In a series of exchanging written notices between Amazon and Future Retail, a new development has arrived where Amazon has confirmed Future Retail Limited (FRL) that Samara Capital remains willing in buying out the cash-strapped retailer’s businesses such as Big Bazaar for Rs 7,000 crore.
FRL’s independent directors had asked Amazon to confirm if it will inject Rs 3,500 crore into the debt-ridden retailer to enable it to pay off debts on the due date of January 29, 202. In response, Amazon wrote to them saying FRL should facilitate its financial details to Samara Capital for the private equity fund to conduct speedy due diligence.
“We confirm that based on your letter dated January 21, 2022, Samara Capital has once again reiterated to us that they remain interested and committed to lead and take forward the term sheet dated June 30, 2020, signed amongst Samara, FRL and the promoters of FRL, which contemplates a purchase consideration of (Rs 7,000 crore),” Amazon said in January 22 letter to independent directors of FRL.
Amazon, however, acted as a messenger between Samara Capital and FRL. It is not clear why Samara capital did not approach FRL directly.
Samara Capital in June 2020 had entered into a non-binding agreement to acquire FRL’s businesses including Big Bazaar, Easyday and Heritage, among other chains, for Rs 7,000 crore.
According to reports, Amazon has vested interests in FRL as it aims to protect its own investment in the retailer company, thus trying to mediate the deal between Samara and FRL, also it wants to ensure that FRL does not offload its injuncted assets to Reliance Retail or entities prohibited as per the original contract.
Amazon, in its January 22 letter, said: “The transaction envisaged in the Samara term sheet would ensure availability of funds in FRL at the earliest, through an asset sale and an equity infusion, which would be a direct antidote to FRL’s indebtedness”.
Also Read: Amazon Shows Willingness To Assist Cash-Strapped Future Retail; Writes To Independent Directors
While Amazon is against billionaire Mukesh Ambani’s group acquiring businesses of FRL along with other group companies for Rs 24,713 crore, it seemed from the letter that it was open to Samara Capital taking over the business.
According to the Amazon letter, which PTI obtained a copy of, the agreement with Samara will not affect the binding nature of the injunctions issued in the Arbitration Proceedings and by Indian Courts regarding the transfer/encumbrance of FRL’s retail assets.
It said the new transaction will imply that “the transaction with the Mukesh Dhirubhai Ambani (Reliance Industries Limited) group (MDA Group) will not proceed and not be acted upon, and all assistance would be done through legally compliant structures”.
Amazon argued that the structure with Samara in place is the same as Reliance Retail and Fashion Lifestyle Ltd’s proposed acquisition of the Future group’s retail and wholesale business (which includes FRL’s retail assets).
“We understand that this entity has negligible business operations and whose parent entity Reliance Retail Ventures Ltd (RRVL) has received at least Rs 47,265 crore from various foreign investors. We also understand that this amount is proposed to be utilized to fund the acquisition of FRL’s retail, wholesale and logistics assets,” the letter said.
It further said the terms of the FRL and constituents of the MDA Group, viz., RRVL and RRFLL, represent “strikingly similar structure”.
The letter said that the Samara Term Sheet says that it facilitates a smooth acquisition of FRL, including the “small store formats” including “Easy Day”, “Adhaar” and “Heritage” brands, via an Indian owned and controlled entity structure led by Samara and backed by Amazon.
Amazon has communicated to the independent directors to allow Samara to conduct due diligence of FRL.
“If access can be provided in relation to all financial, tax, regulatory, operational, licenses, assets, encumbrances, material contracts, material liabilities, material litigations, material investigations and similar data which was shared with the MDA Group, Samara is ready to commence the due diligence exercise from Sunday, January 23, 2022, and complete it in an expedited manner,” Amazon said.