Future Retail (FRL) meet: Some banks not in favour of Reliance Industries (RIL) deal

FRL is yet to officially declare the meeting’s outcome. “If top banks are opposing the sale to RIL, the deal is likely to fall through. The next option is to take the IBC route,” said a banking source.

By: ENS Economic Bureau

New Delhi | Updated: April 22, 2022 10:04 AM IST

2 min read

While FRL has proposed that over Rs 12,000-crore debt will be transferred to RIL, banks are not convinced about it. (Express archive photo)

Future Retail (FRL) and many other group entities completed meetings of their respective shareholders and creditors Thursday to consider and approve the Rs 24,713-crore deal to sell their assets to Reliance Industries (RIL) arm Reliance Retail Ventures Ltd, amid indications that some banks are unlikely to support the deal.

Sources said some leading banks are not in favour of the proposal saying there’s ambiguity on debt recovery. FRL is yet to officially declare the meeting’s outcome. “If top banks are opposing the sale to RIL, the deal is likely to fall through. The next option is to take the IBC route,” said a banking source.

While FRL has proposed that over Rs 12,000-crore debt will be transferred to RIL, banks are not convinced about it. In February, Reliance began taking over the rental leases of hundreds of stores once run by FRL and Future Lifestyle Fashions Ltd, amid lawsuits and arbitration across India and Singapore. Banks have already questioned the RIL takeover of some of the Future stores.

Amazon, which has opposed FRL’s deal with Reliance Retail, last week said the meetings were “illegal” and such a step would not only breach the 2019 agreements when it made investments into FRL’s promoter firm but also violate a Singapore arbitral tribunal’s injunction on the sale of retail assets to Reliance.

FRL had rejected Amazon’s allegations and said the meetings are “in compliance” with the February 28 National Company Law Tribunal (NCLT) orders to consider and approve scheme of arrangement filed by various entities which are part of the deal.

In an April 16 update, FRL said “the said order has been issued by the NCLT, after considering all the facts and information submitted by the parties and specific objections filed by Amazon.Com NV Investment Holdings LLC vide an intervening application and the order dated February 15, issued by Supreme Court on the same subject matter”.

From the homepage