Lenders allow Biyani's Future Retail to pay interest on foreign bonds

Lenders to Kishore-Biyani controlled Future Retail Ltd (FRL) have permitted the company to make interest payments of over Rs 100 crore (about $ 14 million) on the foreign currency denominated bonds. It has already missed repayment due last month and the 30-grace period ends early next week.  

The company had approached banks to allow interest payment. Lenders reviewed the cash flows and decided to give green signal. It is making interest payments to domestic lenders. Though, it is default on principle, said a senior bank executive.

For many restructured loan accounts like FRL, banks are in control of fund movement and there is continuous assessment of financial position. The decision was taken keeping in mind fund flows and the need to avoid further complications for efforts at resolution, said another bank official.

On February 02, the rating agency Standard and Poor's (S&P) agency affirmed rating for Future Retails dollar denominated bonds at 'CCC-' saying it expects the company to service the semi-annual coupon within a 30-day grace period in line with past trends. The coupon was due on the notes on January 24, 2022.

A repayment of about Rs 3,500 crore was due on December 31, 2021, on bank borrowings as part of a one-time restructuring plan implemented by the onshore lenders in April 2021. The company was allowed a review period of 30 days to cure the default.

Future Retail failed to correct the default amid an unsuccessful attempt to monetise its small format stores and insufficient cash flows to meet the sizable repayment obligation.

Future Retail also said in an exchange filing that it has made the payment of interest for the half year ended for an amount of $14 million on dollar denominated notes.