Banks run by the State Bank of India may soon invite expressions of interest for small-format chains – Easyday in northern India and Heritage Fresh in southern India, they said.
Lenders can take this action since the account would be classified as a non-performing loan if payment did not occur during the grace period which ends on January 30, in accordance with the unique restructuring plan signed between them and Future Retail in April. 2021.
Future Retail was unable to sell these stores to a third party as it had agreed to sell them to companies related to Reliance Industries under an agreement dated August 29, 2020. However, the agreement has been delayed due to a series of disputes between Future group and Amazon.com over allegations of breach of the shareholders’ agreement.
Due to the litigation, the long end date of the agreement with Reliance has been extended until March 31, 2022. Until then, the Future Group is bound by the 2020 agreement with and therefore cannot sell the stores to others. But that’s not stopping lenders from trying to sell small-format stores since they’re part of the collateral against the loan, the people said.
Amazon may attempt to block any attempts to sell small-format stores by seeking a stay order. Currently, he is seeking to block Future Group’s proposed deal with Reliance Industries, claiming that its prior agreement with Future Coupon prevents Future Retail from selling its assets to Reliance Group entities.
“For the lenders, this is a last ditch attempt to prevent the account from sliding into the NPA on January 30,” said one banker.
Future Retail did not respond to request for comment.
In a January 1 stock exchange notice, the company said it would “cooperate to complete the monetization of the specialty business within 30 days in accordance with the banks’ instructions to resolve the current issue.”
Future has 800 to 850 small-format stores across India, contributing around 20% of Future Retail’s revenue, a third person said.