Finance

Reliance cancelled its offer to buy Future Retail’s assets

Reliance cancelled its offer to buy Future Retail’s assets

Reliance Industries Limited (RIL) has virtually cancelled its offer to buy Future Retail’s assets, saying it couldn’t proceed with the proposed acquisition because the secured creditors rejected the RIL plan on Saturday.

On Friday, the secured lender rejected the Rs. 24,713 Clore transaction of Future Retail Limited (FRL), which sells its assets to RIL’s subsidiary Reliance Retail Ventures Ltd (RRVL). ”

FRL shareholders, as well as the unsecured creditors, voted in favour of the program, while FRL’s secured creditors voted against the program. With this in mind, the scheme of the relevant arrangements. Cannot be implemented, “RIL said in a regulatory filing. 

According to the stock exchange submission, in the mortgage creditor vote, 69.29% of the votes from 11 lenders opposed the proposal to sell the asset to a RIL subsidiary. However, 30.71 per cent of the votes cast by 34 lenders were in favour of selling the property.

However, we have come to know that 78.22 per cent of FRL’s unsecured creditors voted in favour of the proposal, the company said in a regulatory update. At the shareholders’ meeting, 85.94% of the voters voted in favour of selling the asset to RIL and 14.05% voted against the proposal. 

Future Group owns retail chains such as Big Bazaar, Food Bazaar, FBB, HomeTown, Central and BrandFactory.

 Why didn’t the bank participate in the transaction?

Reliance

 Some major banks did not support the proposal due to the ambiguity surrounding debt collection. “If the top bank opposes the sale to RIL, the transaction can fail. The next option is the IBC route,” he said.

Banks are now expected to seek a settlement plan from the bankruptcy court. The FRL has proposed to transfer more than Rs 12,000  to RIL, but banks are not convinced.

In February, during proceedings and arbitrations in India and Singapore, Reliance began taking over the leases of hundreds of stores once operated by FRL and Future Lifestyle Fashions Ltd.

Banks have already questioned the acquisition of some of RIL’s futures contracts, stating that those who trade company assets should always remember that they are under the burden of lenders.

Amazon’s opposition to the Future Reliance deal

 Amazon, the US online retail giant, opposes trading between FRL and RRVL. Amazon said the meeting was “illegal” last week, and such a move not only violates an agreement signed in 2019 that invested in an FRL promoter company, but also an injunction by the Singapore Arbitration Court to sell retail real estate. He said he violated his trust.

The FRL denied Amazon’s claims and said the meetings were “consistent” with guidelines issued by the NCLT on February 28, 2022, to review and approve Settlement Schemes issued by entities Various submissions are part of the agreement.

In its April 16 regulatory update, the FRL said that “the aforementioned order was issued by the NCLT, after considering all the facts and information submitted by the parties and the specific objections raised by Amazon submission. and an order of 15 February  2022 issued by the Supreme Court on the same subject”.

Why could this be a setback for the Future team?

The Future team has been defaulting on its debt since last year. On April 1, Future Retail said it had not transferred Rs 3,900 crore as equity into the business by the due date of March 31, 2022.

In addition, when considering the capital injection, the company has to pay a total amount of Rs 5,322.32 – as defined in the Single Restructuring Plan (OTR) – to the various consortium banks and lenders before March 31, the company said in a filing exchange.

Reliance

Reliance Industries on Saturday said the deal to buy back assets of Future Group worth Rs 24,713 could not be carried out after secured creditors of  Kishore Biyaniled companies voted against the proposal. 

In a regulatory filing, Reliance said Future Group companies including Future Retail Limited (FRL) and other listed companies involved in the scheme hinted at the outcome of the vote on the upcoming plan. arrangement of shareholders’ creditors at their respective meetings.

  And “… we have also seen that FRL’s secured creditors voted against this plan. Because of this, the arrangement in question is not viable,” said RIL, providing an update on the planned transfer of retail and wholesale businesses as well.

such as Future Group’s warehousing and logistics operations for its subsidiary Reliance Retail Ventures Ltd. (RRVL) and Reliance Retail and Fashion Lifestyle Ltd (RRFLL).

