Lenders to Kishore Biyani's Future Group will withdraw the just-approved debt recast plan that grants more manageable repayment options if the distressed retailer's Rs 24,713 crore asset sale to Reliance Industries Ltd (RIL) goes through in a fair time frame, sources stated.
Lenders of Future Retail last week agreed to stretch repayment of loans by up to two years while converting unpaid interest into a funded interest term loan. The penal charges too will be suspended under the recast plan.
The recast plan has been approved by an RBI-constituted expert committee supervised by K V Kamath.
Banking sources said the debt recast is actually 'Plan B' to sustain the nation's largest retailer stay sailing. The recast will thrust in only if the deal to sell Future’s retail, wholesales, warehousing and logistics assets to Reliance Retail Ventures Ltd (RRVL) appears not to go through.
If the Reliance deal goes through, the recast plan will be eliminated.
Lenders, they said, are still banking on 'Plan A' which is asset sale to RIL.
So far, the consortium of lenders has allowed the debt restructuring of Future Retail Ltd (FRL), Future Enterprises ltd (FEL) and Future Supply Chain Solutions Ltd. The restructuring plans of FEL and FRL have obtained approval from the RBI-constituted expert panel, sources said.
The Rs 24,713 crore deal between RIL and Future Group was declared in August last year but it is getting lingered as e-Commerce major Amazon is contesting it at several forums, including intervention at SIAC and before the Supreme Court, which on Monday tarried the ongoing proceedings before the Delhi High Court.
RRVL has also prolonged the timeline for the deal to be accomplished by six months to September 30, 2021, after citing delay.
According to industry sources, debt resolution plans for two more Kishore Biyani-led Future Group companies -- Future Consumers and Future Lifestyle -- are also assumed to be cleared by the consortium of lenders.
The Expert Committee under the chairmanship of veteran banker K V Kamath has passed the debt resolution plans of FEL and FRL as sanctioned under the Reserve Bank of India''s resolution Structure for COVID 19-related stress, said the source.
The RBI has set up a five-member expert committee under Kamath to suggest financial parameters for resolution of coronavirus-related stressed assets and all debt having aggregate exposure of Rs 1,500 crore or above have to be verified by it.
The moneylenders and the board of both Future Group companies have already passed the particular restructuring plans. Now the companies and the lenders would have to perform other formalities and submit it finally before the RBI, the source appended.
Earlier this week, bestowers of Future Supply Chain Solutions Ltd also signed the debt restructuring plan of the company, but as its total debt was below Rs 1,500 crore, it does not need consent from the Kamath panel.
Future Supply Chain Solutions Ltd is the group's logistics company. It produces warehousing, distribution and other logistics solutions.
A reply from Future Group concerning the development could not be determined by the time of filing the story.
FRL, which operates retail chain stores under several formats including Big Bazaar, fbb, HyperCity etc, has a consortium of 28 lenders and FEL has 19 lenders.
Though both the companies have not stipulated their total debt under the restructuring in their administrative filing according to reports from Care Ratings, FRL has a loan of Rs 6,278 crore as of October 2020, and FEL has a loan of Rs 1,777 crore as of December 2020.
FEL's loan comprises long-term term loans of Rs 528 crore, long-term fund-based bank facilities of Rs 3,250 crore, and short-term non-fund based bank facilities of Rs 2,500 crore.
While FRL debt covers long-term term loans of Rs 528 crore, long-term fund-based bank facilities of Rs 3,250 crore, and short-term non-fund based bank facilities of Rs 2,500 crore.
The restructure would cover FRL's working capital demand loans, term loans, cash credit, short term loans, Non-Convertible Debentures (NCDs), purchase bill discounting limits, other working capital loans and unpaid interest, which became tardy, it added.
The Supreme Court on Monday sojourned the ongoing proceedings before the Delhi High Court in the case associated with the amalgamation of FRL with Reliance Retail.