Wise Star Textile goes ahead with Ring Shine takeover
Wise Star Textile Mills Ltd – a private firm run by listed Queen South Textile's managing director, will proceed with the takeover of the struggling Ring Shine Textiles after the approval of its general investors.
The board of directors has decided to hold an extraordinary general meeting (EGM) to consider the proposed takeover of sponsor directors' shares of the company by Wise Star Textile Mills Ltd and its nominees.
The EGM will be held on 20 June this year virtually, said the company in the disclosure through the stock exchanges.
Ring Shine Textiles was the first big manufacturing company that raised Tk150 crore in fixed price method in 2019 when Professor M Khairul Hossain was the chairman of the BSEC. But after approval, the company could not do business properly due to numerous issues.
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A senior official of the company, seeking anonymity, said the company will have to take a no objection certificate (NOC) from banks and related authorities to be taken over.
The company has already received no objection certificates (NOCs) from three banks out of five involved in its financial activities. The rest of the NOCs will be received in a short time, he expected.
Currently, the bank loans of Ring Shine Textiles stands at Tk550 crore, and Tk80 crore dues to the Bangladesh Export Processing Zones Authority (Bepza). Bepza wants payment of workers' liabilities first and after approval from the general investors, the takeover process will start after that, he added.
The board of directors has already appointed Brig Gen AHM Mokbul Hossain as managing director of the company after Sung Wey Min's resignation from the post.
Earlier, the BSEC allowed Bepza to transfer the sponsor-director shares of Ring Shine to a suitable buyer.
An official of the Bepza said already a few meetings have been arranged with Wise Star Textiles in this regard, but there is no final update till now.
BSEC gave the NOC to Bepza, saying Ring Shine can be handed over to an interested party if it complies with all rules.
Earlier, Union Group showed interest in taking Ring Shine over but ultimately did not go with it because of the huge debt burden of the company.
Ring Shine mainly manufactures dyed yarn, and gray and finished fleece fabrics of various qualities for both local and international markets.
Financial performance in October to December FY23
The new board of the Ring Shine Textiles is trying to be back in business in order to protect the interest of investors.
The company's revenue decreased by 45% to Tk39.46 crore from Tk71.49 crore compared to the same period of the previous year.
But its cost of goods sold increased by 26% to Tk49.89 crore from its revenue during the period.
The net loss after tax of the company stood at Tk19.23 crore, which was Tk38 lakh from one year ago.
What went wrong with Ring Shine
Ring Shine Textiles was listed on the stock exchanges in 2019. By issuing pre-IPO shares, also known as placement shares, to its existing sponsor-directors and 73 external local shareholders, the company became a Tk285.05 crore paid-up capital company from Tk9.95 crore.
But 11 sponsor-directors and 33 external shareholders did not make any payment against their allotted shares.
In September 2020, its production stopped because of the Covid-19 pandemic.
Working capital shortfall, a decline in orders from foreign buyers, and raw material shortage led to the factory shutdown.
In January 2021, the stock market regulator restructured the company's board of directors in a move to bring the company out of its worsening condition.
For this, the BSEC appointed seven independent directors to observe the company's overall condition and make a plan on how to operate it.
In June 2021, the factory went back into production.
