Future Group lenders may take a 40 per cent haircut on their exposure to the conglomerate even after its main businesses are sold to Reliance Industries (RIL). Although the creditors (banks) have been offered the real estate of the Group's companies, they will take some time to recover Rs 13,000 crore dues.
As per an arrangement negotiated between Kishore Biyani, promoter of Future Group, RIL, and Indian lenders, the banks will have to wait until RIL brings in money to invest in Future Enterprises Ltd (FEL) after three other group firms are merged into it.
The banks will get around Rs 8,500 crore following RIL's investment after the merger, a source told the Business Standard, adding that "by the time the merger process is over, it will take at least six months, and banks will have to wait till then."
Meanwhile, a crucial board meeting of FEL, slated to be held on Saturday, August 22, has been deferred by a week, the company said in a statement.
The board was expected to discuss the merger of three group companies- Future Lifestyle, Future Supply Chain and Future Retail- in the meeting. The three firms are likely to be merged into FEL, the news report added. Once the merger process is concluded, RIL will then invest in the merged entity, acquiring a 50 per cent stake in the company.
As per the plan, the banks will lend money to the Future Group to prevent it from defaulting on its foreign currency loans due on Monday, August 24. Future Retail had failed to $14 million (around Rs 100 crore) towards a coupon payment for its $500 million senior secured notes. The 30-day grace period ends on Saturday.
The sale of controlling stake in Future Retail to Mukesh Ambani's RIL is seen as the biggest setback for Biyani, known as one of the best minds in retail business in India. The situation for Biyani is so bad that had the government not announced exemption of COVID-19 related debt from default and suspension of fresh insolvency cases, his company would currently be facing bankruptcy proceedings.