Future Retail Ltd may not be able to arrange funds to make $14-million coupon payments on foreign currency bonds on the due date on Monday, people familiar with the development said.
The Kishore Biyani-promoted company, which had raised $500 million in an overseas bond issue offering 5.6% returns in January 2020, has one-month grace period till February 22 to make the semi-annual coupon payment.
Even that may be difficult if it fails to clear dues of local banks by this month-end, sources said.
Future Retail, which had missed a ₹3,494 crore payment to local lenders on December 31, has time till January 29 to prevent the account from defaulting. If it misses that, local lenders will classify the account as a non-performing loan on January 30.
And they may object to the company paying foreign bondholders since both are at par as secured creditors. Local banks may convey to Future Retail that their dues should be cleared before making payments to foreign bondholders, said one of the persons cited above.
“Since the company has defaulted to local banks, surely they (local lenders) will object to hypermarket paying foreign currency bondholders,” an executive at one of the local lenders told ET.
Another person said the payment to bondholders can be made if the Supreme Court rules approve the deal between Future Group and Reliance Industries-linked entities before February 22, the end of grace period.
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Future Retail Ltd may not be able to arrange funds to make $14-million coupon payments on foreign currency bonds on the due date on Monday, people familiar with the development said. The Kishore Biyani-promoted company, which had raised $500 million in an overseas bond issue offering 5.6% returns in January 2020, has one-month grace period till February 22 to make the semi-annual coupon payment. Even that may be difficult if it fails to clear dues of local banks by this month-end, sources said. Future Retail, which had missed a ₹3,494 crore payment to local lenders on December 31, has time till January 29 to prevent the account from defaulting. If it misses that, local lenders will classify the account as a non-performing loan on January 30. And they may object to the company paying foreign bondholders since both are at par as secured creditors. Local banks may convey to Future Retail that their dues should be cleared before making payments to foreign bondholders, said one of the persons cited above. “Since the company has defaulted to local banks, surely they (local lenders) will object to hypermarket paying foreign currency bondholders,” an executive at one of the local lenders told ET. Another person said the payment to bondholders can be made if the Supreme Court rules approve the deal between Future Group and Reliance Industries-linked entities before February 22, the end of grace period. (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)Download The Economic Times News App to get Daily Market Updates & Live Business News.