Reliance Industries Ltd (RIL) has agreed to expand the operating support to Future Retail Ltd., in order to avoid its failure, though its 24,713-crore deal to purchase the cash-strapped retailer’s properties is awaiting approval from the company law court, two persons directly aware of the matter. The case was set to be decided by the National Company Law Tribunal (NCLT) on Tuesday, but it was postponed until 15th March.
The Mukesh Ambani-led company has also extended the internal deadline for the completion of the acquisition by six months to accommodate the delays caused by the legal fight between Future Group and Amazon.com Inc., according to anonymity, citing legal sensitivity. Firms typically set aside 3-9 months, depending on the size of the deal, to obtain regulatory approvals.
Due to the ongoing legal fight with Amazon, it is difficult to get all the regulatory nodes before May, which is why the deadline has been extended by at least six months,” said one of the two people mentioned above. However, some of the Future Retail lease deals for stores have been shifted to Reliance to relieve the pressure on the struggling retailer and prevent defaults.
“Many current employees of the Future Group have begun training in order to be ready for Reliance Retail jobs. Re-branding activities and soft-launch preparations are going on at full speed, so that everyone from both parties is ready on the date when all the regulatory approvals come in,” said the first person.
India’s Corporate Law Tribunal is expected to finalise its decision on the RIL-Future contract next week. The agreement involves the merger of six Future Group companies and the resulting selling of retail, wholesale, warehouse and logistics properties to two Reliance Industries subsidiaries.
In an interim order dated 22nd February, the Supreme Court suspended the agreement and prevented NCLT from authorising the transaction before further orders were given. The approval of the NCLT is a must for this agreement to be concluded. The Supreme Court will hear the matter again on 19th March, said a third person who is familiar with the ongoing developments.
According to the order of the Supreme Court, NCLT will allow the Future Group to take operational steps towards the proposed RIL-Future agreement, but may not allow the Future Group to hold any meeting of the Future Retail Board to finalise the agreement or seek the approval of the shareholders before the final judgement has been reached.
Future Group lawyers argued that the RIL-Future agreement is vital to saving the Future Group and the livelihoods of thousands of workers. On 3rd March, it was announced that Amazon had offered a turnaround plan for Future to save it from going bankrupt.
