Future Lifestyle Fashions mulls selling investments to deleverage balance sheet

Future Lifestyle Fashions (FLF) is planning to raise money by selling its investments in fashion brands and utilise the funds for deleveraging its balance sheet as well as other corporate purposes.

The company has called for an EGM on March 24 to seek shareholders' nod to form a wholly owned special purpose vehicle (WOSPV) for transfer of identified investments held by the Company for consideration, Future Lifestyle Fashions said in a notice to its members.

Explaining the rationale behind the move, it said the company owned many brands  and also has exclusive manufacturoing and marketing licenses for India for certain global brands. It has also invested in the fast growing fashion brands such as Cover Story, Clarks, Turtle, Mineral, Spunk and Giovani, among others which are owned by various investee companies.

Some of the brands are at nascent stage and have considerable growth potential in future. In order to nurture each of the investments for its possible potential growth, it is necessary that proper support and guidance is given to each of these investee companies as per their specific needs and requirements, it added.

The company said, "The focus on such Investee Companies could be substantially enhanced if the investments held in these Investee Companies are transferred to a wholly owned special purpose vehicles (WOSPV)."

Accordingly, it is proposed to identify specific investments held by the company based on certain parameters, such as minimum holding, ability to monetise such investments, growth potential, etc from the investee companies, as may be identified by the Board or the committee of directors of the company, it added.

"The company would be utilising the funds raised by transfer of identified Investments to WOSPV for deleveraging its balance sheet as well as for general corporate purpose, restricting usage for general corporate purpose to 25 per cent of the amount realized by transfer of the identified investments to WOSPV," the notice to its shareholders said.