A week after a Singapore arbitration court directed a temporary stay on Future Retail’s buyout by RIL-led Reliance Retail Ventures Ltd (RRVL), Future urged the Indian exchanges, the BSE and the NSE, to process its application for the deal with Reliance Retail, as the arbitrator’s order does not restrict market regulator SEBI or the exchanges from considering the scheme and approving the scheme.
In a regulatory filing, Future Retail Ltd (FRL) said that arbitrator’s order accepted Amazon’s contention that two separate shareholder agreements, one between Amazon and FRL’s promoters (to which FRL is not a party) and another between FRL and its promoter (to which Amazon is not a party) constitute one single integrated transaction and that by such a composite transaction, Amazon has an interest in and rights against FRL.
“This contention raised by Amazon is entirely misconceived,” it said.
Future said that, at best, Amazon’s claims are a contractual dispute between Amazon and the promoters of FRL, and Amazon has already initiated arbitration for the same.
Future said that SEBI and the stock exchanges should consider the scheme independently on its merits, and as per SEBI regulations.
According to the company, a contractual dispute between the promoters of FRL and Amazon cannot restrict or interfere with the authority of the SEBI and the stock exchanges to approve the scheme involving the listed entity. The emergency arbitrator’s order cannot and does not in any manner restrict the SEBI or the stock exchanges from considering and approving the scheme.
“FRL therefore respectfully prays that BSE and NSE should continue to process our application for issuance of observation letter/no-objection letter permitting the captioned Scheme to be filed before the NCLT,” it said.
On Amazon’s contention of integrated agreement, Future Retail said that if the two separate agreements were treated as a single integrated transaction by which Amazon obtained an interest in and rights against FRL, then in 2019, when the agreements were executed, there would have been a change in control of FRL in favour of Amazon, requiring it to make an open offer to FRL’s public shareholders in terms of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
“No such open offer was made, thereby suggesting that there was no intent of Amazon to consider the two agreements as a single integrated transaction at that point of time,” it said.
It noted that given that the order is premised on violation of SEBI Regulations it cannot and ought not to be accorded any sanctity by the SEBI, the NSE and the BSE.
It further asked the exchanges not the to take cognizance of Amazon’s recent letter, along with the emergency arbitrator’s order, as the FRL has complied with all the requirements of obtaining the requisite approval from Future Coupons Private Ltd, as was required in the Shareholders Agreement executed by FRL with its Promoters.
It also said that FRL is undergoing serious financial difficulties, particularly in light of the unprecedented impact of the Covid pandemic.
“The proposed scheme is the only way, it can come out of the situation; scheme is in the best interest of all stakeholders, that includes shareholders, financial institutions, vendors and suppliers, and more importantly employees, etc,” it said.
Future Retail further said that any delay in the implementation of scheme will cause irreparable losses to all stakeholders.