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Banks Approves the Debt Restructuring Plan of Future Retail with Repayment of Loans

Future Retail's debt reduction strategy has been approved by banks, with loan repayments being extended for up to two years.

“Repayment of short-term loans, term loans, NCDs, overdue working capital loans (converted into working capital term loans) is to be extended up to a maximum of 2 years,” the company said. There will be interest moratorium between March 1, 2020 to September 30, 2021 and interest during the period will be converted into funded interest term loan which will payable by December 2021, it said.

The deal will now be vetted by the committee headed by KV Kamath. As part of the recast plan, cash credit will be continued at reduced level based on bank assessment and all securities created on assets of the company will continue to operate in favour of the lenders in the ranks assigned originally.

Lenders belonging to a 28-bank consortium have approved Future Retail's restructuring plan. These include Union Bank of India, Bank of India, Bank of Baroda, State Bank of India, Indian Bank, Central Bank of India, Punjab National Bank, UCO Bank, Bajaj Finance Limited, Axis Bank, IDBI Bank, IDFC First Bank, Rabo Bank, YES Bank, IndusInd Bank, HDFC Bank, J&K Bank, Barclays, Kotak Bank, Qatar National Bank, RBL Bank, DBS Bank India, Shinhan Bank, Mannapuram Finance, Punjab & Sind Bank, CSB Bank, Bank of Maharashtra, and South Indian Bank.

As part of the lender-approved resolution plan, the repayment of short term loans, term loans, NCDs, overdue working capital loans (converted into working capital term loans) is to be extended up to a maximum of 2 years. Owing to a moratorium between March 1, 2020, and September 30, 2021, interest during the period shall be converted into Funded Interest Term Loan (FITL) which shall be payable by December 2021. Cash credit will continue at reduced level based on bank assessment, Future Retail added.

All penal interest and charges, default premiums, processing fees unpaid since March 2020 implementation date will be waived off fully under the resolution plan, the company said.

Future Retail expects all the necessary agreements, deeds, undertaking and other relevant documents between the company and the lenders to be finalised on or before April 26.

On NCDs that will be part of the resolution plan, Future Retail mentioned that the same issued under Series IA, IB and II have been included and will be restructured. However, 5.6 per cent US Senior Secured Notes 2025 and NCDs issued to certain trusts are not part of the resolution plan, Future Retail clarified.

"The company has received the written consent of 100 per cent of the holder(s) of the NCDs to amend the terms and conditions of the NCDs as per the resolution plan approved by the other lenders of the existing debt. The Board took these consents on record... and approved the restructuring of the NCDs, in line with the resolution plan approved by the other lenders of the existing debt," Future Retail said in its filing.

"Further, the company shall, prior to undertaking the restructuring of the NCDs as per the resolution plan, obtain the approval of the relevant stock exchanges where the NCDs are listed," it further added.

Under the resolution plan, redemption for Series IA and Series IB NCDS will be rescheduled as four equal quarterly instalments each in FY23 and FY24, respectively. Meanwhile, full redemption for Series II NCDs will happen on June 1, 2025.

Rate of interest on NCDs would continue at same rate as was agreed at the time of allotment, Future Retail stated, adding that interest up to June 2021 on Series II NCDs would be converted into FITL, which would carry interest rate of 8.30 per cent per annum.

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