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After one year of postponement due to legal complexities, National Tea Company finally received the HC's permission to resume subscription of its placement shares worth Tk 2.80 billion.
Once a profitable business, the company looks to utilize the money to recover from persistent losses since 2020. Part of the fund will be spent on repayment of bank loans and the rest will be used as working capital.
As per the regulatory approval, the government and its entities [ICB and Sadharan Bima Corporation] would get shares at a ratio of 4.43:1, meaning 4.43 shares against one existing share. Non-government sponsor-directors would be able to buy 3.21 shares against every existing share they have. For general shareholders, the ratio has been set at 2.85: 1.
The distribution of new shares will increase the government's stake in the company from 42.72 per cent to 51 per cent.
The government had a majority stake in the company until 2002-2003. It lost controlling authority after it sold shares to private entities. Recently, it considered gaining back authority, which will be achieved after the issuance of the new shares.
"The company needs the money for its sustainability. This is good news. Finally, it got permission to collect the money. It will be able to improve the business situation now," said Md. Shakil Rizvi, director of the Dhaka Stock Exchange (DSE).
National Tea's accumulated losses reached Tk 1.43 billion in the four years to FY23 for rising costs of production for an increase in labour wages while the wholesale tea price in auctions plunged. The tea producer incurred a loss of Tk 687 million in the nine months through March this year for the same reason.
In a stock exchange filing on Wednesday, the company said it had received a letter from the Bangladesh Securities and Exchange Commission (BSEC) saying it could resume share subscriptions as per a judgment of the High Court.
The subscription began on Wednesday and will continue till August 19.
Placement shares are new equity shares issued to individual investors, corporate entities, or small groups of investors for fund raising.
The subscription was set to open on July 10 last year, but a general shareholder filed a writ petition with the High Court, accusing the company of not treating all shareholders equally.
The HC gave the final judgment in favour of the company and the regulatory decision to allow the company to float shares.
On Wednesday, shares of the company traded at Tk 388.60 each on the DSE. Shareholders on an average will get 3.55 shares at Tk 119.53 each against each share in their possession. Hence, the adjusted price comes to Tk 180 per share, with the latest share price taken into consideration.