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Envoy Textile has decided to issue zero coupon bonds to raise a Tk 200 crore fund from the capital market subject to approval of the securities regulator.
The listed textile company will use the proceeds to finance its captive power plant and to prepay a portion of high-cost borrowing.
An Envoy executive said the company currently has a loan of Tk 400 crore. Around Tk 150 crore of the proceeds will be spent to repay a portion of the loans while the remaining amount will be used in its ongoing 19mw captive power plant project.
The zero coupon bonds are being issued as part of the company’s long term plan to reduce dependency on bank loans, he said, adding that they also have a plan to float preference shares.
He hoped that the measures will scale up the company’s profits in the coming years.
Describing the bonds in detail, Envoy Textile in a price sensitive information said it will issue the 5-year series zero coupon bond, with face value of Tk 200 crore, at a discounted value of Tk 168.45 crore though private placement to the potential investors.
The bond will be bank guarantee backed, redeemable, non-convertible in nature with discount rate at a range of 6.5 per cent to 7.5 per cent and to be issued in series with maturities starting from six months to five years.
An investor will have to subscribe across all 10 tenures, mentioned the PSI. Envoy Textile witnessed a steep fall in its profit in the fiscal 2020-21 as it declined from Tk 27.4 crore to Tk 9.47 crore
It declared a 10 per cent cash dividend, including 5 per cent interim cash dividend, for its shareholders for the last year.
Incorporated in 1995, the company manufactures 100 per cent export-oriented denim fabric. It is the first denim project in Bangladesh with rope-dyed technology and one of the country’s leading companies in this sector.
Envoy Textile got listed on the exchanges in 2012. Its share price declined 2.42 per cent to Tk 48.3 at the Dhaka bourse on Thursday.
Envoy Textile has a market capitalization of Tk 830 crore while its paid-up capital is Tk 167 crore. It has Tk 365 crore in surplus reserve.
