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Future Retail rejects Amazon’s contention over shareholder agreements

Future Retail Ltd(FRL) has rejected the argument ofAmazonthat the twoseparate shareholder agreementsbetween its promoters and the American e-commerce giant, and between FRL and its promoter constitutes one single integrated transaction whereby Amazon has an interest in and rights over the company.

In a filing to the stock exchanges on Sunday, FRL said if the two separate agreements were treated as a single integrated transaction, then when the agreements were executed in 2019 there would have been a change in control of FRL in favour of Amazon which would have required an open offer to FRL shareholders as per Indian laws.

“No such open offer was made, thereby suggesting that there was no intent of Amazon to consider the two agreements as a single integrated transaction at that point of time,” FRL said in the filing.

Amazon is locked in a legal dispute with Future Group challenging Future Group’s bid to sell its retail business to Mukesh Ambani’s Reliance Industries for Rs 24,713 crore breaches the 2019 agreements with Future.

The e-commerce giant has approached the Singapore International Arbitration Center (SIAC) which last month gave an interim judgement to keep the Future-Reliance deal on hold.

FRL in the filings said Amazon has also sought damages of Rs 1431 crore and interest on the amount invested by it into Future Coupons as an alternative to its claim and injunctive reliefs against the proposed deal. It said even if such “claim is approved by the arbitration or at any other judicial forum, the same would be payable by promoters (of FRL) and there would not be any financial impact on the company.”

Amazon last week wrote to market regulator Securities and Exchange Board of India and stock exchanges to consider the interim judgement of SIAC while reviewing the proposed deal between Reliance and Future Group.

FRL has argued in its filing that it is not a party in the agreement between Amazon and FRL promoters, while Amazon is not a party in the second agreement between FRL and its promoters.

It said, in contrast, the SIAC order accepts Amazon’s contention that two separate shareholder agreements constitute one single integrated transaction whereby Amazon has an interest and rights over FRL.

FRL said it is undergoing serious financial difficulties due to the “unprecedented impact of the COVID pandemic” and the proposed deal with Reliance is the only way it can come out of the situation.

It said the deal is in the best interest of all stakeholders including shareholders, financial institutions, vendors, suppliers and employees and any delay in implementation “will cause irreparable losses to all stakeholders.”

FRL has requested the exchanges not to take cognizance of Amazon’s letter or the SIAC Order since it is not enforceable as per Indian laws, and that it is in the process of taking legal action to protect its rights.

FRL said while Amazon has “painted a picture that public shareholders of FRL are being misled”, it said the argument holds no ground since Amazon is not even a shareholder in FRL.

“Evidently, Amazon’s letter is motivated by other considerations….At best, Amazon’s claims are a contractual dispute between Amazon and the promoters of FRL, and Amazon has already initiated arbitration for the same. It is submitted that SEBI and the stock exchanges should consider the scheme (deal) independently on its merits, and as per SEBI regulations,” FRL said.


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