Companies

Samara Capital offer for Future is similar to Reliance deal: Amazon

BL Mumbai Bureau | | Updated on: Jan 23, 2022
Kishore Biyani, promoter, Future Group

Kishore Biyani, promoter, Future Group

Amazon has asked Future Retail to give all financial details to Samara Capital to avoid default

The structure of the proposed funding by Samara Capital is compliant with the foreign direct investment rules because it is very similar to the acquisition of Future group’s retail assets by Reliance Industries, Amazon has told the Independent directors of Future Retail. 

Amazon has also asked Future Retail to submit all financial details to Samara Capital to be able to bring in additional funds that will help the Kishore Biyani firm to avoid default on payments. 

In a communication to the independent directors of Future Retail, Amazon said, “ 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 ₹7,000 crore.

Funds availability

“Pertinently, the Samara Term Sheet provides for an acquisition of all retail assets of FRL, including the small store formats comprising the Easy Day, Adhaar and Heritage brands, through an Indian owned and controlled entity structure led by Samara and supported by Amazon.”

“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,” it added . 

Independent directors’ SOS

On Friday, the independent directors of Future Retail Ltd had asked Amazon to immediately give ₹3,500 crore to help it pay off its dues to the lenders by January 29. This comes even as Amazon and FRL are at loggerheads over the latter’s plan to merge with Reliance Retail. While Amazon doesn’t want FRL to partner with Reliance, FRL thinks this is the only way to keep the business afloat. 

Amazon said that it is confident that if the independent directors and FRL provide immediate access to the information and records of FRL and fully co-operate in the engagement/discussions, the transactions contemplated in the Samara Term Sheet can be implemented in an expedited manner. “ Further, we along with Samara are open to engage with other stakeholders to find a viable solution at hand, “ Amazon said adding that FRL will have to give an undertaking that it will not proceed with the deal with Reliance Industries. 

Responding to FRL’s independent directors concerns on the Samara deal being compliant with FDI norms, Amazon said the structure of the proposed deal is is similar to the acquisition of the retail and wholesale undertaking of the Future group by Reliance Retail and Fashion Lifestyle Limited. 

“We understand that this entity has negligible business operations and whose parent entity Reliance Retail Ventures Limited has received at least ₹47,265 crore from various foreign investors. We also understand that this amount is proposed to be utilised to fund the acquisition of FRL’s retail, wholesale and logistics assets. In fact, the transaction involving FRL and constituents of the MDA Group, viz., Reliance Retail Ventures Limited and Reliance Retail and Lifestyle Fashions Limited, follow a strikingly similar structure,” Amazon said..

Published on January 23, 2022
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