Malek Spinning Mills, a listed company, has planned to raise Tk 2.90 billion through a zero-coupon bond to finance its business expansion and reduce existing debts.
The bond issue is subject to approval of the Bangladesh Securities & Exchange Commission, the company said in a filing with the Dhaka Stock Exchange (DSE) on Thursday.
A zero-coupon bond is a debt instrument that does not pay interim coupons but instead trades at a deep discount, rendering profit at maturity, when the bond is redeemed for its full face value.
The board of directors of the company has also decided to purchase 55 Bigha (1,815 decimal) land worth approximately Tk 550 million for a new plant at Bhaluka in Mymensingh.
The company will purchase the land from its directors/related parties on a fair market price basis, which may exceed l.0 per cent or above of the total tangible assets shown in the statement of financial position as of the end of the immediate preceding financial year, according to the disclosure.
The board has also approved proposal of J.M. Fabrics, a subsidiary of Malek Spinning, to purchase land measuring 954.94 decimals situated at Gazipur at a total price of approximately Tk 477 million including registration cost for the future expansion of the business of J.M. Fabrics.
"The investment of Tk 477 million would be met from internal generation of funds by J.M. Fabrics. Malek Spinning will not be required to provide any funds in this regard," said the company.
Besides, the board has approved the decision of Salek Textile, a subsidiary of Malek Spinning for recovery of insurance claim over Tk 211.28 million as final settlement against the claim was Tk 304.79 million for losses by fire at Fabric Unit.
The company also informed that the above amount will be utilised against repayment of term-loan of the company.
Each share of the Malek Spinning, which was listed on the DSE in 2010, closed at Tk 28.40 on Thursday, losing 0.35 per cent over the previous day.
The company's nine months consolidated earnings per share (EPS) stood at Tk 2.91 for July 2021-March 2022 as against Tk 1.98 for July 2020-March 2021.
EPS has increased because of net profit substantially increased during the period due to increase in sales and decrease in financial expenses, said the company.
The company has recommended a 10 per cent cash dividend for the year ended on June 30, 2021. In 2020, the company declared no dividend. In 2019, it provided a 10 per cent cash dividend.
The company's paid-up capital is Tk 1.93 billion, authorised capital is Tk 3.0 billion and the total number of securities is 193.60 million.
The sponsor-directors own 47.34 per cent stakes in the company while the institutional investors own 10.61 per cent and the general public 42.05 per cent as of May 31, 2022, the DSE data shows.