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    Give financial details to Samara Capital if you want funds to avoid default, Amazon tells Future Retail

    Synopsis

    Amazon, that is currently embroiled in a legal tussle with Future Group over the Indian group’s plans to sell its assets to Reliance Retail, last week had opposed to FRL’s plans to sell its small-format stores to raise money to pay lenders to avoid defaulting on loan repayments.

    Give financial details to Samara Capital if you want help to avoid default, Amazon tells Future Retail
    Biyani's FRL owes a total Rs 9,119 crore up to March 2022.
    Amazon has asked Future Retail Ltd (FRL) to provide its financial details to Samara Capital for the private equity fund to conduct an expedited due diligence of the cash-strapped retailer in order to infuse funds into FRL to avert a looming debt default by the end of this month.

    “We confirm that based on your letter dated January 21, 2022, Samara Capital has once again reiterated to us that they remain interested and committed to lead and take forward the term sheet dated June 30, 2020, signed amongst Samara, FRL and the promoters of FRL, which contemplates a purchase consideration of (Rs 7,000 crore),” Amazon said in a Saturday letter to FRL independent directors.

    In June 2020, Samara Capital had signed a non-binding term sheet to acquire FRL’s businesses including Big Bazaar, Easyday and Heritage among other chains for Rs 7,000 crore.

    “The transaction envisaged in the Samara term sheet would ensure availability of funds in FRL at the earliest, through an asset sale and an equity infusion, which would be a direct antidote to FRL’s indebtedness,” Amazon wrote in the letter. The US e-commerce giant was responding to the independent directors who on Friday had sought Rs 3,500 crore in unsecured long-term loans from Amazon to help avoid FRL’s debt from being classified as non-performing assets (NPAs) by lenders in the event the Indian retailer failed to repay the amount to the lenders by January 29.

    Ravindra Dhariwal, one of the three-member independent directors of FRL, dismissed Amazon’s latest offer as a “smoke screen.”

    “The letter doesn’t address the issues we had raised,” he said. Dhariwal, said the three-member independent directors are scheduled to have a meeting on Sunday afternoon to decide on the next course of action.

    Amazon on Sunday has further told the independent directors that the capital infusion plans will be in compliance with India’s foreign direct investment laws for multi-brand retailing as the entity taking over FRL’s more than 800 small format stores of Easyday, Heritage, Adhaar among others will be a Samara-led Indian-owned a controlled company.

    “As regards compliance of any structure with Indian law, please note that this structure is also similar to the proposed acquisition of the retail and wholesale undertaking of the Future group (which includes FRL’s retail assets) by Reliance Retail and Fashion Lifestyle Limited,” said the Amazon letter that was reviewed by ET.

    In August 2020, Future Group said it plans to sell its assets on a slump sale basis to Reliance Retail for Rs 25,000 crore. Amazon objected to the deal and received a stay on the proposed deal from a Singapore emergency arbitrator. Amazon argues that FRL must seek Amazon’s consent before parting with its assets as per the 2019 investment agreement with promoter firm Future Coupons Pvt Ltd (FCPL) that hold about 10% of FRL’s stake.

    Amazon, that is currently embroiled in a legal tussle with Future Group over the Indian group’s plans to sell its assets to Reliance Retail, last week had opposed to FRL’s plans to sell its small-format stores to raise money to pay lenders to avoid defaulting on loan repayments.

    “If access can be provided in relation to all financial, tax, regulatory, operational, licenses, assets, encumbrances, material contracts, material liabilities, material litigations, material investigations and similar data which was shared with the MDA Group (Mukesh Dhirubhai Ambani Group), Samara is ready to commence the due diligence exercise from Sunday, January 23, 2022, and complete it in an expedited manner,” the letter from Amazon said..

    FRL owes a total Rs 9,119 crore up to March 2022.


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