Kishore Biyani gets a breather on restructuring loans, with riders
- The riders make it binding for him to sell controlling stake in group companies to raise funds for repayments
- Lenders to Biyani's holding companies include private equity funds such as Blackstone and Aion Capital
Future group founder Kishore Biyani, who is in the midst of a courtroom battle over pledged shares of the company, may get a breather after several lenders gave a conditional nod to restructuring loans worth $600 million of promoter debt, said two people directly aware of the development.
According to the people cited above, the loan restructuring comes with an exit route charted for Biyani from Future group, which he founded in 1987. This makes it binding for him to sell controlling stakes in group companies to raise funds for repayments, they said.
“The lenders have also begun reaching out to potential buyers but as there is a cap on foreign investment in multi retail the task may not be very easy,” said one of the persons mentioned above. Potential buyers of Future Retail include Reliance Industries, which is ramping up its retail portfolio, and a potential joint venture of foreign retailers such as Amazon and Walmart with an Indian partner.
Lenders to Biyani’s holding companies include private equity funds Blackstone and Aion Capital.
An email sent to Future Group did not elicit a response. Blackstone chose not to comment, while Aion Capital declined to comment.
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. The group has moved to find buyers for promoters’ shares in two group entities.
On 25 March, Mint reported that Future group had appointed investment bank Arpwood Capital to find a buyer for the apparel business Future Lifestyle Fashion Ltd, which runs the Central brand of apparel retail stores. Bloomberg on 9 April reported that the group aims to raise as much as ₹2,500 crore by selling its stake in an insurance joint venture.
Last month, rating agency Icra downgraded Future Corporate Resources Pvt. Ltd, a Future group promoter entity, to junk rating of BB+ from its previous rating of BBB- (ratings below BBB- are considered below investment grade). The downgrade, the agency said, was on account of high group level debt and falling stock prices, which were bound to put pressure on promoter pledges.
“Despite monetization of investments across various group entities, the total group debt has increased as on 31 December 2019, as against 31 March 2019. Icra notes the increase in debt is mainly on account of an increase in debt of the opcos, with the total debt at the group’s listed companies increased to ₹12,778 crore as on 30 September 2019 from ₹10,951 crore as on March 31, 2019,” the rating agency said.
Future group was caught in a similar debt trap when India’s economic growth started slowing down after 2011. That episode saw Biyani sell his apparel store business Pantaloons to the Aditya Birla group and his financial services business Future Capital to Warburg Pincus.
Meanwhile, Biyani is also waging a legal battle with its lenders who invoked pledged promoter shares after the steep crash in stock prices.
The Supreme Court on 17 April refused to interfere with a Mumbai high court order granting interim protection to Future group by barring IDBI Trusteeship Services Ltd from invoking pledged shares of Future Retail on behalf of UBS AG till 4 May. Mumbai high court on 30 March had passed this order amid share prices of Future group companies falling because of extreme market volatility as a result of the covid-19 pandemic and the restrictions put in place to contain it.
Future group firms Future Corporate Resources Pvt. Ltd and Rural Fairprice Wholesale Ltd had petitioned the high court after IDBI Trusteeship Services invoked the pledged shares. Future Corp. is the holding company of Rural Fairprice and a promoter shareholder of Future Retail. IDBI Trusteeship had invoked 8% of shares of Future Retail.
Catch all the Business News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
MoreLess
First Published:19 Apr 2020, 06:07 PM IST
- Top Gainers
- Top Losers
- 52 Week High