India's Reliance to take on 200 Future stores amid Amazon dispute - sources (updated)

Future Enterprises

26/02/2022 11:33

(Adds Future Retail statement)
    By Aditya Kalra
    NEW DELHI, Feb 26 (Reuters) - India's top retailer,
Reliance, will take on at least 200 Future Retail  FRTL.NS 
stores after the company failed to make lease payments for them
to Reliance, two people with direct knowledge of the matter told
Reuters on Saturday.
    Since 2020, Reliance has failed to close a $3.4 billion deal
to acquire the retail assets of Future, whose partner Amazon.com
Inc  AMZN.O  has successfully blocked the transaction by citing
violation of some contracts. Future denies any wrongdoing.
    The takeover of stores by Reliance signals Future's
worsening financial situation. Future in January challenged its
lenders in India's Supreme Court to avoid facing insolvency
proceedings over missing bank payments, citing its dispute with
Amazon.  urn:newsml:reuters.com:*:nL1N2U50C9
    Future - which has more than 1,700 outlets, including
popular Big Bazaar stores - has been unable to make lease
payments for some of its outlets. As a result, Reliance
transferred the leases of some stores to its name and sublet
them to Future to operate the stores, the sources said.
    As Future failed to make the payments, Reliance has decided
to run and rebrand about 200 outlets that would otherwise be
closed, they said.
    In a statement to Indian stock exchanges, Future said
"termination notices have been received for significant number
of stores" to which it will "no longer have access."
    The company is "scaling down its operations which will help
us in reducing losses in the coming months," it said, without
mentioning Reliance's plan to take over many such outlets.
    Reliance and Amazon did not respond to requests for comment.
    "Over 200 stores will transition to Reliance stores," said
one source, who asked not to be named as the details of the plan
were not public.
    In a letter seen by Reuters, Reliance offered Future
employees at these stores new jobs on the same terms. "We
welcome you to join our organization," it reads.
    Amazon has argued that Future violated the terms of a 2019
deal the companies signed when the U.S. giant invested $200
million in a Future unit. Amazon's position has been backed by a
Singapore arbitrator and Indian courts.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Explainer: Long-running legal dispute between Amazon, India's
Future    https://reut.rs/3IoRS6h
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 (Reporting by Aditya Kalra in New Delhi
Editing by William Mallard and Mark Potter)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))