Fri. Mar 29th, 2024
Amazon, Future Retail ( FRL)

Independent directors of Future Retail Ltd (FRL) have asked Amazon to answer by Saturday that it will inject Rs 3,500 crore into the impoverished retailer so that FRL can pay off its debts to lenders by January 29, 2022, according to sources.

In a response to Amazon’s letter, the independent directors of FRL said they are ready to evaluate proposals that are comprehensive and provide solutions for banks, employees, vendors, and other stakeholders, and such an evaluation of the proposal must be per FRL’s legal obligations.

On January 19, Amazon had written to independent directors of FRL reaffirming its willingness to help the cash-strapped retailer in addressing its financial concerns.

The independent directors, in their letter to Amazon on Friday, said FRL urgently needs an infusion of cash as it is obliged to pay off Rs 3,500 crore debts by January 29, 2022; upon default, it will be classified as an NPA (non-performing asset).

“Since you are objecting to the sale of small-format sales, the proceeds of which were to be used to repay lenders and thereby avoid NPA classification, please confirm that you are willing to fund this amount by Monday (January 24) through an unsecured, long-term loan, subordinated to FRL’s existing lenders or any other mutually suitable and legally acceptable structure.

“If you do so, FRL will use such funds in order to repay FRL’s existing lenders,” the letter, a copy of which PTI obtained, said.

They added that Amazon will have no limitations in engaging with lenders so that FRL does not “fall foul of our OTR process or obligations”.

They also requested Amazon to confirm the ‘infusion of fiance’ by January 22, 2022, following which they will consider a full proposal, citing the PTI report.

Earlier this month, Future Retail had said that it defaulted on the repayment of debt worth Rs 3,494.56 crore to banks and lenders because it could not sell its assets as it was caged-up in a litigation matter with Amazon, which impacted its plan to bring in some liquidation.

In its January 19 letter, Amazon has said that it has come to its notice that FRL is selling its small-format stores, comprising the ‘Easyday’ and ‘Heritage Fresh’ brands. It had stressed that the sale of small-format stores by the company without the permission of the US e-commerce company would be in violation of injunctions.

It also reaffirmed its readiness to help FRL in addressing its financial concerns, and said: “We reiterate our willingness and ability to assist Future Retail Limited in addressing any financial concerns of FRL, within the framework of the agreements, including the solution proposed in the term sheet between Samara Capital, and FRL, which contemplated an infusion of Rs 7,000 crore in FRL.”

On this, The independent directors have asked the e-commerce company, if it can act on Samara Capital’s behalf and carry out the negotiation and close such a transaction. 

“Amazon’s transaction in Future Coupons has resulted in regulatory scrutiny, including by the Competition Commission of India, as well as enquiries by the Enforcement Directorate.

“It is therefore critical that any investment being proposed is in compliance with all applicable laws, including FDI laws, CCI regulations and Sebi regulations, and that any such transaction should not raise further regulatory scrutiny,” the independent directors said.

By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.

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