Samara ready to invest Rs 7,000 cr to avoid default, Amazon tells Future Retail
Under formal notice to confirm the capital injection to avert an imminent default, Amazon told Future Retail Ltd (FRL) that Samara Capital remained interested in buying the indebted retailer’s business such as Big Bazaar for Rs 7,000 crore.
Asked by the independent trustees of FRL to confirm whether it will inject Rs 3,500 crore into the cash-strapped retailer to enable it to pay its lenders before the January 29 due date, Amazon wrote to them saying that FRL should provide its financial details to Samara Capital for the private equity fund to perform expedited due diligence.
“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 leading and advancing the term sheet dated June 30, 2020, signed between Samara, FRL and the promoter of FRL, which is considering a purchase consideration of (Rs 7,000 crore),’ Amazon said in a January 22 letter to the independent directors of FRL.
Amazon, however, did not explain why Samara Capital was confirming this to the US company rather than speaking to FRL directly.
Samara Capital, which had signed a non-binding term sheet in June 2020 to acquire FRL’s businesses including Big Bazaar, Easyday and Heritage, among other chains, for Rs 7,000 crore, could not be reached independently for confirm the offer.
An email sent to Amazon asking why Samara Capital was communicating with it and not Future Retail directly went unanswered.
Emails sent to Future and Reliance also went unanswered when the story was filed.
According to sources, Amazon is trying to facilitate the deal between Samara and FRL to protect its own investment in Future and ensure that FRL does not sell its injunctive assets to Reliance Retail or prohibited entities as per the original contract.
Amazon, in its January 22 letter, said: ”The transaction contemplated in Samara’s term sheet would ensure the availability of funds in FRL at the earliest, through an asset sale and injection of equity, which would be a direct antidote to FRL’s indebtedness.
While Amazon is opposed to billionaire Mukesh Ambani’s group acquiring FRL’s businesses along with other group companies for Rs 24,713 crore, it appears from the letter that it was open to Samara Capital to take over the business.
Amazon’s letter, a copy of which was seen by PTI, asserted that the engagement with Samara would not affect the binding nature of the injunctions issued in the arbitration proceedings and by the Indian courts regarding the transfer/encumbrance of the FRL retail assets.
He said the new transaction would be understood that “the transaction with Mukesh Dhirubhai Ambani (Reliance Industries Limited) Group (MDA Group) will not proceed and will not be implemented; and all assistance will be through the through lawful structures”.
Amazon argued that the structure with Samara in place is also similar to the proposed acquisition of the Future Group’s retail and wholesale business (which includes FRL’s retail assets) by Reliance Retail and Fashion. Lifestyle Ltd (RRFLL). “We understand that this entity has negligible business activities and whose parent entity Reliance Retail Ventures Ltd (RRVL) has received at least Rs 47,265 crore from various foreign investors. We also understand that this amount is proposed to be used for fund the acquisition of FRL’s retail, wholesale and logistics assets,” the letter states.
He further stated that the transaction involving FRL and the constituents of the MDA Group, namely RRVL and RRFLL, follows a “surprisingly similar structure”. The letter says Samara’s term sheet provides for an acquisition of all of FRL’s retail assets, including “small store formats” comprising the “Easy Day”, “Adhaar” and “Heritage” brands, through of an Indian owned and controlled entity structure. led by Samara and backed by Amazon.
Amazon asked the independent administrators to provide Samara with the ability to perform FRL due diligence. ”If access can be provided with respect to all financial, tax, regulatory, operational licenses, assets, encumbrances, material contracts, material liabilities, material disputes, material investigations and similar data which have been shared with MDA Group, Samara is ready to begin the due diligence exercise from Sunday, January 23, 2022 and complete it on an expedited basis,’ Amazon said.
Future and Amazon were locked in a bitter legal battle after the US e-commerce giant dragged Future Group to arbitration at the Singapore International Arbitration Center (SIAC) in October 2020, arguing that FRL breached their contract by entering into a agreement to sell its assets to billionaire Mukesh Ambani’s Reliance Retail on a declining sales basis.
Earlier this month, Future Retail said it had missed the due date for payment of Rs 3,494.56 crore to banks and lenders as it could not sell assets due to its litigation. underway with Amazon, impacting its monetization plans.
Notably, in December fair trade regulator India’s Competition Commission (ICC) suspended the 2019 approval of Amazon’s deal to acquire a 49% stake in Future Coupons Pvt Ltd (FCPL), the developer of FRL, while inflicting a penalty of Rs 202 crore on the e-commerce major.
The ICC order was challenged by Amazon in the National Company Law Appellate Tribunal, which issued an opinion to the fair trade regulator and the FCPL. The NCLAT ordered the case to be listed on February 2 for the next hearing.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)