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Index Agro Industries Limited has revised its IPO proceeds expenditure plan and decided to use 71 per cent of the raised fund – Tk 50 crore in total – to repay its short-term loans.
The decision was approved at an annual general meeting (AGM), the company said in a filing with the Dhaka Stock Exchange on Thursday.
“The four-year gap between the IPO proposal and approval forced us to revise the expenditure plan and make it time-befitting,” said the company.
It applied for collecting funds from the capital market through the initial public offer in October 2016 but received the capital market regulator’s consent in January this year.
The needs mentioned in the IPO proposal have already been met through bank loans and own sources.
“Expansion was a crying need for our survival. But due to a delay in IPO approval, we have expanded the business with our funds and bank loans. Now, we’ll use the IPO proceeds to repay Tk 35.49 crore short-term loans,” its Company Secretary Abu Jafar Ali told The Business Post on Thursday.
However, no issuer of listed security is allowed to utilise more than one-third of the fund raised through IPO for loan repayment, according to the securities rules.
“The regulator, in its consent letter, allowed Index Agro to use the IPO fund in any sector upon approval of the board and shareholders,” said Ali.
“The condition in our IPO consent letter was that the IPO fund should be used in the declared sector. If for any reason, it cannot be used in the declared sector, the permission of the shareholders must be obtained after the approval of the board. In this case, apart from the sponsors and the directors, 51 per cent vote needs from other shareholders,” he said.
Index Agro raised Tk 50 crore from the capital market in February this year. Initially, it had planned to use Tk 29.96 crore to procure machinery, Tk 17.54 to construct a new building and Tk 2.5 crore to meet IPO expenses.
Until October, the company spent Tk 3.39 crore and Tk 46.61 crore remained unspent. It used Tk 2 crore in constructing a new building and other civil works and Tk 1.38 as IPO expenses.
