PC Jeweller shares hit 10% upper circuit on settlement offer from PNB

Shares of PC Jeweller were locked in a 10% upper circuit limit on Monday after the company said that Punjab National Bank (PNB) has given its approval for a one-time settlement of its outstanding dues. Last month, the crisis-hit company had also received a similar proposal from Union Bank of India to settle its outstanding dues, which was accepted by the jewellery retailer. The cash-strapped company owes ₹1,180.20 crore to its financial creditors along with interest as on April 30, 2023, led by State Bank of India. SBI is the largest creditor amongst consortium banks, followed by Union Bank, and PNB.

“PNB, the third largest bank after State Bank of India amongst consortium banks of the company in terms of its exposure, vide letter dated July 6, 2024 has conveyed its approval to the one time settlement proposal submitted by the company,” the jewellery retailer said in an exchange filing on Sunday.

PC Jeweller further says that it has opted for one time settlement (OTS) to settle the outstanding dues. The terms and conditions of approved OTS include cash and equity component payable under settlement, release of securities and mortgaged properties etc, it said.

Cheering the news, PC Jeweller shares opened higher at ₹56, up 9.6% against Friday’s closing price of ₹51.09 on the BSE. Extending opening gains, the jewellery stock gained as much as 10% to ₹56.19, while the market capitalisation rose to ₹2,615 crore.

The stock price of PC Jeweller hit a 52-week high of ₹66.63 on March 5, 2024, while it slipped to a 52-week low of ₹25.45 on October 4, 2023. The stock has risen 72% in a year; while it has fallen over 5% in six months. The counter has gained nearly 3% in the past one month.

Last month, PC Jeweller in its fourth quarter earnings presentation said that SBI withdrew an insolvency petition filed against the company in NCLT Delhi after settlement terms were agreed between the two parties.

“On account of settlement terms agreed between SBI and the Company, the State Bank of India (Lead Bank) had also filed an application for withdrawal of its petition filed before Hon’ble NCLT, Delhi seeking initiation of Corporate Insolvency Resolution Process under section 7 of IBC against the company. The said petition was disposed as withdrawn, by Hon’ble NCLT, Delhi vide its order dated April 30, 2024,” it said in Q4 FY24 earnings report.

As per the company, it has taken proactive action in resolving the legal cases by approaching its lenders to resolve the issue of unpaid debt with a OTS proposal and upfront payment for the furtherance of the proposal was deposited in a no lien account with SBI by a promoter group entity.

As part of its proactive measure, the board of the company in its meeting on April 16, 2024, approved a proposal to raise capital worth up to ₹2,000 crore via equity or debt instruments. The board gave its nod for raising of funds worth up to ₹1,500 crore by issue of equity shares by way of a rights issue to the eligible equity shareholders of the Company, subject to requisite approvals. It also approved preferential issue of fully convertible warrants for an aggregate amount of up to ₹500 crore to a promoter group company.

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