S&P downgrades Future Retail to 'D' after company fails to clear dues

Standard and Poor's (S&P) has lowered Future Retail Ltd's long-term issuer credit rating from "CCC-" to "D" after the company failed to repay dues.

Future Retail Ltd failed to make the principal payments due on its restructured domestic bank borrowings on December 31, 2021. The 30-day review period (grace period to pay) allowed by India's central bank has ended, S&P said in a statement.

A principal repayment of about Rs 3,500 crore was due on December 31, 2021, on the company's 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 cure the default amid an unsuccessful attempt to monetise its small format stores and insufficient cash flows to meet the sizable repayment obligation, the rating agency said.

However, the rating agency affirmed Notes Rating Affirmed 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.

Future Retail is an India-based retailer with about 1,388 stores across more than 400 cities.

On August 29, 2020, Reliance Retail Ventures Ltd, a subsidiary of Reliance Industries Ltd, announced that it would acquire the retail and wholesale business as well as the logistics and warehousing business of Future Group. The completion of the deal has been delayed by legal issues.