Future Group creditors are exploring options to recover more than $ 2.5 billion in loans. Amid concerns that the Indian retailer’s plan to sell the property to Reliance Industries has failed, four bankers reported the matter.
The future may face liquidation if the deal, already in legal dispute, falls and banks are actively discussing a one-time restructuring option that includes an easy repayment tenure and fresh capital infusion It is said that people are private on the condition of anonymity as a conversation.
“Without Reliance, there is no future for Future,” said a major state-owned lender.
Sources said the bankers discussed a restructuring plan last week and are preparing a roadmap.
Top financial creditors of the future include India’s largest lender State Bank of India as well as smaller rivals Bank of Baroda and Bank of India.
Three banks, Future Group and Reliance, did not immediately respond to requests for comment.
In the future, India’s No. 2 retailer with more than 1,700 stores is in the grip of the epidemic and has agreed to sell most of its retail assets to Mukesh Ambani-led Reliance in a $ 3.4 billion deal.
However, the transaction has led to legal hurdles with e-commerce giant Amazon.com, alleging that Future, by agreeing to sell assets to Reliance, was in breach of the terms of a deal, which The American firm had struck with the Future Group unit.
The future denies any wrongdoing.
The deal was temporarily stayed by a New Delhi court, but the order was later rescinded. Amazon has now taken the matter to the Supreme Court.
In related news, a tribunal has blocked the Securities and Exchange Board of India (Sebi) order that Future Group chief executive Kishore Biyani withheld for a year from securities markets, insider trading allegations in 2017 But, a group company said on Tuesday. .
The Future-Reliance deal will help creditors recover up to 80 percent of their dues, four bankers estimate.
The troubled retailer’s more than $ 2.5 billion in debt includes loans from banks and money to operational creditors.
Sources said that the future, which took advantage of the moratorium in the midst of the epidemic last year, has defaulted after repayment.
He said the defaults, along with the legal battle, are now forcing banks to seriously explore the one-time restructuring plan under the inter-creditor agreement signed last year.
Another banker said, “Even though the restructuring plan was discussed in our 3-4 meetings, we didn’t give it much thought, as it was always the B plan. Now we have to take it seriously.” said.
Although the restructuring plan is still being strengthened, it could include providing easy repayment options to Future, including postponement for some quarters, bankers said.
Two bankers said that banks can convert debt into equity.
While this plan is being discussed, the future will need to bring “large” amounts of capital to the table and lenders will be required to pump in new funds.
“Looking at a very bleak scenario because there is no future cash flow,” said the first banker, adding lenders are wary about putting more money into the retailer.
(Except for the headline, this story has not been edited by NB staff and published from a syndicated feed.)