Big win for Amazon as SC upholds Future-Reliance contract freeze deal
In a blow to Kishore Biyani’s plans to keep Future Retail afloat, the Supreme Court ruled in favor of Amazon on Friday, upholding the Singapore International Arbitration Center’s award against the proposed 24,713 crore merger agreement between Future Retail Limited and Reliance Retail.
The move effectively stops Biyani’s plans to pay off the group’s growing debt and save at least part of the business. For the year ended 2021, the Future Group recorded a loss of 5,943 crore and total debt increased 7% to ₹ 20,742 crore. The company has defaulted several times, and lenders, who recently agreed to restructure the debt, are now worried about the future.
“This is a major setback for Future Retail,” said Arvind Singhal, president and CEO of Technopak. “He desperately needed Reliance as a white knight to bail him out and provide substantial financial recovery for lenders.”
Future Retail had reached an agreement with Reliance Retail in August 2020, but Amazon opposed it, which had acquired, in 2019, a 49% stake in Future Coupons which has a 7.3% stake in Future Retail. The deal gave Amazon an indirect 3.58% stake in Future Retail.
Will pursue all avenues to strike a deal with Reliance: Future
SIAC remains the deal
According to Amazon, there was an agreement with Future that it would not sell a stake to Reliance Industries. After the Future-Reliance deal was announced, Amazon filed a complaint with the Singapore International Arbitration Center. In October, SIAC suspended the case, as part of an interim award.
On Friday, a bench of Judges Rohinton F. Nariman and BR Gavai confirmed the validity and enforceability of the Singapore-based emergency arbitration award.
According to experts, Future Retail is expected to face a major liquidity crisis in the near future. This clearly made investors nervous. On Friday, shares of Future Retail remained stuck in the 10% bottom circuit throughout the day. . “Future Retail intends to pursue all avenues available to close the deal (with Reliance) to protect the interests of its stakeholders and its workforce,” the company said in a statement. “The judgment (SC) addresses two limited points related to the applicability of the emergency arbitrator’s order and not to the merits of the disputes,” he added.
Amazon welcomes the verdict
Amazon, as you might expect, hailed the verdict. “We hope this will speed up the resolution of this dispute with the Future Group,” said a spokesperson for the e-commerce giant.
According to Anuj Kapoor, assistant professor of marketing at IIM-Ahmedabad, “this decision will inspire confidence in international actors by signaling them to reaffirm that their rights would be protected on Indian soil and therefore, would have a long-term impact on investments. future, particularly involving foreign players.
But the key question is how long Biyani can wait for Reliance’s money to flow into Future Retail. A loan restructuring plan has already been put in place by lenders to companies in the Future Group. “With the myriad of legal and restructuring options available with Future, it is too early to predict Future’s demise,” Kapoor said.
Apex court delivers judgment on Amazon’s plea against Future Retail-Reliance deal