Future Retail is in talks with banks to get the line of credit open again topay interest due on $500-million bonds. The company had missed the service of the payment of about ₹ 100-crore interest due on Wednesday.

According to sources, banks had stopped the line of credit due to some concerns related to company’s plans to sell stake to Reliance Industries. “The issue has been sorted out and some payments have come in. Banks are expected to open the credit lines fully by next week,” said a source aware of the development.

The rating agency S&P Global Ratings said the payment worth $14 million for Future Retail’s $500-million senior secured notes was due on Wednesday; however, that had not gone through. The rating agency then warned to lower its preliminary rating on Future Retail to ‘D’.

For payments like these, companies are usually given a 30-day grace period. Post which, it is declared that the company has defaulted on payments. Company sources explained that the payment was stuck due to the minor issues with lenders.

The retail company informed the exchanges that it is proposing to make payment of the interest within 30 days from the interest due date on the US dollar notes. The process of ensuring that payment of such interest is made within this additional time period was initiated, it added.

RIL deal

Meanwhile, Future Retail is looking to close the deal with Reliance Industries Limited quickly to avoid payment default. Sources said the deal has reached its final stages. While earlier media reports suggested that bankers may to take a haircut post the deal with RIL, sources at Future Group said there was no cause for worry for lenders. “There will be no haircuts for banks. This is a strategic sale not a distress sale,” said a source.

The other question is what will happen to Amazon’s stake in Future Retail if the deal with RIL goes through. Reports indicate that Amazon could pick a stake in Reliance Retail. Industry sources speculated that Amazon could sell its stake in Future Retail to RIL and then take a stake in Reliance Retail. “There is no complications arising out of Amazon’s stake in Future Retail. This has been sorted out during talks between RIL and Biyani. How it has been resolved is still unclear,” said a source close to Future Group.

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