According to the plan made by the lenders and RIL, all Future group listed companies will be merged into Future Enterprises. RIL will then invest Rs 8,500 crore in the merged entity which will include the retail business.
Kishore Biyani-led Future Enterprises, which is all set to strike a deal with Reliance Industries to sell its retail business, has set September 7 as the new date for the board meeting.
Earlier, the board was scheduled to meet on Friday to approve its annual accounts for the fiscal ending March 2020. The meeting is getting deferred due to non-completion of the financial result audit.
The company made a late evening announcement to the stock market about rescheduling the board meeting for results. A separate board meet for fund raise for Saturday is on, a company official said. The deal with RIL is seen as critical for the struggling Future group.
In a parallel development, Indian lenders have asked the company to expedite the sale of stake in its insurance ventures so that the group can reduce the debt burden.
Future Enterprises holds a 49.91 per cent stake in the general insurance business and owns 33 per cent in the life insurance segment. While SBI General is all set to merge its general insurance business with Future Generali India Insurance Co Ltd, the hunt is on for a buyer of the life insurance business. SBI General has already set up a team for integration of Future’s general insurance venture with itself.
The book value of the general insurance business is pegged at Rs 366 crore and the life insurance venture Rs 464 crore.
Banking sources said even after the possible sale of retail business to RIL, the lenders are not expected to get their entire dues back. RIL is believed to have asked banks to take a haircut of up to 40 per cent on Future’s exposure worth Rs 12,000 crore.
The banks’ exposure to the promoter entities of the Future group is another Rs 11,970 crore.
The deal news has already pushed up the group’s stocks with market capitalisation of Future companies crossing Rs 14,000 crore on Friday.
Reliance has also asked Future vendors to take a steep haircut of around 40 per cent on their past dues, sources said. Some of the top Indian consumer products companies including ITC and HUL are suppliers to Future retail stores. Several vendors have complained that they have not been paid their dues since early this year.
In fact, Indian lenders want the transactions to close before the moratorium ends on August 31. The Future group companies had availed of the Covid-19 pandemic moratorium package announced by the Reserve Bank of India in March.
As the lockdown continued, several stores of Future group shut down, hitting the cash flow severely. According to the plan made by the lenders and RIL, all Future group listed companies will be merged into Future Enterprises. RIL will then invest Rs 8,500 crore in the merged entity which will include the retail business.
During due diligence, RIL asked the Future Group for details about contracts relating to the properties, licences and statutory approvals required, along with organisation chart describing reporting lines and number of staff in each division, sources close to the development pointed out.
Apart from getting control of insurance ventures, the lenders want access to Future group’s real estate portfolio which will be hived off into a separate company.