Samara Capital has expressed interest in buying Future Retail’s businesses
New Delhi:
Notified to confirm the capital infusion to avert an impending default, Amazon told Future Retail Limited (FRL) that Samara Capital remains interested in buying the debt-poor retailer such as Big Bazaar for Rs 7,000 crore.
Asked by FRL’s independent directors to confirm whether it will inject Rs 3,500 crore into the cash-strapped retailer to enable it to pay its lenders by the January 29 due date, Amazon wrote to them that FRL will provide its financial details. Samara Capital should provide for the private equity fund to conduct accelerated due diligence.
“We confirm that based on your letter of January 21, 2022, Samara Capital has reiterated to us that they remain interested and committed to lead and continue the term sheet dated June 30, 2020, signed by Samara, FRL and the promoters . of FRL, which is considering a purchase fee of (Rs 7,000 crore),” Amazon said in a Jan. 22 letter to independent directors of FRL.
However, Amazon did not explain why Samara Capital confirmed this to the US company instead of speaking directly to FRL.
Samara Capital, which had signed a non-binding term sheet in June 2020 to acquire FRL’s companies including Big Bazaar, Easyday and Heritage, among other chains, for Rs 7,000 crore, could not be reached independently to make the offer. to confirm.
An email sent to Amazon asking why Samara Capital was communicating with it and not with Future Retail directly went unanswered.
Emails sent to Future and Reliance also went unanswered at the time the story was submitted.
According to sources, Amazon is trying to facilitate the deal between Samara and FRL to protect its own investment in Future and ensure that FRL does not sell its judicial assets to Reliance Retail or entities prohibited by the original contract.
Amazon said in its Jan. 22 letter: “The transaction contemplated in the Samara term sheet would ensure the availability of funds in FRL at the earliest, through an asset sale and equity injection, which would be a direct antidote for the indebtedness of FRL”.
While Amazon opposes billionaire Mukesh Ambani’s group along with other group companies acquiring companies from FRL for Rs 24,713 crore, it appeared from the letter that Samara Capital could acquire the company.
The Amazon letter, a copy of which PTI has seen, claimed that the engagement to Samara will not affect the binding nature of the injunctions issued in the arbitration proceeding and by Indian courts regarding the transfer/encumbrance of the retail assets of FRL.
It said the new transaction will be under the understanding that “the transaction with the Mukesh Dhirubhai Ambani (Reliance Industries Limited) group (MDA Group) will not go ahead and will not be executed; and all assistance would be provided through legally compliant structures”.
Amazon argued that the structure with Samara is also similar to the proposed acquisition of the Future group’s retail and wholesale business (including FRL’s retail assets) by Reliance Retail and Fashion Lifestyle Ltd (RRFLL).
“We understand that this entity has negligible business activities and its parent company Reliance Retail Ventures Ltd (RRVL) has received at least Rs 47,265 crore from various foreign investors. We also understand that this amount is proposed to be used to fund the acquisition of FRL’s retail, wholesale and logistics assets,” the letter reads.
It further said that the transaction with FRL and parts of the MDA Group, namely RRVL and RRFLL, follows a “remarkably similar structure”.
The letter stated that the Samara Term Sheet provides for an acquisition of all of FRL’s retail assets, including the “small retail formats” comprising the “Easy Day”, “Adhaar” and “Heritage” brands, through an entity structure owned by and controlled by India led by Samara and supported by Amazon.
Amazon has requested the independent directors to allow Samara to conduct a due diligence investigation of FRL.
“If access can be provided with respect to all financial, tax, regulatory, operational, licensing, assets, encumbrances, material contracts, material obligations, material lawsuits, material investigations and similar data shared with the MDA Group, Samara is poised to Begin the due diligence exercise from Sunday, January 23, 2022 and complete it in an accelerated manner,” Amazon said.
Future and Amazon are embroiled in a bitter legal battle after US e-commerce giant dragged Future Group to arbitration at the Singapore International Arbitration Center (SIAC) in October 2020, alleging that FRL had breached their contract by entering into a deal for selling its assets to billionaire Mukesh Ambani’s Reliance Retail on the basis of a slump.
