Future Enterprises Ltd NSE 1.75 % (FEL) is
planning to prepay the debentures issued by the
company from the money to be received after selling its retail and other
businesses to Reliance Industries NSE 0.07 %' step down firm Reliance Retail Ventures.
The company has proposed to utilise the
consideration received from the Rs 24,713 crore deal for pre-payment of the
Non-Convertible Debentures (NCDs), FEL said in a regulatory filing.
FEL is convening a meeting of its
debenture-holders of Series XV on January 7 next year to consider and approve
prepayment of debentures and amendment of the Debenture Trust Deed.
“As part of the overall reorganisation proposal,
the company proposes to utilise the consideration to be received from Reliance entities from
slump sale of the business undertakings, to prepay the various NCDs the company
has issued and one of the NCDs proposed to be prepaid is NCD-XV, viz the
debentures held by debenture holders of this meeting,” FEL said in a notice for
convening of the meeting.
FEL has raised funds by issuing various debt
instruments including NCDs by way of private placement, from time to time for
its expansion.
However, the Future group firm has reported
several defaults on interest payment of NCDs after
the pandemic.
According
to FEL, coronavirus had a significant impact on businesses and particularly,
lockdown, closure of stores and the slowdown in economic activity resulted in
significant decrease in its revenues and profitability.
“To put it simply, our liquidity position has
been affected for reasons beyond our control and despite our sincere efforts,
we are currently facing extreme difficulty in generating the cash required to
service our external debt obligations,” it said.
As per the terms of the offer for its NCD-XV,
FEL was expected to pay to the debenture-holders, the amount of interest and
principal on respective due dates. However, COVID-19 severely impacted cash
flows and it utilised Rs 5.13 crore from Debt Service Reserve Account (DSRA)
created for NCD-XV for paying interest, FEL said.
It has also requested the holders to consider
relaxation in the clauses of Debenture Trust Deeds, which mandates that
if the company utilises DSRA, it should replenish the same within a period of
seven days.
“However, the reason of the company utilising
the DSRA is due to it not having ready cashflows available and it would be
difficult for the company to ensure the same at least for another six months,
till the time the transaction is consummated," the company said.
Accordingly, Future Enterprises Ltd has also
proposed to modify the clause and remove the replenishment condition to ensure
that there is neither any default or cross-default which gets triggered due to
non-replenishment of DSRA.
On August 29, 2020, Future had announced the
sale of its retail and wholesale business and logistics and warehousing
business by merging 5 listed entities of the Group and 14 subsidiary and
step-down subsidiaries companies into FEL.
As per the deal, Reliance Retail Ventures would
acquire the popular Future brand stores such as Big Bazaar, fbb, Foodhall,
Easyday, Nilgiris, Central and Brand Factory.
Sandip Ginodia , CEO
ALTIUS INVESTECH PVT LTD
We deal in over 60 unlisted companies with 15 years of experience
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .
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