India’s Reliance defends takeover of Future stores in letter

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A delivery man parks his scooter outside a Reliance Smart Bazaar retail store, formerly Future Retail’s Big Bazaar store in Mumbai, India March 14, 2022. REUTERS/Francis Mascarenhas

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  • Reliance took over Future stores under ‘compelling circumstances’
  • Month-long struggle with Amazon over future assets
  • Reliance’s sudden store takeover spooked Future, Amazon
  • Company helped Future, acted as unpaid dues – letter

NEW DELHI, March 31 (Reuters) – India’s biggest retailer Reliance (RELI.NS) has privately defended a brutal takeover of the stores of indebted rival Future Retail (FRTL.NS), saying growing dues of $634 million required it to act beyond expectations, a company letter says.

The takeover was part of a race to dominate a $900 billion retail sector that sparked a bitter dispute in which India’s Supreme Court will decide whether Reliance or Amazon.com Inc (AMZN.O ) may recover the assets of Future.

The March 8 letter, seen by Reuters, reveals for the first time Reliance’s (RELI.NS) position on the events of the night of February 25, when staff suddenly showed up at many of its rival’s stores to take control of missed lease payments. . Read more

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The decision stunned not only Future but also Amazon, which invoked breach of certain contracts to legally block, since 2020, a $3.4 billion deal between the two Indian giants.

In the letter, Reliance said it went “far and truly beyond what could be expected” to keep Future “out of harm’s way” as it took “significant steps” to ensure the continuity of the Future’s activities and ensure that there were “no impediments”. to their business.

These measures included financial support of 48 billion rupees ($634 million), comprising 11 billion rupees of unpaid rent and 37 billion rupees of working capital.

Over the months, Reliance had taken over the leases of more than 900 of Future’s 1,500 stores, while allowing the company to manage them.

As Future proved unable to pay unpaid dues and losses from its retail operations ballooned, Reliance faced ‘compelling circumstances’ and decided to exercise its legal right to take over the stores , adds the letter.

Neither Reliance nor Future immediately responded to a request for comment.

Future, which is watching bankruptcy as its losses mount, previously called Reliance’s move “drastic and one-sided.”

Before Amazon blocked it, Reliance, led by India’s richest man, Mukesh Ambani, had offered a $3.4 billion deal to buy the retail, wholesale and logistics business. of Future, as well as other companies. Read more

But following Reliance’s abrupt takeover of its stores, Future sought several assurances in a March 2 letter, also seen by Reuters, asking whether Reliance would stick to the deal without changing its value or terms.

In its March 8 response, Reliance said Future’s insurance request should be considered “in light of rapidly changing circumstances.”

He added: “As the program (agreement) is implemented, it will be in accordance with its terms.”

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Reporting by Aditya Kalra in New Delhi; Additional reporting by Abhirup Roy; Editing by Clarence Fernandez

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