 "Future Enterprises board likely to discuss merger plan on Saturday")
The board of Future Enterprises Ltd (FEL) is likely to discuss on Saturday the proposal to merge other listed group entities, such as Future Lifestyle, Future Retail, and Future Supply Chain Solutions, with itself.
Once the process is complete, Reliance Industries (RIL) will be investing Rs 8,500 crore in the merged entity by way of additional capital, resulting in the Mukesh Ambani-led conglomerate owning close to 50 per cent in it, said a source close to the deal. The funds infused by Reliance will be used to repay the lenders.
The stake of US-based online retail giant Amazon, which holds 9.9 per cent in Future Retail, will also get diluted in the merger process. According to a banking source, Amazon has climbed down from its earlier position as a loan default by Future is imminent.
It is important to close the transaction before August 31, when the moratorium on loans is ending, as Future is on the verge of defaulting on its foreign currency bonds, said another source. Fearing this prospect, the group held last-minute talks, which ended on Thursday.
On July 22, Future Retail had failed to make a coupon payment of about $14 million (about Rs 100 crore) for its $500 million senior secured notes. The 30-day grace period ends on Saturday.
The lenders to Future Enterprises are also getting an additional sweetener in the deal, with real estate of the group companies expected to be transferred to a new entity with the banks getting full control of the assets, said the source.
Though the Future group had promised to repay bank debt by selling its two insurance ventures, the deal did not take place before the deadline set by the lenders. Future Consumer is not included in the deal.
Once the process is complete, Reliance Industries (RIL) will be investing Rs 8,500 crore in the merged entity by way of additional capital, resulting in the Mukesh Ambani-led conglomerate owning close to 50 per cent in it, said a source close to the deal. The funds infused by Reliance will be used to repay the lenders.
The stake of US-based online retail giant Amazon, which holds 9.9 per cent in Future Retail, will also get diluted in the merger process. According to a banking source, Amazon has climbed down from its earlier position as a loan default by Future is imminent.
It is important to close the transaction before August 31, when the moratorium on loans is ending, as Future is on the verge of defaulting on its foreign currency bonds, said another source. Fearing this prospect, the group held last-minute talks, which ended on Thursday.
On July 22, Future Retail had failed to make a coupon payment of about $14 million (about Rs 100 crore) for its $500 million senior secured notes. The 30-day grace period ends on Saturday.
The lenders to Future Enterprises are also getting an additional sweetener in the deal, with real estate of the group companies expected to be transferred to a new entity with the banks getting full control of the assets, said the source.
Though the Future group had promised to repay bank debt by selling its two insurance ventures, the deal did not take place before the deadline set by the lenders. Future Consumer is not included in the deal.
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