Future group to convene meeting of stakeholders on 20th April

The slew of listed companies of the Kishore Biyani-led Future group have intimated the stock exchanges that meetings of their respective shareholders and creditors had been convened on April 20 and April 21. The idea was to get the approval for the Rs.24,713 crore deal with Reliance Retail, wherein all the retail and consumer facing businesses of Future group would be subsumed into Reliance Retail Ventures Ltd.

Future group has a large number of listed entities on the stock exchanges including Future Enterprises Ltd, Future Retail Ltd, Future Consumer Ltd and Future Supply Chain and Future Market Networks Ltd.

The company also announced that it had announced the meeting and the modus operandi of seeking the approval of its shareholders and its creditors, including the banks and financial institutions. This pertains to the Rs.24,713 crore merger deal.

As per the order passed by the Mumbai bench of the NCLT on  28th February, the meeting of the shareholders will be first held on 20th April. Once the approval of shareholders to the merger deal is sought, the company will also seek the approval of creditors on April 21, 2022.

Banks are owed large sums of over Rs.10,000 crore by the Future group and they are yet to classify them as non-performing assets (NPAs) as it will entail provisions to be made.
 

The modus operandi agreed upon in August 2020 is as under. First and foremost, a total of 19 companies of the Future Group that operate in retail, wholesale, logistics and warehousing assets will first be consolidated under the banner of Future Enterprises Ltd (FEL).

Subsequently, the entire combined business so acquired will be transferred to large investors, private equity funds and strategic partners; which BRLMs are working on.

It may be recollected that since October 2020, the Reliance – Future group proposed merger had been embroiled in a legal battle. Amazon, which already owns a stake in Future coupons, is of the considered view that they should have been given the first right of refusal.

That is because the agreement between the Future group and Amazon clearly bars Future group from selling the entity to any competitor, including Reliance Retail Ventures.

Amazon had approached the competent authority for such disputes, the Singapore International Arbitration Centre (SIAC), which had ruled in favour of Amazon stating that they were entitled to block the transaction between Reliance Retail and Future group for going against their agreements.

Check - Amazon Future group stand-off
 

Since then, the deal has been in a state of suspended animation with most of the subsequent judgments firing in both directions.

The pitch got queered after Reliance Retail Ventures, in late February, took over the operations of at least 300 stores of Future Retail.

Reliance had not only stocked Future group stores via Reliance JioMart, but had also taken the various stores on lease from the various property owners and had sub-let the stores to the Future group. Now that Future group has defaulted on inventories and lease rentals, Reliance is taking over the stores.

Future Retail has said that it was committed to reversal of takeover of its stores by Reliance Retail, but obviously, nobody in the markets is taking these statement seriously.

RRVL has given the Future group a very long rope and Future group made little effort to improve its situation. That left Reliance with no choice but to take over the stores.

As the shareholders and creditors meet, the status of bank loans is yet not clear. That will actually determine where Reliance stands vis-à-vis the entire case.