RIL abandons its bid to acquire Future retail

Following objections by the lenders, the Reliance Industries (RIL) has abandoned its proposed deal to acquire Future Retail’s (FRL), the parent company of Big Bazaar, for £2.47 billion. The company cited less than adequate positive votes from banks for the scheme of arrangement, as the reason for it not going ahead with the deal. To go through, the transaction required 75% of FRL’s secured creditors to vote for the motion but around 69% voted against it, FRL said.
“As per these results, the shareholders and unsecured creditors of FRL have voted in favour of the scheme but the secured creditors of FRL have voted against the scheme. In view thereof, the subject scheme of arrangement cannot be implemented,” said RIL in a regulatory filing.
A senior banker, however, said lenders were forced to vote against the proposal as RIL had not made any commitments and Future Group promoter Kishore Biyani appeared to lack support for the scheme the retailer had put up.
While the development may result in a cash-strapped FRL facing bankruptcy proceedings, a majority of its stores and employees are currently with RIL. In late February, RIL had moved in to take control of around 900 stores of FRL as the latter failed to pay rentals.