Kishore Biyani-led Future Retail will be facing a crucial test on Monday. The company has to repay its coupon holders $14 million or almost Rs 105 crore in interest due for its $500 million senior secured notes. If it fails to honour its dues, the retail company would be in default and may face downgrades from rating agencies.

The retail giant has found itself in troubled waters since the nationwide lockdown started hurting its businesses, worsening its already strained financial position.

Future Group had a consolidated debt of Rs 12,778 crore as of September 2019, as per the company’s public records. Its flagship company Future Retail had a gross debt of Rs 2,657 crore as of March 2019.

“Whatever each bank in the consortium could do individually, we have all done. Now we have to see if they have enough to repay,” said a senior executive from a bank with a large exposure to Future Group. “They (Future Group) have taken whatever loans were available under the COVID-19 Emergency Credit Line from a few public sector banks,” this person added.

As per the company’s exchange release, it was originally due to make the interest payment on its 5.60 percent 2025 dollar notes on July 22 which it missed. “Due to the nationwide lockdown imposed to restrict the spread of COVID-19 pandemic, and consequently restricted business operations of the Company, the liquidity position has been affected causing us to miss the service of the payment of interest due on the USO Notes (listed on Singapore Stock Exchange) on 22nd July, 2020. The terms of issuance of the USO Notes provide for an additional period of 30 days for payment of interest from the due date, in case the same could not have been paid on the original due date,” its notice read.

Future Retail's 30-day grace period to make the payment of interest has now ended.

Another senior executive from a bank with exposure to Future Group said that under RBI’s August 6 Resolution Framework for COVID-19-related stress, its loans can be restructured and the repayment schedule can be extended by up to two years. “Restructuring option is on the table, they are eligible as per RBI circular. Let us see if they are able to monetise their assets and make do, else this is another option,” this person said on the condition of anonymity.

When contacted, Future Retail said it did not wish to comment on the story.

First Published:Aug 24, 2020 6:52 AM IST