Retail of the future – Ultra News
Future Retail Ltd, the heavily indebted general retailer caught in a fight between US retailer Amazon and its Indian rival Reliance Retail, said a request made by its independent directors asking for a loan of Rs 3,500 cr was preliminary in nature.
“Communication between Amazon and the Independent Directors was very preliminary in nature with no intention on Amazon’s part to assist/support the business in any way,” Future Retail said in a clarification today.
The clarification came after stock exchanges asked the company why it had not informed its shareholders of such a development.
In response, Future Retail said the move did not pass the materiality threshold, given that the proposal was at a very preliminary stage.
The Economic Times newspaper had on January 22 reported that the independent trustees of Future Retail had urged Amazon to provide a loan of Rs 3,500 cr to Future Retail so that it could avoid defaulting on its loans.
In the letter, the administrators pointed out that the company plans to sell its small format stores – such as Easy Day and Heritage – in order to raise funds to make payments to its lenders.
“The FRL will use these funds [obtained via the Amazon loan] to repay existing FRL lenders. Alternatively, you are also free to engage with lenders, so that we do not violate our process or our OTR (one-time restructuring) obligations,” the administrators wrote to Amazon, according to the report.
The letter reportedly said Future Retail must make payments of Rs 3,500 cr by January 29 (tomorrow) to avoid its debt being classified as non-performing assets.
The latest clarification did not reveal what the status of the fundraising effort was.
It’s unclear how Amazon responded to the offer, but given that Future Retail said the move didn’t result in any material development, it’s unlikely Amazon offered the amount as a loan.
Future Retail is embroiled in a legal battle, after Amazon alleged its promoters’ decision to sell the business to Reliance Retail violated an agreement they made with Amazon.
The case is being heard by an arbitration panel in Singapore.