Despite reaching out Amazon didn’t help: Biyani
Biyani said he had discussed his dire financial situation eight times with the Seattle-based company but it didn’t help, even when lenders invoked shares.
“As part of the agreement, they could have provided us funds through affiliates or financial institutions by taking over loans from existing lenders but they never did despite the agreement clause and our request,” Biyani said in his first media interaction after agreeing to sell all retail assets to Reliance for Rs 25,000 crore in August.
The Singapore International Arbitration Centre (SIAC) stayed the Reliance-Future transaction in November following Amazon’s plea.
‘Amazon Doing only Lip Service’
Amazon says Future Group has breached a contract that gave the ecommerce giant right of first refusal and barred a sale to entities including Reliance. Amazon didn’t respond to queries.
Biyani says he tried his best to get Amazon, which has a stake in a Future Group holding company, to help salvage his debt-laden enterprise.
“We also connected them with four-five investors but they never showed any interest in salvaging us and were only doing lip-service,” he said. “What is their intention? They want all employees, suppliers, vendors and lenders to suffer and the company to languish.”
Biyani has also written, on behalf of promoter-led companies, a 12-page letter to Amazon’s global office outlining their stance. In the December 31 letter, he denies acting against contractual obligations for personal gain. “We had briefed Amazon about the Reliance transaction multiple times and they always supported and were never averse to the same,” Biyani says.
Amazon owns about 5% of Future Retail Ltd (FRL)—which houses all food and grocery chains such as Big Bazaar and Easyday—after it bought a 49% stake in Future Coupons Pvt. Ltd (FCPL) for Rs 1,500 crore.
Biyani said Future even held talks with Witzig Advisory Services, Amazon’s joint venture company with Samara Capital, but the ecommerce company still didn’t help. By March-end, promoter pledging was as high as 80-99% in all listed Future Group firms. Share prices dropped by over 70% in just a month, adding to selling pressure.
“They had the right to buy shares and become majority investors in three to 10 years. But once the promoter shares were invoked, even that was not possible and that’s when they should have helped us and replaced lenders,” Biyani said. “The Reliance deal was a saviour for us and the employees, stakeholders, shareholders and creditors.”
Biyani, who said he had never been a litigant in his life, said the deal with Reliance was aimed at saving the company, not his personal wealth or retail legacy.
“I have not gained a single penny from the deal but have lost my retail business and right to be in retailing which we have painstakingly built over the last three decades,” he said. “Still, I am faced to fight with a $2 trillion behemoth. If there is a dispute, it is between the promoters and Amazon and why should they drag my listed companies where they have no say.”
In June, banks and other lenders, on account of mounting debt of Rs 11,250 crore, started to exert pressure to restructure the businesses. In its letter, Future said Amazon’s failure to exercise its right to nominate Replacement financial institutions (RFIs) when circumstances warranted such a move contributed to the loss of control over promoters’ shares in FRL. That left promoters with no choice but to consent to FRL’s proposed transaction with Reliance.
“In such dire circumstances, you were not expected to sit on the fence by simply calling for information and data and doing nothing to prevent the alienation and disposal of the promoter FRL securities,” said the letter to Amazon that ET has seen. “The least you could have done, was to nominate RFIs as soon as possible, or within reasonable time. By not nominating any RFIs, you contributed to the deterioration of the asset value of promoters FRL Securities.”
The SIAC said the Future-Reliance transaction should be put on hold until it gave a final ruling on the plea filed by Amazon. Amazon last week accused FRL of attempting to deceive shareholders and regulators by misrepresenting the Delhi High Court’s recent observations on its deal with Reliance. FRL had defended itself, reiterating that the deal was held valid by court.