Future Retail bonds tumble with stocks after Reliance deal blow

Future Retail’s bonds and shares plunged after a top court on Friday halted an attempted purchase by billionaire Mukesh Ambani’s Reliance Industries Ltd.
 

The Mumbai-based supermarket operator’s bonds maturing in 2025 fell by 5.6 cents on the dollar to 57.9 cents, the lowest since Aug. 19 last year, Bloomberg-compiled data show. The company’s shares declined by its daily limit of 10%, while shares of five other companies of the Future conglomerate also slipped.

The slide extends Friday’s losses after India’s Supreme Court ruled in favor of Amazon.com Inc.’s request to halt the purchase, dealing a blow to indebted retailer’s rescue.

“A FRL-Reliance merger seems to be increasingly unlikely,” said Trung Nguyen, senior credit analyst at Lucror Analytics. “FRL has strategic value for Amazon. In our view, the cost of saving FRL would be worth incurring in order for Amazon to gain a strong foothold in the Indian retail market.”

The ruling comes as Future faces two other key triggers -- a 30-day deadline for a missed coupon payment originally on July 22, and a keenly eyed court case in Singapore’s arbitration court.

The Indian court halting the purchase will likely delay the deal’s progress but not derail it, said Vishal Kulkarni, an analyst at Nomura International. Approvals from the Indian authorities for the deal will be on hold until further clarity emerges from the Singapore International Arbitration Centre, and any follow-up steps in the Indian courts, he added.