Kishore Biyani plans Future Retail stake sale to tide over liquidity problems
Future Group founder Kishore Biyani plans to explore a stake dilution in Future Retail after sales have ground to a halt, due to India’s lockdown and ban on delivery of non-essential goods, and the company’s debt mounts.
Biyani’s holding company Future Corporate Resources Private Limited defaulted on its debt repayments earlier in the week, ET Bureau reported. This, coupled with with a downturn in sales from some of Future Retail’s brands, has necessitated that Biyani reduce his stake in Future Retail.
“There will be zero cash flow, possibly for another month, putting further pressure on the share price,” a source told ET Bureau.
“Biyani will have to either pledge more shares at low value to meet the lender's requirements or pay the difference between value of shares when it was pledged and the current market price.”
Future Retail, which runs fast moving consumer goods chain BigBazaar, controls a large share of India’s supermarket sector. The business has seen its share prices consistently decline and holding company FCRPL has debt repayment obligations of Rs 1045 crore ($141.47 million) for the next two years putting the business in a difficult situation. FRCPL has been downgraded by ratings firm ICRA to ‘junk’ statues due to the amount of debt owned by its promoter entities.
The entire world economy has felt the effects of coronavirus and the shut downs global governments are enforcing in a bid to halt its spread. For a business like Future Group which was already grappling with debt, the pandemic has only exacerbated the issue.
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