InvestorQ : How is the Future group going to handle its liabilities with the RIL deal still delayed?
Priyanka N made post

How is the Future group going to handle its liabilities with the RIL deal still delayed?

Answer
user profile image
NISHA Nayak answered.
1 month ago


Future Retail, which is once again on the verge of default after the RIL deal got delayed, is likely to pay interest on its dollar bonds by 24 August. It had missed the payment deadline in July and had to complete the payment to avoid a downgrade at this stage.

It may be recollected that Future Retail had missed paying Rs.105 crore interest due on bonds worth $500 million, as per information furnished to the exchange. It technically did not constitute a default as the terms of the bonds allow for a 30-day grace period.

Future Retail had been in discussions with State Bank of India to raise the requisite cash to pay the interest on the dollar security. However, it is not clear if the banks have funded as it would have amounted to increasing their risk metrics.

While the group has blamed the COVID for the delay in payments, the actual problem is much deeper. The group had locked itself too much into high cost property franchises and the marginal ROE on these investment was going against the company.

Biyani is in fairly advanced stage of discussions with Reliance Retail to sell part of his retail empire. However, the finer points are yet to be ironed out. Future group companies like the supply chain solutions unit and even the insurance unit is up for sale.