Future Retail Downgraded to 'D' on Missed Coupon Payment; S&P Withdraws Ratings
Moneylife Digital Team 26 July 2022
S&P Global Ratings has lowered its issuer and issue rating on Future Retail Ltd because the company failed to pay the semi-annual coupon due on its US$500mn (million) senior secured notes. The coupon was due on 22 July 2022. 
In a release, the rating agency says, "Future Retail is unlikely to make the payment during the 30-day grace period. This is because insolvency proceedings against the company were started on 20 July 2022. All outstanding payments to creditors, including the coupon on the senior secured notes, have to be submitted as claims. The company intends to complete the insolvency resolution process by January 2023. We have subsequently withdrawn all ratings."
According to S&P, the India-based retailer is unlikely to make the payment during the 30-day grace period because of the commencement of insolvency proceedings which require all outstanding payments to be submitted as claims. 
"We, therefore, lowered our long-term issuer credit rating on Future Retail to 'D' from 'SD'. We also lowered the issue rating on the US$500 million senior secured notes issued by the company to 'D' from 'CC'," it added.
Earlier in April, S&P had lowered its credit ratings on Future Retail to 'CC' from 'CCC-' following the termination of the company's proposed asset sale to Reliance Retail Ventures Ltd (RRVL). 
In a report, the rating agency says, "We view a default by Future Retail on its SSN as a virtual certainty. The company's likelihood of failing to make the next coupon payment due on 22 July 2022, and any potential accelerated repayment of its notes, has risen significantly."
"The termination of the proposed sale of assets to RRVL has magnified the risk of a default on the next coupon payment on the rated notes and the initiation of bankruptcy proceedings against the company," it added.
After many twists and turns, including prolonged legal battles up to the Supreme Court (SC) and international arbitration proceedings, Reliance Industries Ltd (RIL) has called off the deal with Future Retail after the company's secured creditors voted against the scheme. 
In a regulatory filing, RIL says, "The Future group companies comprising FRL and other listed companies involved in the scheme have intimated the results of the voting on the scheme of arrangement by their shareholders and creditors at their respective meetings. As per these results, the shareholders and unsecured creditors of FRL have voted in favour of the scheme. But the secured creditors of FRL have voted against the scheme. In view thereof, the subject scheme of arrangement cannot be implemented." (Read: Reliance-Future Retail's Rs24,371 Crore Deal Is Off. What Next?)
2 months ago
What does D mean money of lender and investor DOWN the drain ?
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