Index Agro Industries will repay short term loan with its IPO (initial public offering) proceeds despite the matter was not included in the list of areas where such fund will be utilised.
The company got approval on repayment of loans at its annual general meeting (AGM) held on December 9, according to a disclosure posted on the website of Dhaka Stock Exchange (DSE).
The company will repay partial short term loan worth Tk 354.93 million with the IPO proceeds.
The matter of repaying short term loan with IPO proceeds was not mentioned in the company's prospectus.
The company raised a capital worth Tk 500 million to construct buildings, purchase machinery and bear the IPO related expenses.
In its disclosure, the company said the reason for repaying the loan from IPO proceeds is that it applied for IPO on October 27, 2016 and obtained regulatory consent on January 20, 2021.
The entire process took more than 4 years and in the meantime the company has setup required machinery, equipments and building and civil construction works for the expansion project through bank borrowings and partially from own sources, the disclosure said.
The company secretary of Index Agro Industries Abu Jafar Ali said there is no violation of repaying loan with IPO proceeds as they have received consent of 51 per cent of general shareholders who exercised voting power at the AGM.
"Our company can utilise IPO proceeds in the areas, which are not mentioned in prospectus, considering the option of valid ground," Mr. Ali said.
Asked, the spokesperson of the securities regulator Mohammad Rezaul Karim said the regulator can consider a proposal of altering the use of IPO proceeds based on shareholders' approval and regulations of board meeting.
The sponsor-directors of Index Agro Industries hold 57.77 per cent shares, institutes 20.54 per cent and general shareholders 21.69 per cent as of October 31, 2021.