Future Retail averted default by makes interest payments worth $14 million to investors on August 24. The company fulfilled the paid interest on its 5.6 percent senior secured USD notes due in 2025.
"In furtherance to our letter dated 22nd July, 2020, wherein we had informed about the grace period of 30 days for making payment of interest on above USD Notes. Today, we are pleased to inform that the Company has made the payment of said interest for the half-year ended for an amount of USD 14 million on above USD Notes. We thank you all the investors and USD Notes holders for their continued confidence in us," Future Retail said in a stock filing.
The company had previously failed to pay the amount of interest due on July 22 on its 5.6 percent 2025 dollar notes. If payment were not made within the grace period, it would have constituted a default, which would have made Future Retail the first company to default since March.
According to a Livemint report, last week Future Retail was in discussions with lenders led by State Bank of India to raise cash to help pay the interest on the dollar security.
Future Retail's cash crunch has been inflamed by the COVID-19 pandemic and lockdown, which was the biggest lockdown experienced world-over. The challenges it faces are reflective of the broader challenges Indian businesses face as the economy is forecast to contract for the first time in four decades. While a crunch in the debt market has eased after Reserve Bank of India (RBI) stimulus, the creditworthiness of many borrowers remains strained.