Future Retail plans to raise up to Rupees 1500 crore through debt instruments to replace high-cost loans and to invest in marketing and brand-building.
The company is seeking approval from its share holders for the proposal of raising upto Rs 1500 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 1500 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 utilized 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 2000 crore, including preferential issue of equity share and warrants convertible into equity and Class B shares and right issue.
“….major part of the fund raised is being utilized 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.
Shares of Future Retail were trading at Rs 111.50per scrip, in the afternoon trade, down 0.58 percent from the previous close on the BSE.