InvestorQ : Is Future group now open to the new deal offered by Amazon?
Dawn Cherian made post

Is Future group now open to the new deal offered by Amazon?

Mitali Bhutta answered.
1 year ago

In the latest brand new twist to the Amazon case, there is a letter that has been sent out by Amazon and addressed to the independent directors of Future Retail. Amazon has reiterated the commitment of Samara Capital to invest Rs.7,000 crore in Future Retail. Amazon has written to independent directors; Gagan Singh, Ravindra Dhariwal and Jacob Matthews. Samara Capital is a unit of Amazon and had given the term sheet in 2020.

It may be recollected that back in 2020, Samara Capital had given a non-binding term sheet to Future group regarding its commitment to invest Rs.7,000 crore into Future Retail. However, this offer from Samara Capital is much lower than the Reliance offer of Rs.24,700 crore, albeit for a much broader relationship. Amazon has made this offer after an SOS sent by the independent directors of Future group to Amazon on their upcoming payments.

Future group needs to pay Rs.3,500 crore to the banks and other lenders before the end of January if it has to prevent its debts from being classified as NPAs. That seems out of question without fund infusion. Classification as NPAs would mean that the banks will have to make substantial provision for these Future group outstanding amounts. It would also be the first step to put winding up pressure on Future group, something best avoided.

Amazon has also written about this offer to SEBI, stock exchanges, CCI and the lending banks. The challenge will be the structure but Amazon is clear that the FDI rules would not be breached. The deal would be done by an Indian company with Indian domicile with the backing of Samara Capital. It would still be a backdoor entry for Amazon into Future Retail and the response of regulators is awaited.

For now, Amazon and Samara want the same access to information and data given to Reliance Retail Ventures. However, FRL independent directors think that is like reinventing the wheel. Independent directors are not too enthusiastic considering that the deal is much lower than the RRVL offer. The bigger problem for the Future group is that time is rapidly running out for them.