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Stock regulator suspends NTCL’s Tk 280 crore capital raising

Staff Correspondent
13 Jul 2023 21:36:17 | Update: 14 Jul 2023 00:11:22
Stock regulator suspends NTCL’s Tk 280 crore capital raising

When the fund raising process of National Tea Company (NTCL), a publicly traded company, was almost done through placement share issuance, the Bangladesh Securities and Exchange Commission has postponed the proceeding due to a legal issue.

The stock market regulator has put off the process due to a lawsuit filed one of the company’s shareholders over the fixation of proportion of the placement shares.

NTCL will be allowed to resume the capital raising process if it can ensure clearance from the court over the legal issue, as per a disclosure filed with the Dhaka Stock Exchange (DSE) Thursday.

The BSEC on April 17 this year had approved the listed firm to raise capital worth Tk 279.7 crore through the issuance of placement shares.

The company, as per the regulatory approval, was scheduled to issue 2.34 crore ordinary shares through private placements among its current shareholders.

The company was given permission by the stock market regulator to issue the shares at a price of Tk 119.53 per share (Tk 10 face value plus Tk 109.53 premium), resulting in a Tk 279.7 crore total fund raise.

Following the regulatory clearance, NTCL also completed the spot settlement from May 11 to May 14.

In the given situation, the BSEC has now instructed the company to postpone the subscription of the proposed capital raising proceeding until it receives clearance order from the court, as per the DSE filing.

DSE officials said if there is any pending lawsuit against a company, the regulatory body can step up with such decision.

NTCL carries on the business of plantation, cultivation, manufacturing and selling of tea and rubber. It was founded in 1978 and listed on the stock exchange in 1979.

It produces roughly 5.2 million kilogram of tea on average each year, and most of which is sold on the Chattanooga auction market.

National Tea began selling tea on a modest scale through its dealers in the neighborhood market in 2000. At its registered office, it has a sales center that is accessible to all customers.

The tea company wanted to raise the fund to meet necessary working capital, expansion of its fields and factories, and the repayment of bank loans.

On the Dhaka Stock Exchange (DSE), National Tea Company shares fell by 2.47 per cent to Tk 414 each on Thursday on a day-on-day basis.

Currently, 42.72 percent of the company’s total shares are held by the government. On behalf of the government, the Investment Corporation of Bangladesh (ICB), and the Sadharan Bima Corporation jointly hold this stake which are expected to reach 51 per cent after the completion of the postponed placement shares issuance.

With an authorised capital of Tk 25 crore, the company has a paid-up capital base worth Tk 6.6 crore.

NTCL made profits between 2000 and 2019. But, after the pandemic shock, it could not make profits in the last three years.

Sponsor-directors held a 44.9 per cent stake in the company as on June 2023, while general public owned 36.02 per cent, institutions 14.75 per cent, and government 4.33 per cent.