future retail: Most local banks may have voted against Future’s deal with RIL

According to people aware of the development, most domestic banks may have voted against the sale of Future Group assets to Reliance-owned companies, while foreign bondholders and some non-bank lenders may have voted in favor of the plan. . Voting took place on Thursday.

If Future fails to get a majority vote from creditors and shareholders, the latter voted on Wednesday, the deal could fall through and result in lower recoveries for lenders.

For the plan to be approved, at least 75% of the creditors by value and 51% by number present during the meeting must vote in favor. Futures have to disclose the results to the stock exchange within 48 hours of voting. Home lenders account for 80% of total loans.

A bank said a top-level meeting was held between lenders last Saturday, which included officials from Bank of India, Union Bank of India, Canara Bank and State Bank of India and it appears that most of them are part of the scheme. were not in favor of support. official.

Another bank official said the main factor preventing lenders from backing the disbursement plan is that the proposal presented by Future is not backed by Reliance. Secondly, the plan proposed that the entire amount due to foreign bondholders be absorbed by Reliance, as against 50% in the case of domestic lenders, despite both being senior creditors.

This disparity in distribution was not acceptable to domestic lenders, the other lender said.

However, the biggest factor that prompted some lenders to vote against the plan was the acquisition of 946 stores of Future Retail and Future Lifestyle by Reliance Group for non-payment of rent. Lenders believe that Reliance, which controls half of Future Stores—the key attraction in acquiring the hypermarket—now has little incentive to complete the deal.

Future has proposed that around 45% – a total amount of Rs 12,612 crore – be transferred to Reliance Industries, while the remaining loan will be repaid in a staggering seven years, as reported by ET.

As per the offer made by Future to the lenders, the remaining 55% will be paid by using the cash consideration received from Reliance from sale of stake in the insurance company and partly from converting the debt into equity.

The voting on the plan comes within weeks of lenders approaching the bankruptcy court seeking recovery of its debt to Kishore Biyani’s flagship Future Retail, following a loan default of Rs 3,495 crore in January this year.

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