IndusInd sells Future Retail loans to Edelweiss ARC
IndusInd Bank has solicited bids for the secured principal loan of Rs 142 crore granted to Kishore Biyani promoted Future Retail and the principal loan of Rs 105 crore granted to Asian Hotel Delhi on the basis of 15:85, the people said.
Under the conventional 15:85 structure, the bank will receive 15% of the counterparty as an upfront payment, while for the remaining 85%, the CRA will issue security receipts (SR) which will be reimbursed over time. as they recover their rights from the borrowers.
The sale of Future loans comes at a time when another private lender, CBS Bank, has filed a claim against Future Retail and Future Enterprises with the Debt Recovery Tribunal (DRT) to collect their amounts owed, a third person said.
For the private lender, the exchange with the ARC would imply a discount of around 20% however, if the recovery of one of the two accounts is greater than the principal due, the bank will gain, one of the two people quoted above mentioned.
Edelweiss ARC and IndusInd Bank did not respond to comments.
Asian Hotels (North) Ltd, which owns and operates Hyatt Regency Delhi, a five-star hotel with 105 rooms. The company has entered into a one-time restructuring (OTR) under the Reserve Bank of India’s program for businesses affected by Covid-19. It has a consolidated debt of Rs 1,265 crore as of March 2021.
IndusInd Bank has made a provision of almost 25% in the Future Retail loan and therefore the full 15% upfront payment will help clear the provisions on this account. Most of the banks provided between 25% and 40% to Future Retail after failing to pay Rs 3,495 crore at the end of January, in accordance with the terms of the OTR.
National lenders fear that the delay in implementing the Reliance-Future deal, coupled with the takeover of more than 900 stores of the Future store by Reliance Industries, will mean a haircut for them.
A Rs 24,713 crore asset sale agreement between Reliance and Future Group, signed in August 2020, is yet to be implemented due to a legal battle between Future Retail and e-commerce giant Amazon. Amazon alleged breach of shareholder contract.