BENGALURU: US-based online retail giant Amazon has sent a legal notice to Future Coupons, one of the holding companies of Kishore Biyani’s Future Group, citing breach of terms due to its sale of retail assets to Reliance Industries, said two sources briefed on the matter.
Amazon has also sent a copy of the notice to relevant authorities, including markets regulator Sebi and the stock exchanges, as the battle between the world’s richest man, Amazon’s Jeff Bezos, and Asia’s richest man Mukesh Ambani takes a new turn.
The dispute comes from Amazon’s Rs 1,431-crore investment in Future Coupons, which held about 10% stake in the flagship Future Retail, in August last year (see graphic). As part of the deal, Biyani had also entered into a restriction on transfer of shares to specified persons and right of first offer of shares (ROFO) to Amazon as well, according to filings made by Future Retail at the time. This list of specified persons included Reliance Industries, said one of the sources mentioned earlier.
The deal also gives a right to Amazon to acquire the entire or part of the shares of promoters of Future Retail after three years of the deal and before 10 years, in “certain circumstances” and subject to the law.
But after the deal, the performance of Future Retail languished and Biyani’s personal debts put pressure on its share price as he was not able to meet repayment obligations. In August, Reliance Retail announced the deal to acquire Kishore Biyani’s retail assets as going concern on a slump sale basis for Rs 24,713 crore, including debt obligations. The sale would include brands like Big Bazaar, Foodhall, fbb, Nilgiris, Easyday, Central and Brand Factory.
Sources briefed on the matter said that Amazon learned about the deal “publicly” once the terms with Reliance were finalised. Even before when Biyani was facing issues with lenders, there was “no constructive engagement” despite clauses that were entered into, putting into question rights of foreign investors, said a source.
“The deal is about saving the promoters and to hell with the shareholders. The company could have been saved by other investors with or without Amazon,” said one of the sources. The matter may go for arbitration between the parties according to the contract, said this source, though the future course is yet to be determined. The share price of Future Retail has fallen from over Rs 400 when Amazon signed the deal last year to Rs 88 at close of trade on Wednesday.
“Yes, we have initiated proceedings to enforce our contractual rights. It will be inappropriate for us to provide any more details relating to the matter as it is sub judice,” a spokesperson of Amazon said.
Emailed queries to Future Group and Reliance Retail did not elicit a response till the time of going to the press. Amazon’s move comes at a time when Reliance has been busy racking up funding for its retail unit since September, after announcing the Future Group deal. Reliance Retail has raised a total of Rs 37,710 crore from private equity firms and sovereign wealth funds like Silver Lake, TPG, KKR, Abu Dhabi Investment Authority and GIC.
Amazon has also sent a copy of the notice to relevant authorities, including markets regulator Sebi and the stock exchanges, as the battle between the world’s richest man, Amazon’s Jeff Bezos, and Asia’s richest man Mukesh Ambani takes a new turn.
The dispute comes from Amazon’s Rs 1,431-crore investment in Future Coupons, which held about 10% stake in the flagship Future Retail, in August last year (see graphic). As part of the deal, Biyani had also entered into a restriction on transfer of shares to specified persons and right of first offer of shares (ROFO) to Amazon as well, according to filings made by Future Retail at the time. This list of specified persons included Reliance Industries, said one of the sources mentioned earlier.
The deal also gives a right to Amazon to acquire the entire or part of the shares of promoters of Future Retail after three years of the deal and before 10 years, in “certain circumstances” and subject to the law.
But after the deal, the performance of Future Retail languished and Biyani’s personal debts put pressure on its share price as he was not able to meet repayment obligations. In August, Reliance Retail announced the deal to acquire Kishore Biyani’s retail assets as going concern on a slump sale basis for Rs 24,713 crore, including debt obligations. The sale would include brands like Big Bazaar, Foodhall, fbb, Nilgiris, Easyday, Central and Brand Factory.
Sources briefed on the matter said that Amazon learned about the deal “publicly” once the terms with Reliance were finalised. Even before when Biyani was facing issues with lenders, there was “no constructive engagement” despite clauses that were entered into, putting into question rights of foreign investors, said a source.
“The deal is about saving the promoters and to hell with the shareholders. The company could have been saved by other investors with or without Amazon,” said one of the sources. The matter may go for arbitration between the parties according to the contract, said this source, though the future course is yet to be determined. The share price of Future Retail has fallen from over Rs 400 when Amazon signed the deal last year to Rs 88 at close of trade on Wednesday.
“Yes, we have initiated proceedings to enforce our contractual rights. It will be inappropriate for us to provide any more details relating to the matter as it is sub judice,” a spokesperson of Amazon said.
Emailed queries to Future Group and Reliance Retail did not elicit a response till the time of going to the press. Amazon’s move comes at a time when Reliance has been busy racking up funding for its retail unit since September, after announcing the Future Group deal. Reliance Retail has raised a total of Rs 37,710 crore from private equity firms and sovereign wealth funds like Silver Lake, TPG, KKR, Abu Dhabi Investment Authority and GIC.
