The cash-starved Kishore Biyani-helmed Future group, whose Rs 24,713 crore buyout deal by Reliance Group has been stalled by the Amazon.com, is in a race against time as the January 29 deadline extended by its lenders is fast looming.
In the latest turn of events in what has been a crazy and tumultuous saga, Amazon has confirmed to Future Retail Limited (FRL) that private equity firm Samara Capital is interested in taking over the debt-strapped retailer's businesses such as Big Bazaar for Rs 7,000 crore.
Now, if you are wondering where did this Samara come from, well, the private equity company had in June 2020 signed a non-binding term sheet to acquire FRL's businesses including Big Bazaar, Easyday and Heritage, among other chains, for Rs 7,000 crore.
Last week, the independent directors of Future Retail had asked Amazon to give Rs 3,500 crore to help it pay off its dues to the lenders by January 29. Amazon's response to Future is on behalf of Samara Capital.
- SEBI nod for Reliance-Future deal - Is it a setback for Amazon?
- Future Group knocks on court doors again - It's a fight for survival
Future's director rejects offer
Amazon in a letter to the independent directors of Future Retail said: "We confirm that based on your letter dated January 21, 2022, Samara Capital has once again reiterated to us that they remain interested and committed to lead and take forward the term sheet dated June 30, 2020, signed amongst Samara, FRL and the promoters of FRL, which contemplates a purchase consideration of (Rs 7,000 crore)."
Then again, you may ask why Samara did not convey its plan directly to Future, and why is Amazon is acting at its messenger. Well, there are no easy answers in what has been a corporate soap opera. But market speculation has it that Amazon is getting Samara in the deal to safeguard its (Amazon's) own interest and that Future assets don't end up with the Reliance Group.
Future may have sought emergency funds from Amazon to keep off its lenders, but one of the independent directors has been quoted as saying in Times of India: “The term sheet was rejected. Amazon’s willingness to help FRL is a smoke and mirrors game. Reliance has offered Rs 25,000 crore and the e-tailer is offering only Rs 7,000 crore. They think we are kids. We won't accept it."
If we are reading it correctly, Future, even though it asked for money from Amazon, does not want what is being provided.
For the record, Amazon has a January 29 deadline to meet to pay Rs 3,500 crore in dues to its lenders. Its total outstanding stands at 9,119 crore for repayments up to March 2022.
The strange saga so far
Amazon and Future are also fighting things legally. Amazon and Future are at loggerheads over the latter’s plan to merge with Reliance Retail. While Amazon doesn’t want FRL to partner with Reliance, FRL thinks this is the only way to keep the business afloat.
As things stand, Amazon's arbitration proceedings in Singapore has been stayed by a two-judge Bench of Delhi High Court. Amazon his pursuing the case in the Supreme Court even while it has filed a plea at the National Company Law Appellate Tribunal (NCLAT) against the Competition Commission of India’s (CCI) suspension of the US e-commerce giant’s 2019 deal with Future Retail.
Last year in December, the CCI suspended Amazon’s 2019 deal with Future Retail, citing the company’s alleged deliberate design to suppress information about the scope and purpose of the deal. The antitrust regulator had also imposed a penalty of Rs 200 crore on Amazon.
Amazon had bought 49% stake in Future coupon in 2019, which gave it access to 3% stake in Future Retail. As per Amazon’s agreement with Future Group when the deal was signed, the Biyani-led company could not sell any of its retail assets. The Future Group, however, later sold its retail assets to Reliance under financial duress.
Want to know about the latest happenings in tech? Follow TechRadar India on Twitter, Facebook and Instagram!
