spot_img
spot_img
Wednesday, September 28, 2022
spot_img
spot_img

Latest Posts

$3.2 billion retail deal dropped due to a creditor revolt

spot_img
spot_img
- Advertisement -

What would have been India’s biggest retail deal sale came to a standstill because of a disputed plan to fully repay offshore bondholders.

According to persons familiar with the situation, Debt-laden Future Retail Ltd.’s offshore bondholders — a very minor fraction of the creditor pool — were offered 100 percent payment in the rescue package from billionaire Mukesh Ambani. 

Retail

According to the people, Indian lenders were requested to accept a 66 percent haircut. They begged not to be identified since they were revealing secret information.

Last week, the action was precipitated by the local banks’ rejection of Ambani’s conglomerate’s $3.2 billion offer.  

Struggled to close the retail deal due to legal hurdles from Amazon.com Inc.

Reliance Industries Ltd. revealed the purchase proposal in August 2020, but it struggled to close the retail deal due to legal hurdles from Amazon.com Inc., which claimed it had contractually the first right of refusal.

Retail

The principal bankers to Future Retail, Bank of India, and State Bank of India did not immediately respond to emails seeking comment on why the retail deal was rejected. 

Moreover, Future Group and Reliance representatives did not immediately respond to requests for comment.

If state-run lenders accepted these discriminatory terms, they risked being investigated by federal agencies, they claimed, explaining their preference now for a court-mediated insolvency process in which bids are solicited and there is no possibility of their being accused of making a poor deal. 

The Bank of India has already requested that the procedure be started by an Indian court.

The tough decision by Indian banks has pushed Future Retail, which was one of the country’s major retail grocery chains before the outbreak, one step closer to bankruptcy. 

It has also taken the wind out of a two-year-old legal battle between Reliance and Jeff Bezos’s Amazon — the e-tailer had filed arbitration proceedings in Singapore to block the deal — but it has left the door open for Ambani to snag these retail assets under the bankruptcy process, possibly at a lower price.

While local lenders were initially supportive of the agreement when it was first announced, a lot has changed in the last year or so, according to the sources. 

Retail

The asset value plummeted as the Amazon case dragged on, and the pandemic exacerbated the liquidity pressure at Future Retail, which began defaulting on its debt repayments.

According to the people, secured Indian lenders were guaranteed recovery ranging from 34% to 88 percent of the total $4 billion in dues, with payouts phased over seven years.

Also Read: GANGUBAI KATHIAWADI RELEASED ON NETFLIX

spot_img
spot_img

Latest Posts

spot_imgspot_img

Don't Miss