Exclusive | Kishore Biyani’s Future Lifestyle Fashions looks to raise Rs 200-225 crore via rights or preference issue

Retail tycoon Kishore Biyani’s flagship fashion business Future Lifestyle Fashions, which backs brands like Lee Cooper, John Miller and Indigo Nation, is evaluating options to raise funds and push for flexible debt repayment to revive its operations, people familiar with the matter told Moneycontrol.

These discussions are gathering pace as Future Group battles high promoter level debt, sharp fall in share prices of its group companies and cash flow woes – all of which have been exacerbated by the COVID-19 outbreak.

“Future Lifestyle Fashions is mulling either the rights issue or preferential allotment route to raise around Rs 200-Rs 225 crore over the course of the next few months. These are early days and a final decision has not been taken as yet on the mechanism or timing,” a person told Moneycontrol.

On May 16, 2020, the board of group firm Future Consumer had approved plans to raise Rs 300 crore via a rights issue.

Two other people confirmed Future Lifestyle’s intentions to raise funds.

“The fund raising plans are to beef up equity as business has been badly hit,” one of them told Moneycontrol.

The listed entity, which counts consumer focused private equity firm L Catterton Asia, Azim Premji’s investment arm Premji Invest and the world’s largest alternative asset manager Blackstone among its investors, has been hit hard by store closures due to the extended nationwide lockdown.

“They are in discussions with bankers to enhance the working capital lines and extend the debt repayment to a longer period. Prime Securities has been engaged as the advisor by them,” added a fourth person.

All the four persons spoke to Moneycontrol on condition of anonymity.

Moneycontrol sent an e-mail query but was unable to elicit a response from the FutureGroup. Moneycontrol is awaiting a response from Prime Securities and will update this article as soon as it hears from them.

The Future Lifestyle Fashion stock has plunged by more than 60 percent in the last three months and the market cap of the firm at the end of trade on May 26 stood at Rs 2,818 crore. The promoters hold 45.78 percent stake.

L Catterton Asia has a 10 percent stake, followed by Premji Invest, which has nearly 7 percent stake, Blackstone which holds 5.79 percent stake and a third investor, namely Apollo Private Equity which owns 3.2 percent. Additionally, government owned insurance behemoth LIC has a 7 percent stake in the firm.

According to a May 13 report by Care Ratings, the temporary closure of operations directed by the government due to the COVID-19 outbreak has hampered the company’s ability to generate cash flows. However, Future Lifestyle Fashions has adequate liquidity in the near term, the report noted.

“The company has short-term financial liabilities and term loan repayments of Rs 120 crore (scheduled term loan repayments prior to availing RBI moratorium) of due in FY21. In addition, NCD (non-convertible debentures) of Rs 350 crore falling due on November 09, 2022 carries put/call option in FY21 and FY22. The company plans to refinance this NCD. Timely and adequate fund infusion from investors/promoters remains critical from company’s credit profile,” the report added.

Future Lifestyle, which reported an operating income of Rs 5,755 crore in FY19, covers a range of fashion categories including formal menswear, casual wear, sportswear, women’s ethnic wear, women’s casual wear, footwear and accessories. Bare, Scullers, Clarks, Converse, Umbro & Mother Earth are some of the other brands in its portfolio. As  on December 31, 2019, the firm had 354 stores  covering an area of 7.3 million square feet.

source: moneycontrol