A large loan of around Rs2,000 crore taken by Future Group-founder Kishore Biyani in his personal capacity is acting as a hurdle before the proposed deal entailing the acquisition of retail and lifestyle businesses of Future Group by Mukesh Ambani-promoted Reliance Industries Ltd.
Two persons directly aware of the ongoing discussions confirmed this, adding that a final decision on resolving the personal debt issue and conclusion of the Rs23,000-crore, all-cash deal may be taken within 10 days.
“The deal was supposed to be announced on 30 July, but negotiations got stuck on ways to tackle one large chunk of personal debt taken by Biyani as a promoter in Future Corporate Resources,” said the first person.
Five listed entities, including Future Retail Ltd, Future Consumer, Future Lifestyle Fashions, Future Supply Chain and Future Market Networks, will be merged into Future Enterprises Ltd (FEL) before the sale of the assets, the people said on the condition of anonymity.
FEL will then conduct a slump sale of its retail assets to a retail subsidiary of Reliance Industries Ltd.
As of 30 September, 2019, debt at Future Group’s listed companies increased to Rs12,778 crore from Rs10,951 crore as on 31 March, 2019.
Biyani’s 46% stake in Future Lifestyle is entirely pledged, and in Future Retail, too, three-fourth of his 42% stake is pledged.
The deal includes a takeover of Future’s liabilities by an RIL subsidiary.
FEL develops, owns and leases the retail infrastructure for the group, according to information on the company’s website. It also holds the group’s investments in subsidiaries and joint ventures, including insurance, textile manufacturing, supply chain and logistics.
As part of the deal, fashion and grocery retail formats from listed entities of Future Group, such as Big Bazaar, FoodHall, Nilgiris, FBB, Central, Heritage Foods and Brand Factory, barring apparel brands, will be acquired by RIL. In all, over 1,700 stores across formats are expected to go to RIL.
RIL will also absorb partnerships that the Future Group has with foreign brands and retailers.