Debt

India’s Future Retail Narrowly Avoids Debt Default

India’s Future Retail Narrowly Avoids Debt Default

Future Retail, a sprawling brick-and-mortar operation owned by Indian billionaire Kishore Biyani, made a $14 million interest payment to debt-holders on Monday (Aug. 24) – barely beating the wind-down of a grace period and narrowly avoiding defaulting on a half-billion dollars in debt, CNBC TV18 reported.

India’s Future Retail paid $14 million, or about Rs 105 crores, in interest owed to its coupon holders for $500 million senior secured notes, said a person directly aware of the matter.

The company said in a statement cited by numerous media outlets, including CNBC TV18: “In furtherance to our letter dated 22nd July, 2020, wherein we had [been] informed about the grace period of 30 days for making payment of interest on above USD notes. Today, we are pleased to inform that the company has made the payment of said interest for the half-year ended for an amount of $14 million on above USD notes. We thank all the investors and USD notes holders for their continued confidence in us."

Financial Express quoted a July statement in which Future Retail explained its difficulty making a planned debt payment: “Due to the nationwide lock down imposed to restrict the spread of COVID-19 pandemic, and consequent restricted business operations of the company, the liquidity position has been affected, causing us to miss the service of the payment of interest due on the USD notes (listed on Singapore Stock Exchange) on 22nd July 2020.”

According to published reports, Future Retail was originally scheduled to make its payment on the 2025 notes on July 22. "The retail giant has found itself in troubled waters since the nationwide lockdown hurt its businesses, worsening its already strained financial position," CNBC TV18 stated in Monday’s report.

The Wall Street Journal reported on Aug. 20 that the COVID-19 impact on India has been especially difficult for new members of the country's middle class, driving down sales on items from auto parts to shampoo. The virus also has been very difficult for India's financial institutions.

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