Alif Group has expressed its interest in buying 25 percent shares in BD Welding at an agreed rate from ICB
Bangladesh Welding (BD Welding) Electrode Ltd will change its category from "Z" to "B" on the stock market by issuing dividends.
The company will change its category in order to implement the transfer of its shares held by the state-owned Investment Corporation of Bangladesh (ICB) to Alif Group – a local private sector investor.
Alif Group has expressed its interest in buying 25 percent shares in BD Welding at an agreed rate from ICB.
Earlier, in July 2019, Alif Group and ICB signed a memorandum of understanding (MoU) for the acquisition of the shares. However, the deal was not implemented as BD Welding has been in the "Z" category of the stock market since 2015.
The company has also failed to hold its annual general meeting (AGM) since the 2018 financial year.
As per the securities law, ownership of a company that fails to issue dividends and hold annual general meetings cannot be transferred.
Owner company ICB sought release from this law from the Bangladesh Securities and Exchange Commission (BSEC), to sell its entire holdings to Alif Group, but the regulator did not agree with ICB.
Therefore, as an alternative solution, ICB, on behalf of the company, filed a petition with the High Court to hold the AGM and board meeting of BD Welding for the financial years 2018-19 and 2019-20.
In February this year, the High Court gave permission to BD Welding to hold a board meeting and an AGM.
After the permission was granted, BD Welding held its board meeting on Sunday.
The company's board of directors has recommended no dividend for the year ended on June 30, 2018. However, it recommended a one percent stock dividend for the year ended on June 30, 2019.
The dividend would be approved at the AGM dated September 17, 2020. To ensure shareholders' participation, the record date is set for August 31 this year.
BD Welding has posted a loss per share of Tk0.08 for the year ended on December 31, 2019. Its net asset value per share was Tk11.61.
SM Nurul Islam, managing director of BD Welding, who currently owns around five percent of the company, said that after the dividend approval at the AGM, the company will move from "Z" to "B" category. Therefore, ICB will face no troubles in selling the shares to Alif Group.
He added, "The company is now facing a cash crisis to set up a new factory. We have not been able to manage funds from any other sources because of ICB's obligation. Alif wants to invest in BD Welding as the owner of the company. However, due to these complications, it has not invested yet. I hope in the next few months this issue will be resolved and we will get money to run this company."
Earlier, in 2017, BD Welding sold its land in Chattogram to BSRM Group to repay a bank loan. Recently, the company purchased land in Dhamrai to set up a new factory with existing machinery.
In 1999, the company entered the stock market to collect funds in setting up an oxygen plant in Chattogram. It was competing with the multinational Linde Bangladesh and some new entrants until its raw material imports were disrupted because of a lack of banking support due to defaulted loans.
Losing the edge gradually pushed the company lower and it ended up halting production.
In 2009, five out of eight sponsors sold their entire holdings to the ICB and now the state-owned investment entity is chairing and controlling the BD Welding board.
The company's paid up capital is Tk42.92 crore. Out of total shares, general shareholders hold 65.39 percent.
The closing price for the company's shares was Tk22.20 per share on the Dhaka Stock Exchange on Monday.