Undersubscription forces Navana Pharma to repay bond investors before maturity

Navana Pharmaceuticals has decided to repay the subscribed amount of its partially convertible bond earlier than maturity, without any conversion, due to undersubscription.

The drug manufacturer managed to raise only Tk 80 million of its targeted Tk 1.50 billion through bond issuance, aimed at paying off bank loans.

The subscription was open between August and September last year, but political unrest during that time severely affected the attempt to raise money through the debt security.

Navana Pharma applied to the Bangladesh Securities and Exchange Commission (BSEC) for an extension of the subscription period, but the commission formed after the political changeover refused to grant an extension.

Company secretary Lorens Shamol Mollick said the board of directors, in a meeting on Monday, decided to pay back the subscribed portion of the bond as the funds collected did not serve the purpose.

However, he declined to say how the company would repay its bank loans, which would have been partially settled with the bond proceeds if fully subscribed.

As of March this year, Navana Pharma's short-term loans amounted to Tk 4.6 billion.

The bond repayment decision is subject to approval from the Bangladesh Securities and Exchange Commission, according to a filing on the stock exchange on Tuesday.

In March last year, Navana Pharma received regulatory approval to issue a partially convertible bond worth Tk 1.50 billion, with a face value of Tk 100,000 per unit, for a tenure of five years. The objective was to refinance the company's bank loans.

A convertible bond is a fixed-income corporate debt security that provides interest payments but can be converted into a predetermined number of common stock or equity shares.

As per its original plan, Navana Pharma was supposed to convert 60 per cent of the bond, or Tk 900 million, into shares. It had announced that 20 per cent of the bond would be converted into shares each year starting from the third year, while the remaining amount would be repaid to investors upon maturity in the fifth year.

Navana Pharma entered the stock market in 2022, raising Tk 750 million under the book-building method. The funds were allocated for constructing a general manufacturing building, modernising and expanding the SVPO facility, and partially repaying loans.

As of June this year, the company had already utilised more than 97 per cent of its IPO funds.

Currently, Navana Pharma produces both human and animal drugs, which are sold in domestic as well as international markets.

Financial Performance

Navana Pharma posted a 20.5 per cent year-on-year growth in revenue to Tk 8.03 billion in FY24, while its profit surged 13 per cent year-on-year to Tk 404.63 million in the year.

It declared a 14 per cent cash dividend for the year.

In the nine months through March of FY25, profit rose 13 per cent year-on-year to Tk 375 million.

On Tuesday, Navana Pharma's stock moved up 3.6 per cent to close at Tk 63.7 per share on the Dhaka Stock Exchange.

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