CARE Ratings Ltd. downgraded the debt of Future Retail Ltd. in default after the company founded by Kishore Biyani delayed repayments as part of its single resolution plan.
The company defaulted on its first repayment obligation of Rs 3,494.6 crore to banks and other lenders in the consortium as part of the one-time overhaul, according to its swap record. These were due on December 31.
This prompted CARE Ratings to downgrade its non-convertible debentures as well as its long- and short-term banking facilities to a “D” rating (default).
“Due to pending litigation with Amazon.com NV Investment Holdings LLC, the company has been unable to complete the planned monetization of the specified activity as provided in the OTR plan to fulfill the aforementioned obligations towards banks / lenders, on the due date, ”Retail said in a stock market record.
Future Retail in August 2020 sold its assets to Reliance Retail Ventures Ltd. for Rs 24,713 crore. But Amazon, which had invested in Future Coupon Pvt. in 2019, challenged the deal and obtained an interim suspension from the Singapore emergency arbitrator. After India’s competition watchdog suspended approval of Amazon’s investment in Future Coupons, Future Retail asked Delhi High Court to close the Amazon case.
Future Retail had Rs 6,278 crore of long-term and short-term facilities in circulation as well as MNT of Rs 199 crore, according to a note from CARE Ratings from March 2021.
The company has invoked several moratoriums on lending from lenders – one as part of the Covid-19 package announced by the Reserve Bank of India, and then the central bank’s one-stop-shop.
According to the redesign scheme, Future Retail has one month from the due date to repay the lenders. If it is still in default with a lender, the account will be classified as “non-performing”.
“As discussed with the banks / lenders, the company would cooperate to complete the monetization of the specified activity within the next 30 days in accordance with the banks’ instructions to resolve the current situation,” Future Retail said.
Shares of Future Retail were trading down nearly 1% on Monday at 1:21 p.m., compared to a 1.3% rise in the benchmark Nifty 50.