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Board recast of closed, poor performing companies paying off
AHSAN HABIB
The wheels of the two companies have begun turning again after remaining closed for many years while another firm is moving towards resuming operation – thanks to the restructuring of boards by the Bangladesh Securities and Exchange Commission (BSEC).
Last year, the stock market regulator started recasting the board of a number of listed companies that have either been shut for a long time or failed to pay dividends to shareholders in the preceding two years.
The aim has been to reverse the course of the companies, protect the interests of the investors, and restore confidence in the market.
Initially, the regulator restructured the board of C&A Textiles, Ring Shine Textiles, United Airways, Familytex (BD), Emerald Oil, Fareast Finance, Fareast Islami Life Insurance, FAS Finance, BD Wielding, and Al-haj Textiles.
Of them, Ring Shine Textiles and Emerald Oil have already returned to operation, while C&A Textiles looks to make a comeback.
Some companies need funds to turn around and are trying to attract investments from other companies, at home and abroad, or by way of issuing bonds.
EMERALD OIL
Emerald Oil, which sells rice bran edible oil, went public in 2014 and had been profitable until 2016.
In 2017, the company started making losses and the operation came to a halt due to a shortage of working capital. This was the time when a loan fraud by its founder came to light.
The BSEC restructured its board in March last year. The new board tried to resume the operation of the factory.
Minori Bangladesh Ltd, a Japanese venture, bought 30 per cent shares of the sponsors and another 8 per cent from the capital market.
Emerald Oil said it resumed the commercial production on January 9 this year upon successful completion of the trial production.
RING SHINE
Ring Shine Textiles raised Tk 150 crore from the market in 2019 to purchase machinery and repay bank loans.
It sold shares in the pre-IPO (initial public offering) period free of cost through a private offer, a clear act of forgery, according to a special audit of the BSEC.
On August 27, 2020, the management decided to close the factory for a month due to the coronavirus-induced shortage of imported raw materials.
However, the company was unable to return to operation. The BSEC restructured the board in January 2021.
It resumed production on June 13 last year at 25 per cent of the production capacity and plans to raise it, said Ring Shine Textile recently.
C&A TEXTILES
C&A Textile was downgraded to a junk stock within three years of its listing in 2015 as its commercial operation was suspended and it did not give any dividend.
In June 2017, the textile maker informed investors that it needed to upgrade some of its equipment and bring structural changes to the factory as per recommendations of the Accord and the Alliance, two western buyers’ platforms that worked at the time to improve workplace safety in Bangladesh’s readymade garment sector.
The production will resume soon after the remediation is carried out, it had said at the time.
On May 1, the company’s commercial operation was shut temporarily.
But until 2021, the commercial operation had not begun and there was no update from the company.
This led the BSEC to reconstitute the board in March 2021. After the restructuring, the new board of C&A Textiles confirmed the regularising of gas connections and other utilities after the full payment of all dues.
Alif Group is going to take over the firm and secured approval from the regulator last week to issue bonds to raise Tk 300 crore.
With the bond proceeds, Alif Industries will purchase the shares of C&A Textiles, repay debts, buy machinery and use the funds as working capital.
Shares of C&A Textiles rose 433 per cent after the board restructuring.