 "Fitch rating agency")
Fitch Ratings has placed Future Retail Ltd's (FRL's) issuer default rating of C and the rating on its 500 million dollars 5.6 per cent senior secured notes due in 2025 of C with a recovery rating of RR4 on rating watch positive.
This follows the announcement on August 29 that FRL has agreed to sell its business to Reliance Retail and Fashion Lifestyle Ltd (RRFLL), a wholly-owned subsidiary of Reliance Retail Ventures Ltd (RRVL) that is itself a subsidiary of Reliance Industries Ltd.
The IDR at C reflects the financial stress on the company notwithstanding the agreed sale of FRL to RRFLL.
"Risks remain over FRL's liquidity and its ability to continue to finance its ongoing obligations until the transaction with RRFLL closes, particularly as the Reserve Bank of India's moratorium on debt servicing requirements ended August 31," said Fitch.
FRL believes that the announcement of a transaction and the impending sale of its assets should allow the release of the pre-approved working capital facilities by its syndicate banks or allow it to obtain additional bank financing, which had previously not been forthcoming.
"In our view, these actions will resolve the short-term liquidity strain that constrains the ratings," said Fitch.
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