Kotak Mahindra Bank-backed Phoenix Asset Reconstruction Company (ARC) has acquired a distressed loan portfolio of Rs 1,470 crore from Larsen and Toubro (L&T) Finance, including two stuck advances to Future Group entities, according to The Economic Times report.
The Future Group companies are Precision Realty Developers and Future Entertainment.
According to the report, two people aware of the development told ET that L&T Finance sold the portfolio of four accounts for Rs 980 crore, equating to a recovery of nearly 66 percent. Aside of Future group companies, the other two accounts are C&C Construction, an engineering, procurement and construction company, and Sky One Corporate Park, a realty developer.
Future Entertainment includes apparel brands such as Buffalo, Spunk and AFL.
"Since L&T Finance was the sole lender (to Future Entertainment), it made the deal attractive for the ARC," said one of the two people cited above. As a sole lender, the acquirer can control the recovery process.
Future Entertainment is a subsidiary of Future Corporate Resources, the holding company of founder promoter Kishore Biyani and his family.
According to another report by ET, Biyani is in talks with domestic lenders for an out-of-court restructuring of loans for Future Enterprises and Future Lifestyle and Fashion.
The bankruptcy court has reserved an order for admission of Biyani’s flagship company Future Retail, which operates large format stores, for insolvency proceedings.
Precision Realty is a company that provides infrastructure support to the stores that Future Retail operates. However, the security value of Precision Realty has diminished after Reliance Industries took control of nearly 950 Future Retail stores in March this year due to non-payment of rentals.
L&T sold Rs 339-crore worth outstanding loans of Future Entertainment and Rs 111-crore Precision Realty's loans, the first person cited above said. The other loan accounts include a 405 crore C&C Construction loan and 615 crore Sky One Corporate Park loan, the same person said.
Reportedly, the deal was sealed last month under the 15:85 structure, wherein 15% of the consideration is paid up front, and 85 per cent is paid in the form of security receipts (SR) to be re deemed when the ARC recovers money from defaulting borrowers.
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