Acuite reaffirms ratings on Future Retail on sale to RRFLL
Sep 05, 2020
Mumbai (Maharashtra) [India], Sep 5 : Acuite Ratings and Research has reaffirmed the long-term rating of C on Rs 200 crore proposed non-convertible debentures of Future Retail Ltd (FRL) and kept it on watch with developing implications.
Further, Acuite has reaffirmed the short-term rating of A4 on its Rs 1,400 crore commercial paper programme. The agency has also reaffirmed the long-term rating on Rs 150 crore proposed non-convertible debentures at C.
On August 28, the boards of FRL and Future Enterprises Ltd (FEL) approved the slump sale of its retail and wholesale businesses which includes key format such as Big Bazaar, FBB, Foodhall, Central and Brand Factory to Reliance Retail and Fashion Lifestyle Ltd (RRFLL), a step down subsidiary of Reliance Industries Ltd (RIL).
Further, the logistics business has been sold to Reliance Retail Ventures Ltd (RRVL). There will also be an investment by RRFLL by way of equity and share warrants in FEL post-merger of various other related entities.
Acuite said it is in touch with the management of Future Enterprises and Retail Group (FERG) to understand the contours of the deal and its implications on operational and financial performance of the group till its sale of business and infusion of equity by RIL.
Further, the analytical approach to be adapted after current developments will be based on receipt of further clarity regarding the contours of the deal. The credit profile of FERG is expected to alter significantly on account of the proposed association with RIL.
Acuite has consolidated the financial and business risk profiles of FEL and FRL on account of their common management, strong operational and financial linkages. FEL's business and financial risk profile also includes that of its subsidiaries and associate companies.
As on December 2019, FRL operated across 1,388 large and small format stores spread across 414 cities in India with an area of around 16.05 million square feet.
