Posts tagged: ঢাকা স্টক এক্সচেঞ্জ

The publicly traded National Tea Company Limited has announced the new subscription date for its Tk279.7 crore placement shares, originally scheduled around a year ago but postponed by the regulator, as mandated by a recent court order.

The subscription will be open from 19 June to 19 August during banking hours, following a letter from the Bangladesh Securities and Exchange Commission directing the resumption of the proposed capital raising as per the High Court order, according to the company’s disclosure.

The purpose of issuing placement shares is to support business growth, finance working capital needs, and repay bank loans. However, the company could not complete the modernization project and other initiatives due to a lack of funds. As a result, its turnover is decreasing due to the declining average sale price in the auction market for its products, according to company officials.

Following the court order, there has been significant progress in the implementation of the state-owned company’s plans.

In July last year, Jakir Hossain Sarkar, who owns only 10 National Tea shares, filed a writ petition with the High Court against the company’s scheme of issuing fresh shares approved by the BSEC, alleging that the firm did not treat all its existing shareholders equally.

Later, the court upheld the BSEC’s consent. Upon a petition by the market regulator, the chamber judge of the Appellate Division put the High Court order on hold.

In all these issues, shareholders are the ones to suffer, as after the record date, the price of National Tea shares dropped in adjustment with the upcoming increased number of shares, and now the issuance of placement shares is uncertain.

In April last year, National Tea secured BSEC approval to raise its paid-up capital by issuing 2.34 crore shares at Tk119.53 each, including a Tk109.53 premium per share.

Of the shares, the government, Investment Corporation of Bangladesh, and Sadharan Bima Corporation will get 1.24 crore shares at an average ratio of 4.43 new shares for each existing share, sponsor-directors 13.8 lakh shares at a ratio of 3.21:1, and general shareholders nearly 96 lakh shares at a 2.85:1 ratio.

On Wednesday, National Tea shares closed at Tk388.60 each at the Dhaka Stock Exchange. The company was incorporated in 1978 and listed on the capital market in 1979. It cultivates, manufactures, and sells tea and rubber in the local market. The company’s average annual production is about 52 lakh kg of tea, the majority of which is sold through the Chattogram auction market.

The Bangladesh Securities and Exchange Commission (BSEC) has allowed state-owned power distributor Dhaka Electric Supply Company (Desco) Limited to issue 60.76 crore preference shares at Tk10 each to the government against a share money deposit.

The commission approved this in its meeting on Sunday.

According to its financial statement till June 2023, Desco received Tk607.69 crore from the government as a share money deposit for its annual development plan. Against this fund, the company will now issue irredeemable non-cumulative preference shares in favour of the secretary of the Power Division under the Ministry of Power, Energy, and Mineral Resources.

On 2 March 2020, the Financial Reporting Council (FRC) directed that capital received as a share money deposit, or by any other name, should be included in the equity part of a company. This amount cannot be refunded and must be converted into share capital within six months from the date of receipt.

Such share money deposits shall also be considered in the calculation of earnings per share (EPS).

Desco decided to issue preference shares after more than three years of the FRC directive.

Preference shares are a type of company stock with dividends paid to shareholders before ordinary shareholders. In case of bankruptcy, preference shareholders have priority in receiving payment from company assets before common stockholders.

The irredeemable nature of these preference shares means they will not increase Desco’s paid-up or common share capital. Consequently, the company is not obligated to pay any previous year’s unpaid preference share dividends due to the “non-cumulative” nature of the shares.

The proposed conditions imply that if Desco makes more profits, the government will get high dividends against the preference shares and in cases of annual losses no dividends will be given.

As the new shares will not be taken into account for EPS calculation, there will be no direct impact on the company’s financials.

But because of getting priority in dividend payments, the government as a preference shareholder will first receive a portion of the company’s earnings as a dividend, which might ultimately decrease the net profit.