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Home / Companies / News /  Future Retail misses interest payment on $500 mn bonds as liquidity position deteriorates

Kishore Biyani's flagship company Future Retail Ltd, which runs the popular supermarket chain BigBazaar, on Wednesday missed an interest payment on outstanding dollar bonds, highlighting the deteriorating liquidity position of the Future group, which has put several assets up for sale.

The company missed paying $14 million (approx Rs105 crore) interest due on Wednesday on its offshore bonds worth $500 million due in 2025, which the company had raised just six months ago in January.

"We would like inform that due to the nation-wide lock down imposed to restrict the spread of COVID-19 pandemic, and consequent restricted business operations of the company the liquidity position has been affected causing us to miss the service of the payment of interest due on the USD Notes (listed on Singapore Stock Exchange) on 22nd July, 2020," the company said in the exchange filing.

The liquidity troubles of the company come at a time when Biyani is in advanced discussions with India's richest person Mukesh Ambani, to sell parts of his retail empire, including the flagship Future Retail.

On 11 June, Mint reported that Ambani is among the front runners expected to snap up controlling stakes in Future Retail and Future Lifestyle Fashion Ltd, the apparel retail business of the group. Other group businesses such as Future Supply Chain Solutions Ltd and its stake in an insurance joint ventures is also up for sale.

Biyani’s debt-related troubles came to the fore in March, when shares of Future group’s listed company lost significant value leading to a ratings downgrade of his promoter holding company and invocation of pledged shares by lenders.

To be sure, the missed interest payment does not constitute a default, as the terms of the bonds allow for a 30 days grace period for payment.

"The terms of issuance of the USD Notes provides for additional period of 30 days for payment of interest from the due date, in case same could not have been paid on the original due date," the company informed stock exchanges.

"Accordingly, we are proposing to make payment of the interest within 30 days from the interest due date on the USD Notes. We are in the process of ensuring that payment of such interest is made within this additional time period," it added.

In a note on Wednesday evening, international rating agency S&P Global Ratings, which has rated the bonds at CCC-, said the company has indicated to make the payments within the grace period through various means.

"The company has indicated that it expects to make the coupon payment within the grace period by (i) improving operating cash flow through bank funding; or (ii) arranging for alternate sources of funding, including the sale of certain assets.

It also expects its liquidity to improve with a potential equity recapitalization which could bring in a strategic investor, the rating agency added.

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