Renata gets regulatory nod to issue preference stocks
Our preference share has a very lucrative dividend yield, which is 15 per cent
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Renata has obtained approval of the securities regulator to issue Tk 3.25 billion worth of "non-cumulative, non-participative, fully convertible preference shares" in a bid to ease its current financial burden.
According to the company's filing on Monday, the Bangladesh Securities and Exchange Commission (BSEC) issued an order the day before asking the company to convene another extraordinary general meeting to obtain shareholders' consent for the minor change to its earlier decision.
In November last year, the drug maker decided to issue Redeemable or Fully Convertible Preference Shares. Later on, it changed the plan and decided to keep the fully-convertible provision only.
"We will be able to close our subscription process within October this year. Our preference share has a very lucrative dividend yield, which is 15 per cent," said CFO of Renata Mustafa Alim Aolad.
After tax, the real yield will be 12 per cent, which is very attractive because the interest rate has been declining, he added.
Out of Tk 3.25 billion to be raised, shares worth Tk 1 billion will be subscribed by its sponsor organisation Sajida Foundation.
A single bank has made a request to subscribe the rest of the preference shares, said Mr Aolad, without mentioning the bank's name.
Renata, one of the most compliant listed companies, currently has a heavy burden of loans taken before the Covid pandemic to expand capacity. The overall investment value jumped unexpectedly as the taka became cheaper against the dollar.
Now, an effort is on to reduce traditional loans in the balance sheet and convert them into preference shares. As the preference shares are non-cumulative, they involve lower repayment burden than bank loans.
The drug maker will be able to convert the preference shares later into equity shares, which will lighten loan repayment pressure.
Meanwhile, the share price of Renata fell 1.88 per cent to Tk 516.70 each on Monday on the Dhaka Stock Exchange.
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