Future Group creditors scramble to recover $2.5 bln loans amid Reliance deal woes: Bankers
Future could face liquidation if the deal, already mired in authorized wrangling, falls by and banks are actively discussing an alternate one-time restructuring possibility that might embrace a better reimbursement tenure and recent capital infusion, the individuals mentioned on situation of anonymity because the talks are personal.
“Without Reliance, there is no future for Future,” one of many bankers at a serious state-owned lender mentioned.
Bankers have mentioned a restructuring plan up to now week and are drawing up a blueprint, the sources mentioned.
Future’s prime monetary creditors embrace India’s largest lender State Bank of India, together with smaller rivals Bank of Baroda and Bank of India.
“Without Reliance, there is no future for Future”
The three banks, Future Group and Reliance didn’t instantly reply to requests for remark.
Future, India’s No.2 retailer with greater than 1,700 shops, has been hit laborious by the pandemic and agreed to promote most of its retail property to Mukesh Ambani-led Reliance in a $3.4 billion deal.
The transaction, nevertheless, has confronted authorized hurdles with e-commerce large Amazon.com alleging that Future, by agreeing to promote property to Reliance, was violating phrases of a deal the U.S. agency had struck with a Future Group entity.
Future denies any wrongdoing.
The deal was quickly blocked by a New Delhi court docket however subsequently the order was struck down. Amazon has now taken the matter to India’s Supreme Court.
The Future-Reliance deal will assist creditors recover up to 80% of their dues, the 4 bankers estimate.
The troubled retailer’s over $2.5 billion debt consists of loans from banks and cash owed to operational creditors.
‘BLEAK SCENARIO’
Future, which final yr availed a loan moratorium amid the pandemic, has since defaulted on repayments, the sources mentioned.
The defaults, coupled with the authorized battle, at the moment are forcing banks to severely discover a one-time restructuring plan below an inter-creditor settlement signed final yr, they added.
“Even though the restructuring plan was discussed in the 3-4 meetings we had, we hadn’t given it much thought because it was always plan B. Now with the Reliance deal stuck, we need to take it seriously,” a second banker mentioned.
Although the restructuring plan continues to be being firmed up, it could embrace offering simpler reimbursement choices to Future, together with a moratorium for a number of quarters, the bankers mentioned.
“Restructuring plan was always plan B. Now with the Reliance deal stuck, we need to take it seriously”
Banks may additionally take a look at conversion of debt to fairness, two of the bankers mentioned.
The plan being mentioned, nevertheless, would wish Future to convey a “sizeable” quantity of capital to the desk and wish lenders to pump in recent funds, the 2 bankers added.
“One’s looking at a very bleak scenario because there’s no cash flow happening at Future,” the primary banker mentioned, including lenders are cautious about placing in more cash into the retailer.
