Setback for Future Retail
Last updated: 21 Dec, 2020 | 03:11 pm
Recommended action: Exit/ reduce your holdings in the company.
Delhi HC refuses Future retail’s plea
- In a setback for Future Retail, the Delhi High Court has declined its plea for an interim or injunction restraining Amazon from writing to regulatory authorities SEBI and CCI.
- Future Retail had approached the court to direct Amazon to refrain from interfering with the approval process for the pending ₹27,513-crore deal between Future Retail and Reliance Industries.
Impact on the proposed deal
- This could potentially delay the deal with Reliance Industries, as the final approval of SEBI and National Company Law Tribunal (NCLT) is still pending.
- Last week, a Future Group company Future Enterprises had proposed to utilise the consideration received from the ₹27,513 crore deal with Reliance Industries for pre-payment of the Non-Convertible Debentures (NCDs) (View details of deal)
- Future entities have been defaulting on their debt obligations for the past few months, due to severe financial stress in the companies. Future Retail reported a loss of Rs 692 crore in Jul-Sep 20 period, as disruptions caiused by Covid-19 weigh.
- Therefore, any delay in approval of the deal will put Future entities in further liquidity problems.
According to estimates by a few lawyers (reported in the media), the deal could take about 6-9 more months to materialise after all the regulatory approvals. Hence, the company could remain under pressure in the near-medium term.