Future Retail To Acquire Retail Lease Assets Of Future Enterprises For Rs 4,000 Crore
The acquisition will reduce annual lease rentals, says Future Retail.
Future Retail Ltd., the retail arm of Kishore Biyani-led Future Group, said it will acquire the in-house leased assets held by Future Enterprises Ltd. for Rs 4,000 crore.
The acquisition, according to its investor presentation to the stock exchanges, will end all corporate guarantees provided by Future Retail to Future Enterprises and reduce the annual lease rentals by up to Rs 650 crore per year.
Future Enterprises had Rs 7,225 crore worth of assets under leasing and liabilities of Rs 720.51 crore from the same segment, according to its filing. Its revenue stood at Rs 742.97 crore for the year ended March 2019.
The fair value of the proposed asset will be determined by an independent valuation report backed by fairness opinion, it said. The transaction is subject to shareholder approval as it falls under related-party transaction norms. The company will hold its extraordinary general meeting on Nov. 8.
Future Retail said it will acquire these assets from the sum it will receive from balance warrants issuance, equity upside share and existing credit facilities available with the company.
Future Corporate Resources Pvt. Ltd. owns a 47.02 percent stake in Future Retail.
Future Enterprises has been looking at strategic initiatives to reduce debt, according to a Care Ratings note in July. The company owns 7.77 percent and 25.51 percent equity stake in Future Generali India Life Insurance Company Ltd. and Future Generali India Insurance Company Ltd., respectively. It also holds 51.22 percent stake in Future Supply Chain Solutions Ltd.
Promoters of Future Group had in August entered into an agreement with Amazon.com NV Investment Holdings LLC, which allowed the U.S. e-commerce major to acquire 49 percent in Future Coupons. In addition, the promoters have given a call option to Amazon to acquire all or part of the promoter shareholding in Future Retail, exercisable between third and tenth year after entering into an agreement.
Future Retail had 1,557 stores in 437 cities and it occupied total retail space of 16.3 million square feet at the end of June 2019.