Future Group stocks cannot shake off the shock from the deal with Reliance Retail falling through

• Future Retail’s share price fell another 10% on August 9.
• The share price had fallen about 16% on Friday, after the deal with Reliance fell through.
• CEO Kishore Biyani had previously said that the deal with Reliance Retail was a “saviour” for the company.

Share prices of Kishore Biyani-led Future Retail have taken a nosedive after the ₹24,713 crore deal with Reliance Retail fell through on Friday, August 6.

Future Retail’s share price fell 10% onAugust 9, as of 10:15 a.m. On Friday, the stock had tanked 16% as the Supreme court passed its verdict in favour of Amazon.

The legal battle between Amazon and Future Retail dates back to August 2020, after Mukesh Ambani-led Reliance Retail agreed to buy Future Group’s retail, wholesale and warehousing assets.

Amazon, which held about 3% stake in Future Retail through its 49% shareholding in Future Coupon, objected to the deal. The company highlighted that as per their investor clause, Future Group was barred from selling any of its assets to specific companies, including Reliance Industries.

Future Retail was already going through a rough time with a debt of ₹10,000 crore. The Reliance-Future deal was supposed to come as a “saviour for the company, its employees and stakeholders”, CEO Kishore Biyani had said previously.

Biyani had also noted that they had reached out to Amazon several times, seeking financial help. However, the e-commerce giant never offered any support. “As part of the agreement, they could have provided us funds through affiliates or financial institutions by taking over loans from existing lenders, but they never did despite the agreement clause and our request,” he said.

Why is the fall of Future-Reliance deal a cause of concern?

Earlier in April 2021, a group of 28 lenders to Future Retail had approved a resolution plan to make loan repayment earlier for the Biyani-led retail giant. The company’s existing debt would have been restructured under the Reserve Bank of India’s (RBI) special scheme for COVID-related stress.

The lenders had also decided to extend the period of repayment of the working capital loan by two years. The restructuring was subject to Future Group’s retail assets being acquired by Reliance Retail, as per sources aware of the matter.

Apart from the ₹ 10,000 crore debt, Future Retail is also under stress financially. The retail giant had reported a revenue of ₹6,437 crore in the financial year that ended in March 2021, with a loss of ₹3,180 crore as net loss.


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