest on its $500 million foreign currency bonds on Monday. Future Enterprises, the parent company of Future Retail, also postponed its board meeting to be held on August 22, by a week to August 28. It’s learnt that due to some delay in talks with Reliance Retail last week, the company had to delay the financial results, though efforts are on to discuss the contours of the deal, following which the company will announce the results.

The missed interest payment on foreign currency bonds listed in Singapore would have led to the downgrading of the company to ‘default’, and lenders putting immense pressure on repayment of the pending dues or invoking pledged shares. The mid-cap company made the payment on the last date of the 30-day grace period. It was originally scheduled to make the interest payment on July 22 but missed the deadline, following which it was given 30-days grace period to honour interest payment.

“In furtherance to our letter dated July 22, 2020, wherein we had informed about the grace period of 30 days for making payment of interest on above USD Notes. Today, we are pleased to inform that the company has made the payment of said interest for the half-year ended for an amount of $14 million on above USD Notes,” Future Retail said in a filing to the Bombay Stock Exchange on Monday.

Future Group is in talks with Reliance Retail to sell its flagship Future Retail to pay mounting debts. The companies have supposedly reached an agreement regarding certain terms and conditions, and a deal worth Rs 24,000-27,000 crore could be signed soon. The deal will make RIL the number one player in brick-and-mortar space after getting access to over 1,800 Future Retail stores in India and will lead to Biyani’s exit from the retail business.

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The selling of controlling stake in Future Retail to Mukesh Ambani’s RIL is seen as the biggest setback to Biyani, known as one of the best minds in retail business in India. Future Group has accrued heavy debt over the years. As of September 30, 2019, debt at Future Group’s listed entities rose to Rs 12,778 crore from Rs 10,951 crore as on March 31, 2019. He had the March deadline for repayment of some of these dues. But the Reserve Bank of India’s loan moratorium has provided a breather.

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