Future plans value adjustments, reversal of takeover of stores by RIL

Future Retail Ltd (FRL) on Wednesday said it is "committed" to reversal of takeover of its stores by Reliance Retail and will take all such action as may be necessary to seek value adjustments.

The Kishore Biyani-led firm also said the action of the Reliance Group has come as a "surprise" to it.

Moreover, the action of taking possession of its stores has "complicated" the positive scenario which had started building up after a CCI order in December 2021, FRL said in a regulatory filing.

"FRL and its Board remain committed to taking all such action as may be necessary to seek value adjustments and reversal of takeover of the stores (leases) by Reliance Group.

"FRL and its Board are taking steps to arrive at a feasible solution which will be in the interests of all stakeholders," it said.

Earlier in February, Reliance Retail took over the operations of at least 300 stores of FRL and offered jobs to its employees after the Kishore Biyani-led group failed to make lease payments to landlords.

"FRL's Board has taken strong objection to of such action by Reliance Group and has put Reliance Group to notice to reconsider all other actions initiated over the last few days," it added.

FRL's board has also notified Reliance Group that assets such as store fixtures, store infrastructure, merchandise, inventory, etc belonging to FRL and lying inside these stores are hypothecated as security in favour of FRL's lenders.

"The Board has called upon Reliance Group to ensure that the possession of the secured assets is not transferred and retained unharmed for the benefit of the Lenders," it added.

According to FRL, there have been several media reports and public notices issued by Amazon misreporting that FRL has handed over its retail assets to Reliance in breach of orders of arbitration tribunal of SIAC and the Supreme Court of India.

"Such reporting is inaccurate and factually erroneous," it said.

"FRL has not handed over the stores to Reliance Group.

"On the contrary, FRL's Board had two meetings and notified Reliance Group that such a drastic and unilateral action of Reliance Group to takeover the stores has not only come as a surprise to FRL but also complicated the positive scenario, which had started building up after the CCI order in December 2021, in favour of the Scheme and Future Group," it said.

On Tuesday, Amazon had come out with a public notice in newspapers alleging that FRL and its promoters have in a "clandestine" manner played a fraud on the constitutional courts in India and the arbitral tribunal formed at the Singapore International Arbitration Center (SIAC), adding that it reserved the right to civil and criminal legal recourse.

"FRL and its promoters have consistently acted in violation of the order passed by the emergency arbitrator and reaffirmed by the Arbitral Tribunal.

"It has now come to light that FRL and its promoters have been attempting to remove the substratum of the dispute by purportedly transferring and alienating FRL's retail assets comprising the retail stores in favour of the MDA Group (Mukesh Dhirubhai Ambani)," the notice had said.

FRL's statement came in response to stock exchanges seeking clarifications/ confirmations over the public notice by Amazon.

According to the Future Group firm, since the last week of February 2022, Reliance Group has unilaterally terminated the leases and forcefully taken over control of hundreds of Future Retail's stores.

"Such termination of leases and takeover of stores by Reliance Group has come as a surprise to FRL and its Board since throughout the entire period, the Future Group and Reliance Group have been collaborating to ensure full continuity of businesses," it said.

In August 2020, the loss-making retail giant proposed to sell its retail, wholesale and logistics arms that included businesses like Fashion at Big Bazaar, Koryo, Foodhall and Easyday to Reliance for Rs 24,713 crore.

However, the deal could not be closed as Future's warring partner Amazon went to courts citing violation of some contracts. Future denies any wrongdoing.

After the deal was stuck in a series of litigations and arbitrations, the long-stop date for the scheme was extended by six months to September 30, 2022 by Reliance.

"FRL has in fact welcomed the extension of the long stop date of the Scheme to 30th September, 2022," it said.

The Competition Commission of India (CCI), in an unprecedented move, revisited its more than two-year old approval granted to Amazon to acquire a stake in Future Coupons, through which the global e-commerce major is claiming rights over Future Retail.

On December 17, the CCI had suspended its approval for Amazon's deal to acquire a stake in Future Coupons Pvt Ltd and also imposed a Rs 202 crore penalty on the e-commerce major for certain contraventions.

On Tuesday, Amazon had informed the Supreme Court that talks with Future Group to resolve the dispute over Future Retail's merger deal with Reliance Retail have failed and sought intervention to ensure that the stores of FRL are not taken over.

Earlier on March 3, the Supreme Court had granted 10 days for exploring the possibility of resolving the dispute through dialogue with the Future Group.

The Future Group companies have convened meetings of their respective shareholders and creditors between March 20 to March 23, 2022, to get their approval for the Rs 24,713 crore deal with Reliance Retail.

The Mumbai bench of the National Company Law Tribunal (NCLT) had on February 28 given a go-ahead for convening meetings of shareholders and creditors of respective Future group companies.