Vishal deal in limbo

Future Group’s hesitation will probably delay the process of corporate debt restructuring (CDR)

of Vishal Retail. As of now, whether Texas Pacific or Future will take over the debt-ridden Vishal Retail is uncertain. Future Group had proposed converting Rs 175 crores of the total debt into redeemable preference shares, with redemption at the end of 10 years from the date of issue. Future also wanted Vishal Retail to change its name and had proposed legal due diligence — by a third party appointed by Future Group — of properties and physical verification of fixed assets and net current assets. In case the value of net current assets of Vishal Retail is lower than Rs 25 crore, then Future Group would terminate the transaction after discussions with the former’s promoter. Approval of the unsecured lenders is also a pre-requisite for the transaction to get through.

On the other hand, TPG was much nearer to closing the deal. The company had proposed to convert the same amount into compulsorily convertible debentures. The second option was being seen as more beneficial by some lenders in case TPG can turn the company around and trade at a premium whenever it is listed. Moreover, the CDR cell had already approved TPG’s proposal to invest in Vishal. But the company had signed an agreement with TPG which was non-exclusive and non-binding. This means new investors can still come in. The lenders are still to decide between the proposals of TPG group and Future Group to finalize the corporate debt restructuring.