Founded by Ramchandra Agarwal and Uma Agarwal

Engaged in the operation of 183 hypermarket stores under the Vishal Megamart
brand across India

Average store size of 25,000 to 30,000 sq. ft. with area of more than 2.4 MM sq. ft.
in around 110 cities

The turnover of the company for 09-10 was INR 11050 MM

Company has loans outstanding to the tune of INR 7.6 Bn as of FY10 which was
used to fund expansion and place orders with suppliers in 2007 and 2008 which did
not translate into topline growth due to the financials crisis

Company went into CDR in Nov 2009

Proposed restructuring package

Texas Pacific Group (TPG) has agreed to infuse INR 5 Bn (INR 2 Bn upfront and INR 3
Bn in 2014) by signing a non binding and non-exclusive agreement on June 23,
2010

Conditions of the restructuring package are

Company will transfer all its fixed assets to a special purpose vehicle (SPV) owned
82% by TPG and rest by lenders such as State Bank of India , HDFC, Bank of India,
HSBC and others

Business will be run as a wholesale cash and carry because FDI is not allowed in
multi brand retail

Of the total dues, INR 2526.4 MM will be converted as new loan facility to the
wholesale company and another INR 1460 MM and its interest of INR 290 MM will be
converted in compulsorily convertible debentures (CCD)

TPG has also proposed that the wholesale company will come out with an IPO by
2015 and the CCD holders will have to convert their bonds in equity anytime before
the IPO

The bonds will be converted at Rs 108 a share

TPG has proposed a ‘tag along rights’ of lenders wherein the creditors will have the
right and the obligation to sell its stake to the same entity that TPG decides to sell
its stake

Kishore Biyani offered to retain the Vishal brand by issuing redeemable preference
shares worth Rs 176 crore entering the race to retain the brand along with TPG
Biyani offered to pick up the liability of INR 5000 MM which is the secured debt of
VRL. VRL and its promoters have to take responsibility of INR 2500 MM of unsecured
debt but Biyani may provide more assistance. Future Group will retain INR 1750 MM
as debt on its books instead of converting it into equity, while another INR 2560 MM
of debt would be transferred into the books of Future Group subsidiaries

FUTURE GROUP TPG

Split operations into wholesale co
No split of business, to
and retail company (FDI
retain Vishal brand
compliance)
Future Value Retail to TPG along with a domestic
manage integrated investor to manage biz (TPG-
operations Shriram Group likely combo)
Part of debt (Rs 176 crore) to be
Reedemable pref converted into 0.05% CCDs to CDR
shares to lenders lenders. Conversion at Rs
worth Rs 176 crore 108/share by 2015 for 6.68%
equity
Lenders need to infuse addl Rs 100
Lenders don't need to
cr term loan, Rs 150 cr working
infuse fresh capital
cap in phases

Foreign lenders to Vishal Retail are unloading their bad loans to Pegasus Asset
Reconstruction Company as of Nov 2010 who had obtained court orders temporarily
stopping the planned sale of Vishal Retail to private equity firm TPG Capital and
Chennai-based Shriram group

Pegasus, backed by New York-based hedge fund DE Shaw, has bought Barclays
Bank’s bad loans of 400 MM to Vishal Retail at a 16-18 % discount ten days ago and
is in final stages of negotiations with two other lenders—Deutsche Bank and DBS