Future Enterprises to raise Rs 3000 cr from insurance biz sale to avoid insolvency

Debt-ridden Future Group firm Future Enterprises Ltd expects to raise around Rs 3,000 crore from selling its stake in the insurance business to pare debt, which may save the company from facing the rigour of the insolvency process, according to industry sources. Earlier on Thursday, Future Enterprises Ltd completed the sale of its 25 per cent equity in Future Generali India Insurance Company Ltd (FGIICL) to joint venture partner Generali for Rs 1,266.07 crore.

After this transaction, FEL will directly and indirectly continue to hold 24.91 per cent shares in FGIICL.

"Now in the next 30-40 days, they will sell the remaining 25 per cent stake of the General insurance business for another Rs 1,250 crores to another entity," a source said.

Besides, FEL is also planning to sell its 33.3 per cent stake in its Life Insurance JV - Future Generali India Life Insurance Company Limited (FGILICL).

"Also in separate deals remaining 33 per cent stake of Life insurance business will be sold to Generali and separately to one more Indian entity for a little above Rs 400 crore," he said, adding after this the Kishor Biyani-led group firm would completely exit the insurance sector.

From these exercises, FEL would raise nearly Rs 2,950 crore and will pay to its lenders, he added.

"This is part of the exercise that Future Group is doing to pay off as much debt of various cos so they can be regularised and do not go into insolvency," he said.

On March 31, FEL defaulted on repayment of Rs 2,911.51 crore of loans to the consortium of banks and lenders. Later it also missed a 30-day review period as per the scheme of One Time Restructuring (OTR) for COVID-hit companies with its consortium of banks.

Besides, it has also missed a deadline for payment of interest on non-convertible debentures (NCDs) which were due in the month of March and April.

The total financial indebtedness of FEL, including short-term and long-term debt is Rs 6,778.29 crore.

FEL, develops, owns and leases the retail infrastructure for the Future Group, which owns and operates retail chains as Big Bazaar, Easyday and Heritage, among others.

On last Friday, another Future group firm, Future Consumer Ltd (FCL) announced to sell part of its stake in Amar Chitra Katha Pvt Ltd (ACKPL), which publishes Amar Chitra Katha comics, for Rs 13.62 crore.

It has entered into definitive agreements on Thursday to dispose of part of its investments held in ACKPL constituting 18.58 per cent of the total paid-up share capital of ACKPL to Ramanaidu Daggubati and Spirit Media, according to a regulatory filing.

Several Future Group companies are selling their assets to pare debts after their creditors last month voted against the Rs 24,713 crore deal to sell its retail, wholesale, logistics and warehousing assets to Reliance Retail.

The lender of its flagship firm Future Retail Ltd, which operates retail stores under brand formats such as Big Bazaar, FBB and Easyday, has already taken the company to the insolvency tribunal NCLT. It has already defaulted Rs 5,322.32 crore.

On April 28, the Mumbai bench of NCLT gave time till May 12, to submit its reply to the insolvency petition filed against the company by the Bank of India.

FEL was part of 19 companies, which were supposed to be transferred to Reliance Retail as part of a 24,713 crore deal announced in August 2020 to sell its retail, wholesale, logistics and warehousing assets.

The deal has now been called off by the billionaire Mukesh Ambani-led Reliance Industries last month after the creditors of the listed entities voted against it.