Mumbai: PC Jeweller has reached a one-time settlement (OTS) with a consortium of lenders led by State Bank of India (SBI) to settle its debt by offering banks a mix of cash and equity in the Delhi-based company.
The ₹2,250-crore offer represents about a 20% haircut to lenders’ principal amount, estimated at ₹2,900 crore, and 64% recovery of total dues, including interest of ₹3,500 crore, said people familiar with the details.
PC Jeweller informed stock exchanges over the past month that six of the 14 lender banks have agreed to the OTS proposal. It, however, did not disclose the settlement details. The lenders include Union Bank of India, SBI, IndusInd Bank, Punjab National Bank, Karur Vyasya Bank and Axis Bank. “Each bank will have to take separate internal approvals for the transaction. Banks expect to complete the process, including taking equity stake in the company in the next three to four months,” said one of the persons cited above.
According to the contours of the proposed deal, about 10% of the settlement amount will be paid in cash upfront while the rest will be a mix of equity in the company, and deferred cash payments including interest linked to SBI’s benchmark marginal cost of lending-based rate (MCLR), payable over two to three years, giving lenders some potential upside in the future. Banks will end up owning about 10% stake in PC Jeweller after the company allots shares to them as part of the OTS.
A company spokesperson told ET the settlement with banks is under process, and the company is hopeful of finalising it very soon. “Till then, we will not be able to comment upon anything,” the spokesperson said.
Individual banks could not be reached for comment.
The company’s FY23 annual report lists Indian Bank, Bank of India, Canara Bank, Kotak Mahindra Bank, Indian Overseas Bank, IDBI Bank, IDFC First Bank and Bank of Baroda among the 14 lenders. SBI had initiated insolvency proceedings against PC Jeweller in July 2023 after the company defaulted on loan repayment. SBI later withdrew the petition after both parties reached a settlement in April 2024. SBI is the largest creditor to the company with dues of about ₹1,180 crore.
