India's Reliance defends takeover of Future stores in letter

Future Enterprises

31/03/2022 07:53

* Reliance took over Future stores in 'compelling
circumstances'
    * Months-long fight with Amazon over Future assets
    * Reliance's sudden takeover of stores spooked Future,
Amazon
    * Firm helped Future, acted as dues unpaid -letter

    By Aditya Kalra
    NEW DELHI, March 31 (Reuters) - India's top retailer,
Reliance  RELI.NS , has privately defended an abrupt takeover of
the stores of debt-laden rival Future Retail  FRTL.NS , saying
mounting dues of $634 million compelled it to act beyond
expectations, a company letter shows.
    The takeover was part of the race to dominate a $900-billion
retail sector that set off a bitter dispute in which India's
Supreme Court will decide whether Reliance or Amazon.com Inc
 AMZN.O  gets to scoop up Future's assets.
    The March 8 letter, seen by Reuters, reveals for the first
time Reliance's  RELI.NS  stance on the events of the night of
Feb. 25, when staff suddenly showed up at many of its rival's
stores to take control over missed lease payments.  urn:newsml:reuters.com:*:nL2N2V904L
    That move stunned not only Future but also Amazon, which has
cited violation of certain contracts to legally block, since
2020, a $3.4-billion deal between the two Indian giants.
    In the letter, Reliance said it went "well and truly beyond
what can be expected" to keep Future "out of harm's way," as it
took "significant steps" to ensure business continuity at Future
and make sure there was "no impediment" to their deal.
    These steps included financial support of 48 billion rupees
($634 million), comprising 11 billion rupees of unpaid lease
rentals and 37 billion rupees of working capital.
    Over months, Reliance had taken over the leases of more than
900 of Future's 1,500 stores, while still allowing the company
to run them. 
    As Future proved unable to pay outstanding dues and losses
in its retail operations swelled, Reliance faced "compelling
circumstances" and decided to exercise its legal right to take
over the stores, the letter added.
    Neither Reliance nor Future immediately responded to a
request for comment.
    Future, which is staring at bankruptcy as its losses grow,
has previously called Reliance's move "drastic and unilateral".
    Before Amazon blocked it, Reliance, led by India's richest
man, Mukesh Ambani, had proposed a $3.4-billion deal to buy
Future's retail, wholesale and logistics operations, as well as
some other businesses.  urn:newsml:reuters.com:*:nL2N2VJ0AI
    But following Reliance's abrupt takeover of its stores,
Future sought several assurances in a March 2 letter, also seen
by Reuters, asking if Reliance would stick to the deal without
changing its value or terms.
    In its response on March 8, Reliance said Future's request
for assurances had to be seen "in the light of the rapidly
evolving circumstances". 
    It added, "As and when the scheme (deal) is implemented, it
will be in accordance with its terms."

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ANALYSIS-Battle of the billionaires: Bezos, Ambani gun for India
retail supremacy    https://reut.rs/2KJpvXn
Explainer: Amazon's battle with Reliance for India retail
supremacy     https://reut.rs/36IFbW7
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Aditya Kalra in New Delhi; Additional reporting
by Abhirup Roy; Editing by Clarence Fernandez)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))