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Saturday, November 28, 2020

Amazon contentions ‘misconceived’, RRVL deal in best interests of stakeholders: Future

Future Retail, in an update to the BSE and NSE, said the bourses should not take cognisance of either Amazon’s letter or the emergency arbitrator’s order as Future Retail had complied with all the requirements of obtaining approvals from Future Coupons, the promoter group entity.

By: ENS Economic Bureau | New Delhi | Updated: November 2, 2020 11:26:32 am
Future Retail group is led by Kishore Biyani

Kishore Biyani’s Future Retail Limited (FRL) on Sunday shot back at global e-commerce giant Amazon’s letter to Securities and Exchange Board of India (Sebi), the BSE and the National Stock Exchange (NSE), saying that the contentions raised by Amazon were “entire misconceived”.

“In its letter, Amazon has painted a picture that public shareholders of FRL are being misled. It is a bit rich for such an argument to be made from someone who is not even a shareholder in FRL. Evidently, Amazon’s letter is motivated by other considerations,” FRL said in its update to the BSE and NSE.

On August 29, Future Retail had announced that it would “sell by way of a slump sale the retail and wholesale business” of its supermarket chain Big Bazaar, premium food supply unit Foodhall, and fashion and clothes supermart Brand Factory’s retail and wholesale units, to Reliance Retail Ventures (RRVL).

The deal had run afoul of Amazon, that had bought a 49 per cent stake in Future Coupons, which translates to roughly 3.58 per cent in Future Retail.

In its update to BSE and NSE, Future Retail said that Amazon had treated two separate agreements as “a single integrated transaction by which the latter had obtained interest in and rights against the former.

Future said that BSE and NSE should not take cognisance of either Amazon’s letter or the emergency arbitrator’s order as Future Retail had complied with all the requirements of obtaining approvals from Future Coupons, the promoter group entity. Future Retail has also reiterated that as it was undergoing serious financial difficulties, especially due to the Covid-19 pandemic, the proposed deal with RRVL was the only way it could come of the situation.

“(The) scheme is in the best interest of all stakeholders, that includes shareholders, financial institutions, vendors and suppliers, and more importantly employees … any delay in the implementation of scheme will cause irreparable losses to all stakeholders,” Future retail said in its statement to the exchanges.

The FRL update to the bourses also mentions that Amazon had sought Rs 1,431 crore plus interest as damages from the former, which is equal to the amount Amazon had invested in Future Coupons in 2019. “It may be noted that even if such claim is approved by the arbitration or at any other judicial forum, the same would be payable by promoters and there would not be any financial impact on the company,” FRL said.

On October 31, The Indian Express reported that Future Group had kept aside up to Rs 1,000 crore in an escrow account in order to deal with all present and future liabilities in its arbitration tussle with Amazon. The amount in the escrow account, which could later be raised to Rs 1,500 crore, is equal to the total investment made by Amazon in Future Coupons, the promoter group entity of Future Retail.

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