Future Group Defaults on Rs.3,494 Crore Loan Payment

Future Group Defaults on Rs.3,494 Crore Loan Payment

by 5paisa Research Team Last Updated: Aug 08, 2022 - 06:58 pm 41k Views

Future Retail, part of the Future group, has defaulted on a repayment obligation of Rs.3,494 crore as of 31-December. This payment was due as part of a one-time debt recast offered by banks. Post the default, CARE Ratings has downgraded the debt of Future Retail to Default status. Future group has blamed the dilatory actions of Amazon for this default.

It may be recollected that Future group and Reliance Retail had entered into a Rs.24,713 crore merger deal wherein RRVL would acquire the retail and wholesale franchise of the Future group. However, Amazon had dragged Future group to court since this deal was in contravention of the undertaking given to Amazon while buying a stake in Future Coupons.

Amazon owns 49% in Future Coupons, which gives it an indirect stake in Future Retail. Amazon has held on to its contention that the deal had prevented Future group from entering into a deal with any retail competitor of Amazon. In such cases, the right of first refusal (ROFR) had to be given to Amazon. Future group has denied any such clause.

As a result of this default by Future Retail on 31-December, CARE had immediately downgraded the NCDs issued by Future Retail as well as its long term and short term banking facilities to Default Grade (Care-D). More so, because this was part of the one-time restructuring commitment given to the consortium of banks and lenders.

Future group has justified the default on the grounds that it could not monetize its assets and franchise on time due to the prolonged legal wrangles created by Amazon. However, this may not help the case much as the time and patience of most of the banks may gradually be running out. So, what are the next steps?

Normally, in the event of a borrower defaulting on a one-time restructuring obligation, there is a 30-day review period that is offered effective from the due date to pay lenders. If at the end of 30 days, the Future group is still in default, then banks will have to classify the account as non-performing asset and eventually make provisions up to 25% immediately.

In another development, the deal between Amazon and Future Coupons is already under a cloud and it is expected to be suspended as it has emerged that Amazon got the approvals by misrepresenting facts. But for the banks and for the Future group, time is surely running out fast.

How do you rate this blog?


Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Open Free Demat Account

Resend OTP
Please Enter OTP
Account belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Nifty Outlook for 6 June 2023

After a gap-up opening, the nifty index traded higher throughout the day and settled at 18593.85 levels with a 60 points gain. While, Banknifty inched up by 0.37%, and closed at 44101.65. On the sector front, Nifty Auto & Media has contributed more than 1% gains, followed by the Metal and Commodities indices. While PSUBANK, FMCG & IT dragged slightly for the day.

  • Jun 05, 2023
How to Protect Demat Accounts from Fraud

Introduction In today's digital age, knowing how to protect a demat account from fraud is crucial. An electronic repository for retaining your securities, a demat account is susceptible to many forms of fraud and online threats. However, you can protect your demat account and lessen the risk of fraudulent actions by taking crucial precautions.

  • Jun 04, 2023
How To Make ₹50 Lakh in 5 Years

Introduction A person starts investing with a sizable financial objective, but whether they can create that much money is always questionable. The goal is to become wealthy - a billionaire numerous times over. Making 50 lakhs in 5 years may seem to be an impossible feat, but it is not. Anyone may accomplish important financial objectives with appropriate preparation and dedication.

  • Jun 04, 2023

Start Investing Now!

Open Free Demat Account in 5 mins

Enter Valid Mobile Number