Future lifestyle can have a lifeline

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Future Lifestyle Fashions Ltd lenders have drafted a debt settlement plan that gives the company that operates the Central and Brand Factory branches a two-year repayment moratorium but no interest rate concessions, according to two bankers who know the plan.

Future Group owes roughly $ 3 billion in loans that bankers fear could turn sour if the lawsuit with Amazon.com Inc. isn’t quickly resolved. Future Lifestyle alone owes its creditors £1,714 crore, including money borrowed from the sale of non-convertible notes (NCDs), according to CARE ratings.

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Future Lifestyle alone owes its creditors £1,714 crore, including money borrowed through the issuance of non-convertible notes as per CARE ratings

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With the Future Group’s £24,713 crore deal with Reliance Industries Ltd, stalled again by a recent court order in Delhi. Bankers prepare loan revision proposals for Future Group companies including Future Lifestyle and Future Retail Ltd (FRL). As Mint previously reported, this is a backup plan that will be implemented if the contract with Reliance Retail collapses.

The total debt in the context of this revision is £2,007 crore, including NCDs from £125 crore, said the bankers on condition of anonymity. They said the plan received an RP4 rating from rating companies, the minimum level required to qualify for a recast plan under the Reserve Bank of India Circular of Aug. 6.

“The remaining term of the term loan will be extended by 24 months, with repayments beginning in the December quarter (Q3) of fiscal 23,” said one of the bankers named above. The plan was approved by the Committee of Lenders for the Future Lifestyle.

A dispute over Future Group assets between two of the richest men in the world – Mukesh Ambani of Reliance and Jeff Bezos of Amazon – has got lenders in trouble to ensure they can get loans back to Future Group. Bankers have signed agreements between creditors, a precursor to debt recast, to ensure all lenders are on the same page and to avoid delays in approval. Last year, banks took advantage of the debt revision after RBI clarified that lenders could do so without a resolution plan. The banks now have until the end of June to implement the resolution plan.

“The company (Future Lifestyle) has non-convertible notes from £Subscribed to 350 crore by three institutions. Of this, £125 crore, drawn from a private bank, is under the resolution plan, while the rest are not, “said the second banker. He added that the lenders are still in talks with Kotak Mutual Fund to bring that up £100 crore NCDs held by the Kotak Credit Risk Fund under this repayment delay.

Emails to the State Bank of India (SBI), the Future Group and the Kotak Mutual Fund went unanswered.

On March 18, following an Amazon appeal against the FRL’s Future Group, a single judge’s bench at the Delhi Supreme Court ordered the FRL to stop selling its assets to Reliance, finding that the FRL was “deliberately against the Singapore International Arbitration Center has violated emergency order “in relation to the deal. Future Group has decided to appeal the order of the Delhi Supreme Court.

According to analysts, given the current circumstances, it may take longer for the Reliance future deal to materialize. If an unfavorable judgment is made, there is a risk that Future’s assets will go to competition and Reliance Retail will lose a potential uptrend in its huge retail business and Future Group’s network and supply chain capabilities.

“If the deal does not go through, the creditors can lead the company to the Bankruptcy and Bankruptcy Code (IBC) and there may be other applicants for the company there,” said Arvind Singhal, chairman and general manager of Technopak Advisors, India.

Reliance Retail is the largest retailer in India with a network of 12,200 retail stores.

“It (Future Group) is good business. So I don’t think the deal will be closed. It could change hands and financial creditors, and suppliers could certainly get a hit, “Singhal said.

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