Lenders to Kishore Biyani-led Future Retail have approved a debt restructuring plan for the company, which will allow it a two-year relief on loan repayments.

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In a note to exchanges, Future Retail said, “The board of directors of the Company, at its meeting held on 17th April, 2021, has approved a resolution plan to restructure the existing secured financial debt from the bankers of the Company, as permitted under a Resolution Framework for COVID 19 related Stress announced by the Reserve Bank of India.”

The resolution plan will now have to be cleared by the Expert Committee led by veteran banker KV Kamath, before it can be implemented. According to the August 6 one-time restructuring circular issued by the RBI, the resolution plan must be implemented within 180 days for corporates. This deadline expires on April 26, 2021- before which the plan would have to be implemented to be successful.

Future Retail said it has received the written consent of 100 percent of the holders of the NCDs to amend the terms and conditions of the NCDs as per the resolution plan approved by the lenders.

Details of the Restructuring Plan

As per the plan approved by the lenders and the board of the company, Repayment of Future Retail’s short term loans, term loans, NCDs, overdue working capital loans (converted into Working Capital Term Loans) will be extended up to a maximum of two years.

Further, the interest due between March 1, 2020 to September 30, 2021 will be converted into Funded Interest Term Loan (FITL), which will only be payable by December 2021.

The company’s cash credit will be continued at a reduced level based on banks’ assessment, it said. All securities created on assets of the company will also continue to operate in favour of the lenders in the ranks assigned originally. Lenders have also agreed to fully waive off All penal interest and charges, default premiums, processing fees unpaid by Future Retail since March, 2020.

Future Retail said that 5.6% US Senior Secured notes 2025 issued by it, and non-convertible debentures issued to certain trusts are not part of the resolution plan.

Future Retail’s Debt

As per a Care Ratings note from October last year, Future Retail had loans of Rs 6,278 crores, including long-term term loans of Rs 528 crores, Long-term fund based bank facilities of Rs 3250 crores, Short-term non-fund based bank facilities of Rs 2500 crores. It also had Non-Convertible Debenture issued outstanding of Rs 299 crores, and a Fixed Deposit Programme of Rs 700 crores.

Its lenders include Union bank of India, Bank of India, Bank of Baroda, State Bank of India, Indian Bank, Central bank of India, Punjab National Bank, UCO Bank, Bajaj Finance Limited, Axis Bank, IDBI Bank, IDFC First Bank, Rabo bank, Yes Bank, IndusInd Bank, HDFC Bank, J&K Bank, Barclays, Kotak Bank, Qatar National Bank, RBL Bank, DBS Bank India, Shinhan Bank, Mannapuram Finance and Punjab & Sind Bank.

Future Retail’s Liquidity Position Impacted due to COVID-19

The company’s liquidity was severely impacted because of COVID-19 and the resultant economic hot. The initial months of lockdown hampered its ability to generate cash flows, and Future Retail has sought additional working capital from lenders last year under the COVID-19 emergency credit line schemes, and also sought restructuring relief under RBI’s August 6 circular.

“Pursuant to the implementation of resolution plan of the Existing Debt (including the NCDs), the Board expects that the Company would recover from the financial stress caused by the COVID 19 pandemic, within the resolution timeframe,” it said in the statement.

Lenders are also expected to finalise the restructuring plans for its other group companies including Future Lifestyle Fashions and Future Enterprises soon.

Future Retail Limited is the flagship company of the Future Group, one of India’s leading retailers, and operates Big Bazaar, Easy Day, Foodhall among other format stores.

In August last year, Future Group had entered into an agreement with Reliance Retail to sell its retail, wholesale, logistics and warehousing business for nearly Rs 25,000 crores. The deal was initially expected to be closed by March 31, but has been delayed due to an ongoing legal battle with Amazon over Future Retail’s stake sale to Reliance Industries. The matter is pending before the Supreme Court and is scheduled to be heard on 27 April. In the meantime, the long-stop date for the deal has been extended by six months.​

(Edited by : Aditi Gautam)

First Published:Apr 18, 2021 12:07 PM IST