Amazon is busy preparing a bailout plan for the cash-strapped Future Retail. This is, however, subject to the condition that the Singapore International Arbitration Centre (SIAC) rules against the planned takeover of the retail chain by Reliance Industries Ltd.
The arbitration authority is expected to announce its final verdict in the matter later in August, after a whole year of hearings that started in August 2020.
Future Retail will need an immediate Rs. 5,000-5,500 crore funding to avoid defaulting against bondholders and bank loans. This can be offered by Amazon through an alternative investment fund (AIF), one of the individuals in the knowhow of the developments informed.
The accumulation of dues over time by Future Retail has caused a cash deficit, which is the result of an asset-liability mismatch. The bailout will, however, depend on whether Future Group decides to take up Amazon’s offer, he said.
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According to the informant, Amazon also plans to bring rope-in additional investors in the near future, to participate in the equity infusion, including private equity funds, for bailing out the Kishore Biyani-led group, which presently is faced with the possibility of bankruptcy in case the SIAC ruling goes against it.
On 6 August 2021, the Supreme Court had held that last year’s emergency arbitration award by SIAC is valid and enforceable in India.
On 29 August 2020, Future Group had announced the sale of its retail and wholesale assets to Reliance Retail.
The deal was, however, opposed by Amazon, which alleged that the transaction violates its 2019 pact with Future Coupons Pvt. Ltd. The terms of the 2019 agreement prohibit Future Group from selling the shares of Future Retail to certain prohibited entities, including RIL.
Read also: SC rules in Amazon’s favour, holds emergency arbitration award enforceable
