Future Retail board agrees to raise fund upto $500 million through dollar bonds
By MYBRANDBOOK
In a filing with stock exchanges, Future Retail said that its board has approved a fundraising plan to raise up to $500 million through dollar denominated bonds.
"Further to the decision taken in the Board meeting held on 12th October, 2019, the Board has reconsidered the various funding options for the acquisition of the retail infrastructure assets and found it more efficient to fund the same through the USD denominated borrowings and accordingly, approved raising of long-term funds for the company subject to the applicable regulatory approvals and market conditions, through the offer, issue and of allotment of senior, secured USD-denominated notes for an aggregate amount not exceeding $500 Million to be issued in one or more tranche(s), to one or more eligible lenders/investors," the stock exchange filing said.
The Board of Directors of the company, on 12th October, nodded for the acquisition of retail infrastructure assets of Future Enterprises in one or more tranches, through direct purchase, acquisition through slump sale or any other mode as mutually acceptable between the two firms. These retail assets are valued at around Rs 4,000 crore.
With this restructuring, the Future Retail will save around Rs 650 crore of lease rental payments annually. It will thus bringing down the company’s debt to Ebitda ratio from 2.4 times as of fiscal year 2019 to about 1.5 times by April 2021 and less than 0.2 times in the next three years. This will in turn result into stronger operating cash flows and sustained Ebitda growth.
The decoupling would help reduce inter-corporate linkages between entities of the Future group, simplifying its structure. It would also result in cessation of the corporate guarantee of about Rs 3,600 crore from Future Retail to the lenders of Future Enterprises.
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