RIL closer to Future retail deal as companies narrow differences: report

Reliance Industries (RIL) is reported to be in the final stages of negotiations with Kishore Biyani’s Future Group to acquire a controlling stake in the group’s retail business. The two parties have agreed on certain terms and conditions and a deal is likely to be announced shortly, say reports.

Future Retail manages over 1,500 stores under various formats, including Big Bazaar, Fashion at Big Bazaar (FBB), ezone, and Foodhall and a combination would make Reliance a leader in both brick-and-mortar and online retail business.
Once the negotiations conclude successfully, RIL plans to take over the retail, supply-chain and related businesses of Future Group, propelling itself to the country’s top retailer.
Reliance Industries Limited, the country’s largest company by market capitalisation, already operates retail units, which include Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trends, Hamleys, AJIO, JioMart.
Reliance Retail reported a turnover of Rs1,30,566 crore for the financial year 2018-19. As of 30 September 2019, Reliance Retail operated 10,901 stores across 6,700+ cities with a retail area of over 24.5 million sft.
Reports said the transaction got delayed because of a lack of consensus over the valuation of Future Retail, especially since the company is grappling with cash crunch after it defaulted on a Rs100-crore ($14-million) repayment on its $500-million foreign currency bonds last week. 
Promoters have 42 per cent share in Future Retail, which runs hypermarket chain Big Bazaar and neighbourhood grocery stores chain Easyday Club, but 75 per cent of the holding is pledged as on June 30, 2020.
Acording to the report, the board of Future has agreed with the final draft of the deal and a resolution will be passed over the next few days. 
Biyani is expected to retain the FMCG and some other smaller group entities. The transaction will be financed through a mix of share-swap and cash.
The market value of Future Group’s listed entities fell 74 per cent to Rs10,464 crore in one year while its debt jumped to Rs12,000 crore. Also, Future companies did not repay banks debts since the last four months. 
Meanwhile, an earlier report said RIL has asked Future Group's lenders for a ‘massive haircut on debt and easier terms of repayment. Discussions were underway for a haircut of about 30 per cent on outstanding dues of over Rs6,000 crore and refinancing part of the borrowings for a further tenure of 5-7 years.