Berger revises down rights share price

Berger Paints has revised the offer price of its proposed right shares in line with regulatory instructions, aimed at increasing its free float.

The previous offer price was Tk 1,376 per share, which has been revised down to Tk 1,110 per share, with a premium of Tk 1,100 per share. Other aspects linked with the rights issues have remained unchanged, according to a regulatory filing on Tuesday.

In this process, Berger intends to collect Tk 3.03 billion by issuing 2.73 million ordinary shares exclusively to general shareholders and its eligible employees. Its sponsor-directors are excluded.

Since 2.59 million shares meant for Berger's parent company J&N Investments will be divided into 0.4 million shares for employees and 2.2 million for general shareholders, the latter ultimately will be entitled to 1 rights issue against each existing share.

After the disbursement of rights issues, the dilution of Berger's shares will be approximately 10.28 per cent.

Before unveiling its plan to issue rights shares, Berger received an exemption from the stock market regulator regarding sponsor-director share subscription.

The exemption was granted because the plan to increase free float shares in the market, as per the rules, would not have succeeded if rights shares had been issued to sponsor-directors as well.

In September 2021, the securities regulator asked Berger Paints to ensure at least 10 percent of its shares as free float within three years. Currently, its publicly available shares amount to 5 per cent of the outstanding shares.

The issuance of rights shares is subject to approval of the shareholders at the extraordinary general meeting (EGM) scheduled for January 25 next year and consent of the Bangladesh Securities and Exchange Commission (BSEC).

The record date for the EGM is January 2. A separate record date will be declared for the entitlement of the rights shares after regulatory approval.

Khandker Abu Jafar Sadique, company secretary of Berger Paints, said they would submit a revised application after shareholders' approval in the upcoming EGM.

In March this year, the multinational paint manufacturer submitted a rights offer application to raise Tk 3.75 billion by issuing 2.73 million rights shares to meet the regulatory requirement of free float. On November 12 this year, the new commission advised Berger to submit a separate application in compliance with the SEC (Rights Issue) Rules, 2006.

Meanwhile, the stock rose 0.12 per cent to close at Tk 1,770.5 per share on the Dhaka Stock Exchange on Tuesday.

Berger to set up third factory

The proceeds of the rights issues will be utilised for partially financing the construction of its third factory at National Special Economic Zone at Mirsarai.

Berger has been investing in capacity expansion as well as diversification of products and businesses, keeping environmental impact in mind.

It announced in January this year that it would construct a third factory at an estimated cost of Tk 8.13 billion. The new plant is expected to start production in April 2026.

Once the third factory goes into production, it will have a positive impact on both revenue and profit, the company secretary said earlier.