Relief of 2 years May be Granted to Future Retail Ltd. on Repayment of Loans
There is a ray of hope for lenders to Future Retail Ltd. (FRL) of having a recast plan by the end of April 2021. The company has circulated the final draft among lenders for approval. The plan will entail a two-year moratorium on repayment without any changes in the prevailing interest rate.
According to a statement of a banker, "There were some disagreements over working capital limits under the restructuring deal, but those have been sorted now. We have circulated a final copy of the one-time recast proposal and hope to close it soon."
Another banker also stated that the plan is in the final stages of approval and hoping that it shall be approved by end of April.
The recast will be done under the Reserve Bank of India's (RBI) special window for pandemic-hit borrowers. The company is trying to use its assets and repay the loan to the lenders on a priority basis.
It is also stated by one of the sources that "Reliance Industries Ltd (RIL) is not only helping Future with its operations but has also extended the timeline for the deal, as it knows the strength of Future's assets."
Future Retail owes banks Rs. 6,278 crore, showed data from Care Ratings. On an aggregate basis, Future group owes $3 billion in loans, and lenders are trying to figure out a way to ensure the least possible hit on asset quality.
It also owes mutual funds that had invested in securities sold by group entities, including Rivaaz Trade Ventures, NuFuture Digital India, and Future Ideas Co. For Indian banks with bad loans of ₹7.38 trillion, a soured asset of that size will only make matters worse.
Reliance Retail Ventures – a subsidiary of Reliance Industries extended the long-stop date for completion of its ₹24,713 crore deals with Kishore Biyani's Future Group as the latter is engaged in a legal battle with Amazon.
Reliance Retail Ventures had entered into an arrangement to buy Future Group's retail assets on a slump sale basis. Amazon and the Future group have been engaged in a legal battle, over the latter's stake sale to Reliance Industries.
The said matter is still pending before the Apex Court and the next date of hearing of this matter is on 27 April 2021.