Four shuttered debt schemes of Franklin Templeton Mutual Fund saw their respective net asset values (NAV) fall on Monday as Rivaaz Trade Ventures (RTVPL) — a Future group entity — defaulted on its scheduled debt obligation due on August 31.
Due to the default in payment, the securities of RTVPL will be valued at zero based on Association of Mutual Funds in India (Amfi) standard hair cut metrics.
Franklin India Short Term Income Plan, Franklin India Dynamic Accrual Fund, Franklin India Income Opportunities Fund and Franklin India Credit Risk Fund have invested in various non-convertible debentures (NCDs) issued by RTVPL. Data from Value Research shows that four schemes have seen its NAV down in the range of 0.03%-6.10% on Monday.
Earlier Nufuture Digital (India) and Future Ideas Company had defaulted on payment obligation resulting in NCDs being valued at zero.
On August 29, Reliance Retail announced acquisition of retail & wholesale business and logistics & warehousing business of the Future Group, on a slump sale basis, for lumpsum aggregate consideration of Rs 24,713 crore.
“Based on representations received from the Future Group, we understand NCDs held by Franklin Templeton MF are proposed to be repaid from proceeds of the transaction. We believe, the proposed sale announcement is a positive development for the NCDs held by schemes of Franklin Templeton MF. We are closely tracking developments around the same,” said the fund house in a note.
The proposed slump sale and the scheme of restructuring will be subject to regulatory approvals including National Company Law Tribunal (NCLT), Stock exchanges, Sebi, Competition Commission of India and approval from equity shareholders and creditors of the transferor companies and transferee companies.
The fund house also added in the note that the acquisition was being done as part of the scheme in which Future Group was amalgamating certain companies (listed as well as unlisted) carrying on the aforesaid businesses into Future Enterprises (FEL). After the amalgamation, FEL is expected to conclude the slump sale. Further, FEL is expected to raise approximately `2,800 crore by way of preferential allotment to Reliance Retail through a combination of equity shares and warrants.
Reliance Retail will hold approximately 13.14% in FEL (post-merger).
