Months before RIL-Future deal, Amazon devised Rs 6,000 cr rescue plan for Biyani's company
BusinessToday.In March 3, 2021
Even as Amazon Inc and Kishore Biyani's Future Retail are at loggerheads over the RIL-FRL deal, there was one time back in early 2020 when Jeff Bezos-led e-comm giant was making all-round effort to rescue the retail company out of financial troubles. Amazon had devised a plan to invest Rs 6,000 crore in Future Retail in equity and debt.
In 2019, Amazon bought a 49 per cent stake in Future Coupons, with a right to buy into Future Retail in 3-5 years. But Future group has claimed that Amazon failed to provide any help to the debt-laden company that suffered a massive setback during the COVID-induced lockdown. The US e-commerce major, on the other hand, contends that there were ongoing discussions on multiple options with partners and with the promoters of Future.
As per the details, Amazon even proposed restructuring the board and top management in Future Retail, LiveMint reported citing sources. To raise money, Amazon had initiated talks with key investors like PremjiInvest, TPG capital, SSG Capital and Verlinvest. All of them would have brought in Rs 750 crore worth of investment, while the rest of the funds were planned to be raised via private equity investors or banks, without selling Future Retail to any rival company.
As coronavirus-led curbs forced companies to shut their businesses after March, Future Group's bank dues were increasing, defaults were looming and the company was facing a huge cash crunch to stay afloat.
It put a huge financial burden on Kishore Biyani's company, despite Amazon making efforts to revive it. Between March and May, Amazon reportedly made a presentation to Future investors about its rescue plan. Amazon also received a positive response from Future Retail as it sought investment in tranches from May 2020. However, amid the rescue talks, Future was going deep into the liquidity crisis and needed funds urgently. Amazon reportedly proposed a second plan, which involved selling the retail business to cut debt but focus on other key businesses.
Amazon received a blow in August 2020 when Future Group announced the sale of its retail, logistics, warehousing and wholesale business to Mukesh Ambani-led Reliance Retail for Rs 24,713 crore. Amazon later dragged Future Group to arbitration at the Singapore International Arbitration Centre against the deal, saying the Reliance-Future deal violated the Amazon-FRL pact and that it had the right of first refusal.
On October 25, SIAC passed an interim award in favour of Amazon, barring FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party. Amazon also approached the Delhi High Court, seeking the enforcement of an interim order of the emergency arbitrator at the SIAC.
On February 8, the Delhi High Court stayed the implementation of single-judge order to Future Retail Ltd and various statutory authorities to maintain the status quo regarding the Rs 24,713 crore deal. Amazon on February 12 moved the Supreme Court (SC) in a bid to block the deal. The scheme of arrangement had already received approval from the Competition Commission of India (CCI), with no objection from SEBI and bourses, following which it had approached NCLT Mumbai on January 26, 2021.