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Future Group: Reliance called off Rs 24,713 crore deal

The Rs 24,713-crore deal with Kishore Biyani’s Future Group to buy its retail, wholesale, logistics, and warehousing operations were called off on Saturday after secured creditors of the latter opted against the deal.

On Saturday, Reliance Industries announced that they had cracked a deal with Future Group to acquire its retail, wholesale, logistics, and storage operations could not go ahead since secured creditors of the latter voted against almost 21 months after signing the agreement.

Several companies of Future Group firms included in the deal, such as FRL, which is future retail limited, and other branches involved in the plan, have informed their shareholders and creditors of the results of the scheme of arrangement vote at their respective meetings, according to a regulatory filing.

FRL’s secured creditors rejected the strategy. As a result, the agreed-upon scheme cannot be executed. RIL made a report on the transfer strategy of the Future Group’s retail and wholesale businesses, which will be transferred to RIL’s associate companies RRVL and RRFLL, according to an update on the scheme of arrangement.

Reliance calls off ₹24,713 crore deal with Future Group. This is why.... -  Hindustan TimesThis week, the Future Group entities held shareholders and secured and unsecured creditors’ meetings to gain approval for the system of amalgamation and asset sale announced with Reliance Retail.

Secured creditors of listed firms Future Retail, Future Enterprises, Future Lifestyle Fashion Ltd, Future Market Networks, and Future Consumer, on the other hand, we’re unable to obtain the required 75 per cent clearance.

The investors of the listed companies, on the other hand, had backed the Reliance acquisition.

Amazon, which bought a 49 per cent share in Future Coupons Pvt Ltd (FCPL), a promoter firm of FRL, in 2019, was a vocal opponent of the meetings.

The future Group signed a Rs 24,713 crore deal with Reliance Retail Ventures Ltd in August 2020 to sell 19 companies in the retail, wholesale, logistics, and storage industries (RRVL).

Future Group to focus on saving, rebuilding Future Lifestyle, Future Supply  Chain & Future Consumer - The Economic TimesThe Reliance Group’s retail companies are held by RRVL, which is a holding company.

Amazon, the world’s biggest internet retailer, has been vocal in its criticism of the deal, arguing that it violates a 2019 agreement in which it paid Rs 1,500 crore for a 49 per cent ownership in FCPL, FRL’s promoter firm.

Reliance Retail, Future Group, and Amazon, the e-commerce juggernaut, are all opposed to the deal and have made no quick remarks on the situation.

After Kishore Biyani failed to pay rent to its landlord, Reliance Retail took over the operations of at least 350 FRL stores and provided jobs to its employees in February.

In October 2020, Amazon brought the FRL and its subsidiaries to the Singapore International Arbitration Center (SIAC), where the EA (the emergency arbitrator) issued an interim award in favour of Amazon. It had made it illegal for future retail limited to sell or encumber its assets or publish securities to raise money from a forbidden party.

RIL-Future Group deal: RIL buys out retail & wholesale biz of Future group  for Rs 24,713 crore - The Economic TimesA spate of lawsuits was brought as a result in the High Court of Delhi, the Supreme Court, and the NCLT.

As a result, RRVL had to extend the Scheme’s long-stop date three times. It was given a 6-month extension last month, from September 30, 2022, onwards.

As per the merger agreement among both Future Group and Reliance Retail, Nineteen of the original companies would be merged into a single entity called Future Enterprises Ltd (FEL), which would then be turned over to RRVL.

But, as per FEL’s voting results, the plan has been rejected by 99.97 per cent of its secured creditors as of Friday.

Even though the purchase was supported by 99.99 per cent of the company’s owners, the deal was approved by 62.65% of the unsecured creditors, while the remaining 37.34 per cent of the total votes cast voted it down.

Except for Future Supply Chain Solutions Ltd, none of the listed Future group companies, including Future Retail, Future Lifestyle Fashion Ltd, Future Market Networks, and Future Consumer, received the required 75% vote in favour of the deal.

Reliance calls off Rs 24,713-cr deal with Future Group after secured  creditors give a thumbs downIn 2 firms, Future Consumer and Market Dynamics Networks, 100 per cent of financial debt voted against the accord.

FRL, the original company, issued a statutory statement on Friday; it reported that 69.29% of secured creditors voted against the sale, while 30.71% voted in favour.

Around 85.94% of FRL shareholders endorsed the idea of the Reliance merger, while 14.06 per cent voted against it.

The National Company law tribunal has approved a plan of the arrangement that must be authorized by the “majority of people representing three-fourths in value” in a meeting of creditors or members (shareholders), according to Section 230 (6) of the Companies Act, 2013.

Furthermore, the future is uncertain because the status of FRL’s board of directors and management has filed a lawsuit with the NCLT to start insolvency proceedings.

On Monday, the Bank of India filed a motion with the National company law tribunal Bombay bench, requesting insolvency proceedings and an asset moratorium.

Edited by Prakriti Arora

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