Future Retail plans to raise up to Rs 1,500 crore

Future Retail plans to raise
up to Rs 1,500 crore through debt
instruments to replace high cost loans
and to invest on brand building and
marketing.
The company is seeking approval from its
shareholders for the proposal of raising
up to Rs 1,500 crore through issue of
non-convertible debentures on private
placement basis, Future Retail said in a
filing to the BSE .
“The amount to be raised by the way of
issuing non-convertible debentures on a
private placement basis however shall not
exceed Rs 1,500 crore in aggregate,” the
filing said.
Explaining the rationale behind the move,
the company said: “With overall reduction
in base lending rate by the banking
sector, there is further scope to borrow at
a reduced rate of interest.”
“The present borrowing initiative would
also help the company to replace some of
its present high cost near-term maturity
debts with lower cost and long-term
maturity debts and further reducing overall
cost of funding and improving debt
maturity profile of the company,” Future
Retail said.
It further said the funds would be utilised
for certain general corporate purpose,
including brand building and other
marketing expenses, acquiring assets
such as furniture and fixtures vehicles
and spend on lease improvements, among
others.
Moreover, the company is also seeking
shareholder approval for grant of stock
options to eligible employees and
directors.
Future Retail had recently concluded its
equity funding of around Rs 2,000 crore,
including preferential issue of equity
share and warrants convertible into equity
and Class B shares and rights issue.
“…major part of the fund raised is being
utilised for debt reduction, reducing
overall debt as well as finance cost of the
company thereby improving its debt equity
and debt servicing coverage ratio,” the
filing added.