All the sponsors and directors of the firm left for Taiwan without notice
The securities regulator has asked the Bangladesh Bank to freeze the initial public offering (IPO) account of the recently listed Ring Shine Textiles Limited, citing irregular cash disbursement.
The textile firm announced the withdrawal of Tk50 crore from its account to pay off loans taken from different banks before the public share issuance. Ring Shine raised Tk150 crore from the issuance.
The firm owed Tk28 crore to Offshore Banking Unit of the Dhaka Bank and Tk22 crore to the South Korea-based Woori Bank, sources said.
However, Ring Shine paid off only Tk22 crore. And instead of the debtor banks mentioned while making the withdrawal, the Premier Bank received the sum.
The Dhaka branch of Woori Bank requested the Bangladesh Securities and Exchange Commission, in a letter, to intervene and ensure the recovery of its loan.
But Ring Shine claimed in its IPO fund utilisation report that the repayment of the Premier Bank's loan, instead of that of Woori Bank, was discussed and approved in its annual general meeting.
The firm raised Tk150 crore after its IPO was launched on October 6, 2019. Of which, Ring Shine used Tk25.53 crore until December 31, 2019.
Company Secretary of Ring Shine Textiles Asraf Ali told The Business Standard that the firm did not receive any formal letter from the regulator about freezing its account.
Sources said, all the sponsors and directors of the textile firm are Taiwanese, and they, along with a number high-ranking officials had gone home to celebrate the Chinese New Year, without any prior notice.
The uncertainty created by their departure made the Bangladesh Securities and Exchange Commission request to freeze the firm's IPO fund account.
The Bangladesh Securities and Exchange Commission approved the IPO of Ring Shine on March 12 last year.
The company wanted to use the capital raised from the IPO for purchasing and repairing machinery and equipment and paying off loans.
It wanted to import machinery worth Tk96.40 crore and pay off loans of Tk50 crore while spending around Tk3.60 crore on IPO-related expenses.
At the end of the fiscal year 2018-19, the earning per share of the firm was Tk1.72, net asset value per share Tk24.88, and net profit Tk49.17 crore.
The authorised capital of the company was Tk540 crore and paid-up capital Tk513.13 crore.
The firm's number of shares is around 50 crore. It owes Tk370 crore in short-term loans.
The firm was launched on December 28, 1997, as a private firm and went into production in August 1998. It is mainly engaged in gray thread production and marketing.
The firm also produces yarn and fabrics for the country's garment industry as a backward linkage firm and wants to thrive on the growing demand for imported raw materials.