Future group shares plummet up to 36% in 2 sessions after Reliance calls off deal

Shares of debt-laden Future group companies extended fall for the second straight session on Tuesday as Kishore Biyani-led firms face bankruptcy risk after Reliance Industries (RIL) called off the deal to buy Future Retail assets. The fate of all Future group firms hangs in balance as lenders plan to drag all listed companies to bankruptcy court to recover their dues under the Insolvency and Bankruptcy Code.

Future group companies hit their lower-price circuits for the second consecutive day on the BSE amid an uncertain future as they failed to secure the ₹24,713 crore deals with RIL. Shares of Future Lifestyle Fashions were locked in a lower circuit of 20% at ₹23.55 apiece on Tuesday after falling 20% in the previous session. The stock has tumbled more than 36% in the past two days.

Similarly, Future Supply Chain Solutions shares dropped as much as 17.3% to hit an intraday low of 30.9 after diving 20% on Monday.

In a similar trend, Future Retail and Future Enterprises hit their lower circuit limit of 5% and 10%, respectively, for the second day. Among others, Future Consumer nosedived 18% and Future Market Networks shed 4.5% after falling 20% each in the previous session.

Future group shares have been reeling under selling stress after Reliance said on April 23 that the deal with Future Retail cannot be implemented as the company's secured creditors had "voted against the scheme”.

In August 2020, Reliance Retail Ventures Ltd (RRVL), the retail holding company of RIL, had signed a deal to take over the retail and logistics business of Kishore Biyani-led Future Group but the transaction couldn't be closed as U.S.-based e-commerce major Amazon contested the deal citing violation of some contracts.

Future Retail in an exchange update said that 75% of Future group's shareholders and unsecured creditors had voted in favour of the deal with Reliance, while 69.29% of secured creditors rejected the offer, citing lower valuation. State Bank of India (SBI), Bank of Baroda (BoB), Union Bank of India, and IDBI Bank are among the key members of the consortium. The decision was taken in a meeting of unsecured creditors of Future Retail held on April 21.

As the deal with Reliance called off, Future group companies having exposure to bank loans - Future Consumer, Future Retail, and Future Enterprises – face insolvency proceedings. These group companies owe more than ₹28,000 crore to banks as of January 31, 2022.

Bank of India has already filed insolvency proceedings against cash-strapped Future Retail for non-payment of dues. The bank lent ₹5,322.32 crore as of March 31, 2022, as per the lender’s petition to the National Company Law Tribunal (NCLT).