May 25, 2022 21:51 (IST)
Follow us:
facebook-white sharing button
twitter-white sharing button
instagram-white sharing button
youtube-white sharing button
Minor girl gang-raped in Assam’s Kokrajhar, three arrested | Andhra Pradesh Minister's house set ablaze after district renamed | PM Modi meets Japan counterpart Fumio Kishida in Tokyo, pitches investment opportunities in India | BJP top leaders meet to discuss Rajya Sabha nominations, July's Presidential poll | India, US sign investment incentive agreement in Tokyo
Future Retail accuses Amazon of blocking its OTR scheme, asks US etailer to pay the lenders Future Retail | Amazon

Future Retail accuses Amazon of blocking its OTR scheme, asks US etailer to pay the lenders

India Blooms News Service | @indiablooms | 23 Jan 2022, 01:25 am

Amazon's January 19 letter opposing the sale of small-format stores by Future Retail Limited (FRL) has elicited a terse response from the latter's independent directors, who asked the e-commerce giant to pay Rs 3,500 crore to FRL so that it can repay its lenders, media reports said.

According to a Money Control report, responding to FRL’s plans to sell its small-format stores comprising the 'Easyday' and 'Heritage Fresh' brands, the US-based company had in its recent letter to FRL said: “Amazon reiterates that FRL is bound by valid and subsisting injunctions issued by the Arbitral Tribunal, and enforced by Indian Courts. Amongst others, FRL is prohibited from directly or indirectly taking any steps to transfer/dispose/alienate/encumber FRL's Retail Assets without Amazon's consent.”

Reacting to Amazo's warning, the independent directors of FRL pointed out that Future Retail needs urgent cash infusion to pay back Rs 3,500 crore to its lenders by January 29, 2022, failing which it will be classified as an NPA.

"Since you are objecting to the sale of small-format sales, the proceeds of which were to be used to repay lenders and thereby avoid NPA classification, please confirm that you are willing to fund this amount by Monday (January 24) through an unsecured, long-term loan, subordinated to FRL’s existing lenders or any other mutually suitable and legally acceptable structure.  If you do so, FRL will use such funds in order to repay FRL’s existing lenders. Alternatively, you are also free to engage with the Lenders, so that we do not fall foul of our OTR process or obligations,” they added, the report stated.

The plan to gather funds has the support of the lenders of FRL and it is only on account of the Scheme that FRL has been able to enter into a one-time restructuring (OTR) with its lenders and restructure its debt.

This OTR has been entered into under the aegis of RBI Circulars, and pursuant to this OTR, FRL is required to sell its small-store format business (i.e. the business under the brands 'Easyday' and 'Heritage Fresh'), by December 31, 2021, and use the proceeds to repay lenders, the report stated.

Alleging that Amazon was trying to thwart the sales, they said: “While a 30-day grace period has been provided which expires on January 29, 2022, it is unfortunate that you are again attempting to stop such a sale and prevent the lenders from realising their dues. Your actions have resulted in driving FRL to the ground at enormous cost to the entire ecosystem of its creditors, lenders, vendors, employees and shareholders."

Further, they spoke about  Amazon's reference to a potential transaction between Samara Capital and FRL.

“In this regard, you are requested to confirm if Amazon can act on behalf of Samara Capital and has the authority to negotiate and finalise such transaction on its behalf,” they said.

FRL added: “Please also confirm the structure for the proposed transaction, and that the manager of Samara Capital is owned and controlled by resident Indians.  As you know, FRL is in the multi-brand retail sector, and FDI in this sector is restricted.  You are also aware that Amazon’s transaction in Future Coupons, has resulted in regulatory scrutiny, including by the Competition Commission of India, as well as enquiries by the Enforcement Directorate. It is therefore critical that any investment being proposed is in compliance with all applicable laws, including FDI laws, CCI regulations and SEBI regulations, and that any such transaction should not raise further regulatory scrutiny.”

Related Images
FOHMA addresses press conference 01 Jan 1970, 05:30 am
Related Videos
PM Modi on Union Budget 2022-2023 01 Feb 2022, 06:28 pm
IBNS Live Business Chat 30 Dec 2021, 05:53 pm