As the commission asked for required documents and explanations from the company, it repeatedly applied for deadline extension instead of sending a reply
The securities regulator has turned down Western Marine Shipyard Limited's rights share application as the shipbuilding company failed to submit required documents on time.
The Bangladesh Securities and Exchange Commission (BSEC) on Monday sent letters to the company and its issue manager in this connection.
Western Marine, the country's largest shipbuilder, could not meet the regulatory requirements on time, a BSEC official said.
Then the commission asked for required documents and explanations from the company.
Although the submission deadline was extended twice, the company repeatedly applied for extra time instead of sending a reply.
So, the BSEC decided to reject the company's rights share offer.
In November 2017, Western Marine first decided to offer rights share at Tk10 premium to expand its shipyard capacity, BMRE (balancing, modernisation, rehabilitation and expansion), and to pay off debts.
Later, the company decided to revise its issue price and the ratio of the proposed rights issuance in July 2018 at Tk5 premium.
Western Marine also revised the proposal in February 2019 and offered rights shares at a ratio of one rights share for existing two shares at a face value of Tk10 each.
The net profit of the company dropped by 78% in the third quarter of the last financial year.
The shipbuilder's net profit was Tk3.21 crore and earnings per share was Tk0.14 during January-March quarter of the financial year 2019-2020.
In the first three quarters of the last financial year, Western Marine's net profit fell by 43% to Tk24.78 crore and earnings per share stood at Tk1.08.
Bangladesh has over 200 shipbuilding companies, largely concentrated in Dhaka, Chattogram, and Narayanganj, according to a LightCastle Partners study.
Western Marine dominates the market with an 89% share of the export.
The company's major export destinations include Germany, New Zealand, Pakistan, Mozambique, and The Gambia.
Despite being marked by the government as a strategic industry for growth, shipbuilding has failed to meet expectations.
A slowdown in the global economy combined with infrastructural limitations have restrained the industry's growth, the LightCastle study said.
Earlier, the industries ministry drafted the Shipbuilding Industry Development Policy 2019 which include policies such as a 10-year tax break, cheaper financing, and cash incentives.
The government has also been considering the development of a Tk5,000 crore special fund for the advancement of the industry.
However, Western Marine's workers staged demonstrations in front of its main entrance in Chattogram in April this year, demanding four months' arrears and overtime pay of 17 months.
The company paid a 15% stock dividend to its shareholders for the financial year 2018-19.
Western Marine was listed on the Dhaka Stock Exchange (DSE) in 2014 and its paid-up capital is Tk229.46 crore.
The closing price of the company's shares was Tk13 each on Monday at the Dhaka Stock Exchange.
The sponsors and directors jointly hold 30.01% stake in the company, institutional investors 16.85%, and general investors 53.14%.