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| Reliance cancels retail deal after future group's secured creditors voted against it | | |  Reliance Industries Ltd (RIL) said the Rs 24,713-crore retail deal with Future group "cannot be implemented" as the secured lenders of Future Retail Ltd (FRL) voted against it.
Indeed, RIL, in a stock exchange filing, said, following secured creditors - primarily banks and financial institutions - of several listed entities of Future Group's rejection of the sale agreement, the deal cannot go through.
Under the Rs 24,713 crore deal, Future Group was to sell 19 of its entities in retail, wholesale, logistics and warehousing segments to Reliance Retail Ventures Ltd (RRVL), which is a wholly-owned subsidiary of RIL.
To stave off bankruptcy, the Future Group of companies had called meetings of their shareholders and secured and unsecured creditors to get the approval for the Reliance deal.
While over 75 per cent of Future Group's shareholders and unsecured creditors had voted in favour of the Mukesh Ambani's Reliance Retail deal, nearly 70 per cent of secured creditors rejected the deal and the remaining a touch over 30 per cent voted in favour of it, as per the results submitted to stock exchanges.
With Future Retail failing to get the 75 per cent approval needed from its secured creditors to get the agreement through, the fate of the company and the management is uncertain after the Bank of India initiated insolvency proceedings last week.
Indeed, the Bank of India had moved the National Company Law Tribunal (NCLT), filing a petition to initiate insolvency proceedings against debt-ridden Future Retail last week after the company defaulted on its payments to lenders, which FRL says is because of the long-running legal feud with Amazon.
Amazon Inc has opposed the Reliance deal and initiated legal proceedings against Future Group and its promoters, citing a violation of its 2019 agreement with FCPL, the promoter entity of FRL - through which it acquired a 49 per cent stake in FCPL for about Rs 1,500 crore.
Amazon had opposed the Future Group of companies' meetings to approve the Reliance deal. Amazon and Future Retail have been in a bitter and long-running legal battle. Amazon has initiated various litigations against FRL - before the Delhi High Court, the Supreme Court, and the NCLT.
Amazon also dragged FRL and its promoters to the Singapore International Arbitration Center (SIAC), where the Emergency Arbitrator passed an interim order in favour of Amazon in October 2020, stopping FRL from taking any further steps until the case is decided.
In February, Reliance Retail had taken over the operations of at least 350 stores of the Kishore Biyani-led group after FRL defaulted on its lease payments.
Earlier this month, in the proceedings before the Delhi high court, Amazon had said the transfer of Future Retail's assets looks like "Ripley's; believe it or not," FRL let go of over 800 shops without any protest.
But Future Retail denied those allegations and had told the Delhi High Court, "for Rs 1,400 crores, Amazon has destroyed a ? 26,000 crores company. Amazon wanted to destroy us, and it succeeded. Amazon has been successful in what it wanted to do."
"We are hanging by a thread. No one wants to do business with us now. When the landlord gives an eviction notice, then what can we do?" Future retail has said, referring to the take over of its stores by RIL.
FRL said it could not pay rent and ultimately had to surrender its stores. Have lost control of over 835 stores, running the remaining 374 stores "on a wing and a prayer," Future Retail had added. |
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