Amazon extends new option to Future Retail

New Delhi: Put on notice to confirm capital infusion to avert a looming loan default, Amazon told Future Retail Ltd (FRL) that Samara Capital remains interested in buying out the debt-strapped retailer's businesses such as Big Bazaar for Rs7,000 crore.

Asked by FRL's independent directors to confirm if it will infuse Rs3,500 crore into the cash-strapped retailer to enable it to pay its lenders by the due date of January 29, Amazon wrote to them saying FRL should provide its financial details to Samara Capital for the private equity (PE) fund to conduct an expedited due diligence.

"We confirm that based on your letter dated January 21, 2022, Samara Capital has once again reiterated to us that they remain interested and committed to lead and take forward the term sheet dated June 30, 2020, signed amongst Samara, FRL and the promoters of FRL, which contemplates a purchase consideration of (Rs 7,000 crore)," Amazon said in January 22 letter to independent directors of FRL. Amazon, however, did not explain why Samara Capital was confirming this to the US firm rather than speak to FRL directly.

Samara Capital, which had in June 2020 signed a non-binding term sheet to acquire FRL's businesses including Big Bazaar, Easyday and Heritage, among other chains, for Rs7,000 crore, couldn't be independently reached to confirm the offer.

An email sent to Amazon asking why Samara Capital was communicating with it and not with Future Retail directly remained unanswered.

Emails sent to Future and Reliance also remained unanswered by the time of filing of the story.

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 doesn't sell its injuncted assets to Reliance Retail or entities prohibited as per the original contract.

Amazon, in its January 22 letter, said: "The transaction envisaged in the Samara term sheet would ensure availability of funds in FRL at the earliest, through an asset sale and an equity infusion, which would be a direct antidote to FRL's indebtedness". While Amazon is opposed to billionaire Mukesh Ambani's group acquiring businesses of FRL along with other group companies for Rs s 24,713 crore, it seemed from the letter that it was open to Samara Capital taking over the business.

The Amazon letter, a copy of which was seen by PTI, asserted that the engagement with Samara will not affect the binding nature of the injunctions passed in the Arbitration Proceedings and by Indian Courts over transfer/encumbrance of FRL's retail assets.