‘Golden Harvest fails to make overdue coupon payments’

Bondholders of Golden Harvest Agro Industries have alleged that they did not receive coupon payments in line with the terms and conditions.

A failure to make interest payments could represent the frozen food manufacturer’s first default on a Tk 50 crore public bond, said sources at the Bangladesh Securities and Exchange Commission.

Such a default would put the company at risk of becoming a defaulter, which might rattle the investor confidence.

On Sunday, Golden Harvest saw its stock rise more than 4 per cent, extending its winning streak for the third straight session on the Dhaka Stock Exchange.

The matter came after bondholders had demanded their dues and issued a legal notice to repay debt and lodged complaints to the securities regulator.

That prompted the BSEC to instruct the company to let it know the update about the coupon status.

The bond, which got the BSEC nod in 2016, is fully redeemable, non-convertible, and unsecured.

“The commission has come to know from the legal notice and complaint of the subscriber, the issuer of the bond failed to payment of coupon and principal at redemption as terms and conditions of the approved corporate bond,” reads the letter sent by the BSEC to Golden Harvest’s managing director on March 8.

“At this stage, you are directed to comply with the terms and conditions given in the consent letter from the commission as well as the information memorandum,” it said.

The company has also been instructed to submit information regarding the outstanding status of the corporate bond within seven working days of the issuance of the letter, it added.

The face value of the bond, which could only be issued to financial institutions and high-net-worth individuals through private placement, was Tk 1 crore per unit and maturity period seven years.

Golden Harvest Agro Industries Company Secretary Nirmal Chandra Sardar said his company did not receive any legal notice from any bondholders or any letter from the BSEC.

“We paid returns on the bond regularly,” he told The Business Post on Saturday.

This isn’t the first time Golden Harvest has fallen foul with the securities regulator. In 2020, the company faced the music for lending Tk 379 crore to its sister company free of interest between 2016 and 2020.

The exercise breached securities rules.

The latest development is another stroke of uncomfortable news for the company, which operates the Domino’s Pizza franchise in Bangladesh.

Earlier this year, it was downgraded to a ‘B’ category stock for paying a 5 per cent cash dividend for its last financial year. In its previous financial year, it paid no dividend, as its sales were battered by the global coronavirus pandemic.

However, after four consecutive quarters of losses, the company bounced back to profitability in the first quarter of fiscal 2021-22. It logged Tk 0.29 crore in profits during the period as the economy shook off the pandemic after-effect.