Future Retail secured creditors reject plan to sell assets to Reliance Retail
Secured creditors of two Future Group companies, Future Retail Ltd. and Future Lifestyle Fashions Ltd., have flatly rejected a reorganization plan that would have paved the way for a mega deal with Reliance Retail Ventures Ltd, led by Mukesh Ambani.
At Future Retail, 30.71% of secured creditor votes (by value) were in favor of the proposed scheme approval, while 69.29% voted against, according to the company’s exchange filing.
Unsecured creditors and shareholders of Future Retail, however, approved the scheme.
A proposal requires at least 75% of the votes by value, creditors and shareholders, to be adopted.
According to details provided in the voting summary, secured creditors with debt of Rs 6,860 crore voted against the proposal, while those in favor had outstanding debt worth Rs 3,040 crore.
Among unsecured creditors, those who voted in favor of the proposal had outstanding debt worth Rs 4,117 crore, while those who opposed the scheme had debt worth Rs 1,146 crore rupees.
Even in the case of Future Lifestyle Fashions Ltd., secured creditors representing 82.75% of the debt voted against the deal. Among unsecured creditors, those representing 6.07% of the debt voted against the proposal, while 18% of shareholders rejected it.
BloombergQuint reported on Thursday that three major lenders including State Bank of India, Bank of India and Union Bank of India rejected the sale of Future Group’s retail assets to Reliance Retail Ventures Ltd. And that other lenders would probably have followed suit. .
In September last year, the National Company Law Tribunal allowed Future Retail and other group companies to call meetings of shareholders and creditors to vote on the consolidation of group entities.
The meetings were to seek approval of the scheme of arrangement between 20 Future Group companies, six of which are listed, along with Reliance Retail Ventures Ltd., and Reliance Retail and Fashion Lifestyle Ltd. This would mean that Reliance Retail would buy the retail and logistics business of Future Group for around Rs 25,000 crore, which was first announced in August 2020.
But the deal was delayed due to legal challenges by Amazon.com NV Investment Holdings LLC, an investor in a Future Group entity.
During this period, Future Group’s debt piled up as the viability of its operations came into question. A one-off restructuring program, implemented last year, failed as Future Group companies were unable to meet repayment milestones. The lenders have since decided to classify Future Retail as a non-performing asset.
Meanwhile, in February this year, Reliance Retail took control of 200 Big Bazaar stores after Future Group defaulted on lease renewal payments. In March, Future Retail said it received notices of termination from Reliance for another 835 subleased properties – 342 large-format stores including Big Bazaar, [email protected] Bazaar and 493 small-format stores such as Easy Day and Heritage stores.
Future Lifestyle also received termination notices on 112 subleased properties from Reliance Retail due to pending assessments. This included 34 central stores and 78 Brand Factory outlets.
Indeed, Reliance Retail already controls the bulk of Future Group’s outlets despite the deal which faces certain death.