Winning Bizness Desk
Mumbai. Lenders of Future Retail Limited (FRL) has rejected the proposed deal with Reliance Retail worth Rs 24,713 crore. In a regulatory filing, FRL said on Friday that 69% of the lenders voted against the deal, while only 30% have voted in favor of the company's plan to sell its assets to Reliance. Voting is a mandatory process of the National Company Law Tribunal (NCLT) for the approval of shareholders and creditors.
Debt of Rs 17,000 crore from a consortium of 29 lenders
Lenders of Future Retail include Union Bank of India, Bank of India, Bank of Baroda, State Bank of India, Indian Bank, Central Bank, Axis Bank and IDBI Bank. At present, FRL has a debt of Rs 17,000 crore from a consortium of 29 lenders. The overall debt of this group is around Rs 30,000 crore. In such a situation, experts believe that the bankruptcies of Future Group are certain due to the suspension of Reliance's transactions by the creditors.
Reliance controls 835 stores
In February, Reliance took control of 835 stores of Future Group due to persistent rent hikes. The Future Group currently has about 620 stores left. Now lenders and other creditors will have to fight in bankruptcy court for the remaining assets of Future Group to recover over Rs 17,000 crore. A total of 620 stores include 30 hypermarkets and 350 small format outlets in Big Bazaar.
What is the controversy over this deal?
In the year 2019, Amazon bought 49% stake in Future Coupons (the holding company of Future Group) for Rs 1500 crore. Under this deal, Amazon also got the right to buy a stake in Future Retail within 3 to 10 years. But in 2020, Future Group announced the sale of its retail, wholesale and logistics business to Reliance Retail for Rs 24,713 crore. Since then this controversy started.
Amazon had turned to SIAC
Amazon had approached the Singapore International Arbitration Center (SIAC) objecting to the Future-Reliance deal. Amazon had said that the deal between Reliance and Future Retail is against the deal between it and Future Coupons. After this, the matter is going on from the High Court to the Supreme Court and the National Company Law Tribunal (NCLT).
CCI suspends Amazon-Future coupon deal
Recently, the Competition Commission of India (CCI) suspended this deal with Amazon's Future Coupons. The Competition Commission had also imposed a fine of Rs 202 crore on Amazon for hiding information during the deal. The CCI had said in the order, "Amazon concealed its true purpose of the deal and made false and false statements to the agreement, therefore the deal will have to be looked at afresh."