“The promoters of Kalyan Jewellers are in talks with both Motilal Oswal and 360One to authorise debt financing for either or both of them,” said one of the people, requesting anonymity. “Part of the debt financing will be used to fund the stake acquisition from Warburg Pincus.”
Queries sent to Kalyan Jewellers, 360 One and Motilal Oswal remained unanswered till the time of going to press.
The debt is expected to have an interest rate of 13.5% to 14%, and shares will be pledged as collateral at a 2.5 times coverage ratio, the people said.
If Kalyan Jewellers’ share price, which was priced at 616 rupees on Monday, falls, additional shares will be needed to maintain the pledge, while cash collateral will be required if the share price falls by more than 35 percent. A fall of more than 45 percent would trigger forced bond redemption, the people said. Last week, Warburg Pincus affiliate Hydel Investment said it would sell 2.36 percent of the company’s share capital to promoters for 535 rupees a share, taking the total proceeds to 1,300 crore. The promoters can increase their stake by about 5 percent by raising 2,500 crore.
