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Reliance Retail Ventures Ltd. (RRVL) has just dropped its INR 24,713 crore takeover bid of Future Retail Ltd. (FRL) like a hot potato, leaving Amazon flummoxed.
Why: RRVL cited 69.29% of Future’s secured creditors voting against its move as the reason. Future required 75% of secured creditors' approval to implement the takeover by Reliance.
Quick Background
Amazon, the world’s biggest e-commerce company had made an offer of INR 7,000 crore to Kishore Biyani to acquire his retail business, while applying heavy-duty legal pressure on the latter to cancel his deal with Ambani.
As Ambani has backed out of the deal, Bezos should be a relieved man for at least not allowing the former to take over the business of FRL, but turns out, relief in the FRL takeover is more of a gangland myth.
Those Assets Belong To Me
In a complete surprise to the whole world, in February 2022, Reliance India Limited (RIL) took over 800 out of 1,400 Future retail stores, comprising 60% of its revenues.
Mind you, these were not just flagship Big Bazaars, but also Heritages, FBBs, and Easydays. Instead of lease take-overs from FRL, Reliance signed direct leases with the realty owners, ousting Future as a tenant from all these outlets. RIL then opened its own brand stores in the same spaces.
A majority of remaining Future Group stores are currently inactive and do not have much value for Reliance, Amazon or even the group’s creditors.
😳 WTF? Yo. The Future Group owes around INR 20,000 crore to its secured creditors including banks and around INR 8,000 crore to its unsecured creditors and vendors.
Per a regulatory filing, Future Enterprises has defaulted on its payment of INR 2911.51 crore to various consortium banks and lenders between 23rd March 2022 to 31st March 2022.
What happens now?
Future Group will now go through bankruptcy proceedings under IBC, although creditors may be unable to recover anything substantial.
Amazon stands to get nothing much either and Jeff's only option is to get into a long, expensive legal battle to try and set things right.
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