Banks will now implement the restucturing plan before the end of the week.
“The plan has been approved and we will have to complete the legal and other formalities by April 24 the last date for the restructuring according to RBI norms. April 24 will then be date for implementing the plan,” said one of the two people cited above.
This is the second large restructuring approved by the five member Kamath committee. Late last month it had approved a Rs 10,900 crore restructuring plan for the Shapoorji Pallonji Group.
Kamath committee has been formed by RBI to scrutinise proposals of Rs 1500 crore and above under the one time restructuring plan to provide relief to companies impacted by the Covid 19 pamdemic.
Lenders to Future Retail, the main brand of the Kishore Biyani-led group had approved a restructuring plan under a framework for Covid 19 related stress, the company had said in a late night exchange notification.
Future Retail is the largest debtor in the group with about Rs 10,000 crore of outstanding dues. Together with two other listed companies namely
Future Enterprises which holds its supply chain; and Future Lifestyle Fashions which houses apparel brands like Central and Brand Factory, the total debt of the group stands at about Rs 21,000 crore.
Future Group has promised to pay banks an aggregate of Rs 6,900 crore in two tranches by the end of the fiscal mainly by selling its small format stores. The restructuring will help the group buy time and keep an alternative ready even as it awaits a judicial clearance to complete the sale of its business to Mukesh Ambani’s Reliance Retail, ET had said.
Late last August, Reliance Retail Ventures agreed to buy the retail assets of Future Group on a slump sale basis for about Rs 25,000 crore. However, that deal has still not been completed because US based retail giant Amazon, which owns a 49% stake in Future Coupons Pvt Ltd, a Future Group holding company, objected to the deal and approached the arbitration court in Singapore, which said it should be suspended pending a final decision. Reliance had extended the deadline to complete the Future deal till the end of September earlier this month.
Future Retail’s restructuring plan includes debt raised through the non-convertible debentures (NCDs) issued by the company besides bank loans. However, the 5.6% US dollar bonds issued by the company and NCDs issued to certain trusts are not part of the resolution plan.
A total of 28 lenders led by Bank of India and also including foreign banks are part of the loan restructuring plan, Future Retail said.
The plan for Future Retail includes repayment of short term loans, term loans, NCDs, overdue working capital loans which will converted into term loans) to be extended upto a maximum of 2 years.
Lenders have also agreed on an interest moratorium between March 1, 2020 to September 30, 2021.
As part of the plan lenders have agreed to waive off all penal interest and charges, default premiums, processing fees unpaid since March, 2020 to the date of the implementation of the plan.
Future Enterprises restructuring also involves some non convertible debentures (NCDs) with a pre agreed coupon rate payable by 2025. About 60 to 70% of the debt from Future Enterprises is to be repaid via NCDs which have a two year straight deferement depending on when the NCDs are maturing. For example if some NCDs are maturing in 2023 they will be given time to repay by 2025. Consultancy firm EY is working on the details of the plan.