Future retail lenders agree to debt overhaul plan with up to two-year repayment
Future Retail lenders have approved a debt overhaul plan in which the company can extend loan repayments for up to two years. This follows the approval of the debt restructuring plan by the KV Kamath committee, set up by the RBI to recommend parameters for ad hoc restructuring of corporate loans.
The resolution plan approved by the lenders and the board of directors of Future Retail will be executed no later than April 26.
A group of 28 lenders, including Union Bank of India, Bank of India, State Bank of India, Bank of Baroda, Axis Bank and HDFC Bank, have decided to extend the repayment period for short term loans, term loans, NTMs, overdue work capital loans (converted to term loans for working capital) from the company. In addition, in accordance with the debt overhaul plan approved by the lenders, interest during the period of March 1, 2020 and September 30, 2020 will be converted into an Interest Funded Term Loan (FITL) which will be payable by December 2021.
In addition, the cash credit will be maintained to the company but at a reduced level depending on the assessment by the banks, and all interest and penalty charges, default premiums, processing fees unpaid from March 2020 until the date of implementation of the resolution plan will be canceled. fully.
In addition, as part of the resolution plan, debts raised through NTMs are also part of the restructuring process and the company has obtained the consent of all NTM holders to modify the terms and conditions of NTMs in accordance with the NTM plan. resolution approved by lenders. .
In an exchange notification, the company said, the pandemic has profoundly affected its long-term business viability and led to significant financial strains across industries. “The debt burden has become disproportionate to the cash flow generated by the business due to multiple lockdowns since the start of the pandemic, posing significant risks to the financial stability of the business. Therefore, debt restructuring is crucial and essential, ”he said.
According to the rating agency Care Ratings, as of October 2020, Future Retail had loans worth Rs 6,278 crore, including long-term loans of Rs 528 crore, long-term bank facilities based on funds of Rs 3,250 crore and non-short term loans – bank facilities of Rs 2,500 crore based on the fund.
In August last year, Future Group announced that it would sell its retail and wholesale business to Reliance Retail Ventures for Rs 24,713 crore. However, the deal was not concluded as Amazon challenged the deal’s scheme of arrangements. E-commerce giant Amazon invested in Future Coupons in August 2019.