Although FRL shareholders and unsecured creditors voted in favour of the plan, he added. Some of Future Group’s listed entities – Future Retail Ltd, Future Enterprises Ltd (FEL), Future Market Networks Ltd, Future Consumer Ltd, Future Supply Chain Solutions Ltd and Future Lifestyle Fashions Ltd – are in their respective regulatory filings. on Saturday also announced a sample composite arrangement.

with Reliance Group entities cannot currently be done as a result of the vote. “Regarding the announced results, we would like to advise that the plan in question cannot be implemented,” the Future group companies said.

In another development, Future Lifestyle Fashions Ltd Chairman and Independent Director Shailesh Haribhakti resigned, as “Director to find solutions to unpredictable changes in unstable, complex and unpredictable legal and financial conditions.

The meeting’s recommendation was a company, implementation push. Haribhakti was accused by the National Company Law Tribunal (NCLT) and was asked to vote for a transaction of 24,713 rupees with Reliance Retail.

Shareholders and credit of Future Group companies. Chairman of the meeting of the Future Group listed companies this week, shareholders, and secured and unsecured creditors to seek approval for the merger and sale of assets proposed under the agreement with Reliance Retail.

  However, secured creditors of listed companies, primarily including banks and financial institutions, we’re unable to obtain 75% compulsory approval. The meeting will be the promoter of FRL in 2019.

It was opposed by the e-commerce giant Amazon, which bought a 49% stake in Future Coupons Pvt Ltd (FCPL).

Amazon refused to comment on the development but was unable to solicit comments from the Future Group at the time of writing the story.

Since the transaction was announced in August 2020, it has been subject to continuous oversight by law enforcement agencies such as the Supreme Court,  Delhi High Court and NCLT for the past 21 months.

Reliance

It is also subject to procedures at the Singapore International Arbitration Center.  This also forced RIL to extend a long suspension date to close three transactions.

Last month, the program’s long-term outage was extended by another six months until September 30, 2022.

For mergers and acquisitions, a long suspension date is a time frame in which the parties agree that all conditions before the transaction have been met and must be completed.

In February, Reliance Retail took over the operation of at least 350 stores from FRL and provided work to employees after the Kishore Biyaniled Group failed to pay the landlord’s rent.

Amazon has dragged FRLs and promoters into the Singapore International Arbitration Center (SIAC), and in October 2020, the EA (Emergency Arbitrator) awarded Amazon a tentative award in favour of Amazon.

It prevented the FRL from taking steps to sell or interfere with its assets or issue securities to secure the financing of restricted parties. Then a series of legal disputes began in front of the Delhi High Court, the Supreme Court, and NCLT.

The plan between Future Group and Reliance Retail proposes to integrate 19 businesses from the former into one entity (Future Enterprises Ltd (FEL)) and transfer them to RRVL as part of the proposed transaction. ..

However, 99.97 per cent of secured creditors opposed the program, according to a poll updated by FEL on Friday. While 99.99% of shareholders supported the deal, 62.65% of unsecured creditors voted for the program and the remaining 37.34% voted against it. Except for Future Supply Chain Solutions Ltd, all Future listed companies, including Future Retail, Future Lifestyle Fashion Ltd, Future Market Networks and Future Consumer, may receive a 75% secured creditor vote in favour of this scheme. I could not do it.

In the case of Future Consumer and Future Market Networks, 100% of secured creditors voted against this transaction. Future Group flagship FRL said Friday that 69.29% of secured creditors voted against the deal and 30.71% voted in favour. Approximately 85.94% of FRL’s shareholders voted in favour of the deal with Reliance, while 14.06% of shareholders disagreed. In addition, the fate of FRL’s board and management is uncertain as FRL faces bankruptcy filings with NCLT.  Last week, the Bank of India, a public sector lender, filed for bankruptcy at NCLT’s bank in Mumbai and summoned it to declare a moratorium on its assets.

edited and proofread by nikita sharma

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