IndusInd’s sale of Future loans to Edelweiss ARC falls through

A deal between IndusInd Bank and Edelweiss Asset Reconstruction Company (ARC) for the sale of Future Retail’s loans has fallen through, sources aware of the development have said. IndusInd Bank had put on the block a bunch of loans, including to Future Retail, Asian Hotels (North) and some small-value exposures.

Edelweiss ARC is understood to have backed out of buying the Rs 247-crore corporate exposures as it was unable to complete its due diligence. It was also reluctant to buy exposures included in the pool other than those to Future Retail.

However, Edelweiss ARC has bought the small-value assets being offered by IndusInd Bank. The pool included commercial vehicle and small business loans with a total outstanding of about `400 crore, which the ARC bought for Rs 285 crore under the 15:85 structure. This means 15% of the amount has been paid in cash while security receipts have been issued for the remaining amount.

Emails sent to IndusInd Bank and Edelweiss ARC did not elicit responses till the time of going to press.

Future Retail is poised to go through the corporate insolvency resolution process as banks rejected a takeover scheme put forth by Reliance Retail Ventures. Bank of India has already referred Future Retail to the National Company Law Tribunal. The case is yet to come up for hearing.

The retailer’s accounts slipped into the non-performing asset (NPA) category in January and the 40% provisions taken against it will show in banks’ Q4FY22 financial results.

Asian Hotels (North) owns the five-star hotel Hyatt Regency in Delhi. The company ran into difficulties in FY21 owing to the impact of the Covid-19 pandemic on operating performance. According to a rating report by Crisil dated November 17, 2021, Asian Hotels (North)’s liquidity was constrained by its negative operating profit, and would remain weak over the medium term.

The company had applied for one-time debt restructuring announced by the Reserve Bank of India through its circular dated August 6, 2020, on account of the pandemic. The restructuring was implemented in June 2021.

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