Future Retail Ltd, the highly indebted general retailer caught up in a tussle between US-based retailer Amazon and its Indian rival Reliance Retail, said a request made by its independent directors seeking a loan of Rs 3,500 cr was of a preliminary nature.
“The communication between Amazon and Independent Directors were of a very preliminary nature without any intent on part of Amazon to actually help/support the company in any manner,” said Future Retail in a clarification today.
The clarification came after stock exchanges asked the company why it hadn’t informed its shareholders about such a development.
In response, Future Retail said the move had not crossed the threshold of materiality, given that the proposal was at a very preliminary stage.
The Economic Times newspaper had, on Jan 22, reported that Future Retail’s independent directors has urged Amazon to extend a loan of Rs 3,500 cr to Future Retail so that it could avoid going into default on its loan repayments.
In the letter, the directors pointed out that the company was planning to sell its small-format shops — such as Easy Day and Heritage — to raise money to make payments to its lenders.
“FRL will use such funds [obtained via the Amazon loan] in order to repay FRL’s existing lenders. Alternatively, you are also free to engage with the lenders, so that we do not fall foul of our OTR (one-time restructuring) process or obligations,” the directors wrote to Amazon, according to the report.
The letter reportedly said that Future Retail needs to make payments of Rs 3,500 cr by Jan 29 (tomorrow) to avoid its debt being classified as non-performing assets.
The latest clarification did not reveal what the status of the fund-raising effort are.
It is not known how Amazon responded to the offer, but given that Future Retail said the move has not resulted in any material development, it is unlikely that Amazon has offered the amount as a loan.
Future Retail is caught in a legal tussle, after Amazon alleged that its promoters’ decision to sell the company to Reliance Retail is in violation of an agreement that they had entered into with Amazon.
The case is being heard by an arbitration panel in Singapore.
