FRL independent directors ask Amazon to confirm Rs 3,500-cr infusion by Sat

Independent directors of Future Retail Ltd (FRL) have asked Amazon to confirm by Saturday that it will infuse Rs 3,500 crore into the cash-strapped retailer in order to repay FRL’s lenders by January 29, 2022, according to sources.

Responding to Amazon’s letter, the independent directors of FRL said while they are willing to assess proposals that are comprehensive and provide a solution for banks, employees, vendors, and other stakeholders, and that any assessment of proposals will be subject to FRL’s legal obligations.

On January 19, Amazon had written to the independent directors of FRL reiterating its willingness to assist the Mumbai-based company in addressing its financial concerns.

The independent directors, in their letter to Amazon on Friday, said FRL is in need for cash infusion urgently, and is required to pay Rs 3,500 crore by January 29, 2022, failing which 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 was seen by PTI, said.

They added that Amazon is also free to engage with the lenders, so that FRL does not “fall foul of our OTR process or obligations”.

They further asked Amazon to provide the confirmations sought by tomorrow January 22, 2022, following which they are open to assessing a detailed proposal.

E-mails sent to Amazon and Future group seeking comments on the matter did not elicit a response.

Earlier this month, Future Retail had said it had missed the due date for the payment of Rs 3,494.56 crore to banks and lenders as it could not sell assets due to its ongoing litigation with Amazon, impacting its monetisation plans.

In its January 19 letter, Amazon had said it has become aware from certain media sources that FRL is proposing to sell its small-format stores, comprising the ‘Easyday’ and ‘Heritage Fresh’ brands. It had emphasised that any sale of small-format stores by the company without the consent of the US e-commerce giant would be in violation of injunctions.

It had also reiterated its willingness to assist the cash-strapped retailer in addressing its financial concerns, and said: “We reiterate our willingness and ability to assist FRL 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 asked Amazon to confirm if it can act on behalf of Samara Capital and has the authority to negotiate and finalise such a transaction on its behalf.

“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.

FRL has always acted in compliance with applicable laws in letter and spirit and will continue to do so, they added.

Future and Amazon have been locked in a bitter legal tussle after the US e-commerce giant dragged Future Group to arbitration at the Singapore International Arbitration Centre (SIAC) in October 2020. Amazon argued that FRL had violated their contract by entering into a deal for the sale of its assets to billionaire Mukesh Ambani’s Reliance Retail on a slump sale basis for Rs 24,713 crore.

Earlier this month, Future Retail had said it had missed the due date for the payment of Rs 3,494.56 crore to banks and lenders as it could not sell assets due to its ongoing litigation with Amazon, impacting its monetisation plans.

In December, the Competition Commission of India (CCI) had suspended the 2019 approval for Amazon’s deal to acquire a 49 per cent stake in Future Coupons Pvt Ltd (FCPL), FRL’s promoter, while slapping a penalty of Rs 202 crore on the e-commerce major.

The CCI order has been challenged by Amazon before the National Company Law Appellate Tribunal, which has issued a notice to the fair trade regulator and FCPL.

The NCLAT has directed to list the matter on February 2 for the next hearing.

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