PC Jeweller to Raise Rs 2,705 Crore via Preferential Allotment; Promoters Will Infuse Rs 850 Crore to Settle Bank Loans and Boost Working Capital

PC Jeweller Ltd plans to raise up to Rs 2,705 crore by issuing warrants on a preferential basis to promoters and investors. This money will mainly be used to settle bank loans and for working capital needs. The company’s promoters will contribute about Rs 850 crore by subscribing to these warrants.

Board Approval

In a regulatory filing on Saturday, PC Jeweller announced that its board has approved the proposal to raise up to Rs 2,705.14 crore by issuing fully convertible warrants on a preferential basis.

Usage of Funds

MD Balram Garg said, “The funds will primarily be used to settle bank loans, with around 75% going towards loan repayment and the remaining 25% for working capital.”

Warrant Issuance Details

The board approved issuing up to 48,13,42,500 fully convertible warrants at Rs 56.20 each. Of these, 15 crore warrants will be issued to the promoter group. An extraordinary general meeting (EGM) will be held on August 8, 2024, to seek approval from the company’s members for this preferential issue.

One-Time Settlement with Banks

PC Jeweller has opted for a one-time settlement (OTS) for its outstanding dues with a consortium of banks. The settlement includes cash and equity components, release of securities, and mortgaged properties. Punjab National Bank (PNB), the third-largest bank in the consortium, recently approved the one-time settlement proposal. The company did not disclose the total outstanding dues with all banks or the full details of the OTS.

Positive Developments

In an investor presentation in late May, PC Jeweller noted the withdrawal of a petition from the National Company Law Tribunal (NCLT) by SBI and positive consideration of its OTS proposal by the banks. This has allowed the company to focus on increasing its brand presence and marketing initiatives, which are showing positive results.

Current Operations

As of March 31, 2024, PC Jeweller has a wide network of 60 showrooms (including 6 franchisee showrooms) in 44 cities across 15 states. The company’s core strengths, such as manufacturing and designing capabilities, skilled staff, and customer policies, remain intact. Additionally, the company is revamping its business operations, preparing to launch new jewelry collections, revamping its franchisee business, and optimizing costs.