RIL deal: Future Retail asks exchanges to disregard arbitration order

By: |
November 2, 2020 5:15 AM

The arbitration has been initiated by Amazon.com NV Investment Holding, which had bought a 49% stake in Future Coupons, a promoter group entity of FRL, in late 2019.

In late August, RIL announced the acquisition of the retail, wholesale, logistics and warehousing businesses of Future Group for Rs 24, 713 crore.In the November 15 auction, bidders quoted between 8.5 and 8.6 per cent slope to corner all of the 5 mmscmd supplies available.

Future Retail (FRL) on Sunday asked the stock exchanges to not take cognisance of an order by Emergency Arbitrator (EA) nominated by the Singapore International Arbitration Centre (SIAC) that barred the company from selling its assets to Reliance Industries (RIL).

The arbitration has been initiated by Amazon.com NV Investment Holding, which had bought a 49% stake in Future Coupons, a promoter group entity of FRL, in late 2019. In late August, RIL announced the acquisition of the retail, wholesale, logistics and warehousing businesses of Future Group for Rs 24, 713 crore.

Sunday’s regulatory filing by FRL notes that the contention raised by Amazon is ‘misconceived’. Amazon has argued that that two separate shareholder agreement(s), one between Amazon and FRL’s promoters (to which FRL is not a party) and another between FRL and its promoter (to which Amazon is not a party) constitute one single integrated transaction and that by such a composite transaction Amazon has an interest in and rights against FRL.

However, FRL notes that if the two separate agreements were treated as a single integrated transaction by which Amazon obtained an interest in and rights against FRL, then in 2019, when the agreements were executed there would have been a change in control of FRL in favour of Amazon, requiring it to make an open offer to FRL’s public shareholders in terms of the Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

FRL said it has complied with all requirements of obtaining the requisite approvals from Future Coupons adding it faces serious financial trouble and that the proposed transaction with RIL is its only way out. “Any delay in the implementation of scheme will cause irreparable losses to all stakeholders,” the company wrote.

“In its letter, Amazon has painted a picture that public shareholders of FRL are being misled. It is a bit rich for such an argument to be made from someone who is not even a shareholder in FRL. Evidently, Amazon’s letter is motivated by other considerations,” FRL said.

Future Retail also told exchanges that Amazon has sought damages of Rs 1,431 crore along with interest, which is the amount invested by Amazon in Future Coupons.

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