Billionaire Mukesh Ambani’s Reliance Retail has slapped notices on Future Retail for terminating sub-leases of 950 stores it had taken over previously.
New Delhi, NFAPost: Billionaire Mukesh Ambani’s Reliance Retail has slapped notices on Future Retail for terminating sub-leases of 950 stores it had taken over previously.
In stock exchange filings, the Kishore Biyani-led debt-laded Future Group firms said they have been served notices to terminate the lease of 835 Future Retail stores and 112 Future Lifestyle stores.
Last month, Reliance Retail had taken over store spaces for which the Future Group couldn’t pay lease rent. These were then sub-let to the Future Group for operation.
“The company has received certain termination notice(s) in respect of sub-leased properties from Reliance entities,” Future Retail said in a stock exchange filing.
“So far notices have been received in respect of 342 large format stores (such as Big Bazaar, Fashion@ Big Bazaar (fbb)) and 493 small-format stores (such as Easyday and Heritage stores) of the company,” it said.
Separately, Future Lifestyle Fashions said it has received termination notices for 34 ‘Central’ stores and 78 ‘Brand Factory’ stores.
“These stores have been historically contributing approx. 55 per cent to 65 per cent of retail revenue operations of the company. As of now, these stores are not operational for stock and inventory reconciliation,” it said.
Reliance Retail, the retail arm of the oil-to-telecom conglomerate, had in August 2020 agreed to take over the retail and logistics business of the Future Group for Rs 24,713 crore but the deal couldn’t be closed, as Future’s warring partner Amazon went to courts citing violation of some contracts. Future denies any wrongdoing.
Future Group entities said they are “in continuous discussion with the Reliance Group for maintaining status quo and safeguarding the interest of various stakeholders.”
Future, which owns more than 1,700 outlets, including the popular Big Bazaar stores, had not paid lease rents for some of its outlets. This is because the firm is neck-deep in losses and even defaulted on loan repayments.
Facing closure, Reliance transferred the leases of some stores to its step-down subsidiary, RRVL and sublet them to Future to operate the stores, the sources said.
In addition, a majority of inventory at these stores was being supplied by Reliance Jiomart as a cash-strapped FRL could not clear dues to existing suppliers. Reliance will likely replace Big Bazaar signages and branding from these stores with its own brand.
These sub-leases are being terminated. It isn’t clear why Reliance took this decision.
Reliance has since then started rebranding the stores and offered to take all employees employed there on its payroll, they added.
Amazon has argued that Future violated the terms of a 2019 deal the companies signed when the US e-commerce giant invested $200 million in a Future Group unit. Amazon’s position has been backed by a Singapore arbitrator.
Future had in January challenged its lenders in the Supreme Court to avoid facing insolvency proceedings over missing bank payments, citing its dispute with Amazon.
In August 2020, the loss-making retail giant proposed to sell its retail, wholesale and logistics arms that included businesses including Fashion at Big Bazaar, Koryo, Foodhall and Easyday to Reliance for Rs 24,713 crore.