ICB panel for Beximco Sukuk extension by six years as principal repayment in crisis

Highlights:

• Committee recommends extending Beximco Sukuk maturity from 2026 to 2032
• Conversion shortfall leaves Tk2,809 crore principal still unpaid
• Only Teesta project generates revenue; other projects delayed or damaged
• SPV warns available funds far below upcoming principal obligations
• Extension depends on reviving Korotoa plant with Tk150 crore funding
• Investors split on extension; some demand higher profit rate

A Bangladesh Bank–mandated working committee has recommended extending the maturity of Beximco Ltd's landmark Shariah-compliant green Sukuk by six years, after the issuer informed regulators that it will be unable to return investors' principal when the bond matures in December 2026.

The 21-member committee, led by the Investment Corporation of Bangladesh (ICB) — the Sukuk's trustee — has proposed a new maturity date of 2032 for the Tk3,000-crore instrument, according to its report seen by The Business Standard.

The extension has been sought amid Beximco's ongoing financial strain, delays in two of the three Sukuk-funded projects, and the company's failure to convert Sukuk units into its shares as originally planned.

Infograph: TBS

Conversion failure leaves nearly entire principal unpaid

Under the original structure, up to 20% of the Sukuk was to be converted into Beximco shares each year over five years. Although Tk1,800 crore was scheduled for conversion between 2022 and 2024, only Tk190 crore—6.36%—has actually been converted. This has left an outstanding principal of Tk2,809 crore.

Market insiders say investors avoided conversion because they preferred the Sukuk's 9% semi-annual return. The BSEC-imposed floor price, which keeps Beximco shares stuck at Tk110.10, has also discouraged conversion, as the Sukuk trades far below that price at Tk58.50 in the secondary market.

A senior Beximco official, requesting anonymity, said that in light of the group's setbacks after 5 August 2024, repaying the principal by 2026 is "not possible", although a five-year extension could make full repayment feasible.

Beximco's owner, Salman F Rahman, remains in jail facing multiple cases, but the company is still paying profit instalments to Sukuk investors.

Only one Sukuk-funded project earning revenue

The Sukuk financed two solar power plants — Teesta and Korotoa — alongside the expansion of Beximco's textile division.

Since starting commercial operation in January 2023, the Teesta Solar Park has generated Tk1,693.31 crore in revenue up to October 2025. Of this, Tk1,044 crore has been paid out as periodic returns to investors, while Tk248.39 crore went to operating expenses. Only Tk401 crore is currently available for redemption, including Tk235 crore in the sinking fund.

However, the Special Purpose Vehicle (SPV) operated by the ICB to manage the Sukuk, says this balance, along with expected earnings next year, will still be far short of the principal repayment requirement.

In contrast, the Korotoa Solar Park remains inactive after suffering extensive damage during the July 2024 uprising. It needs Tk150 crore to resume operations. The textile unit, which received Tk800 crore, is running only partially because raw-material imports have been disrupted by post-transition banking complications.

As a result, Teesta is the only project currently generating income for Sukuk obligations.

Extension linked to project revival

The committee noted that if the Korotoa plant can be revived with Tk150 crore in new funding, the required extension could be reduced to five years.

It has recommended keeping the Sukuk's 9% semi-annual profit unchanged, and proposed granting the SPV power of attorney over 650 acres of Teesta project land, 130 acres of Korotoa project land, and Beximco Textile's six-storey building. Increasing the sinking fund size has also been advised.

Although machinery assets are mortgaged, the project and textile lands are not. The committee has therefore recommended amending the lease deed so that these lands come under the SPV, given that full repayment by 2026 is unachievable.

Bangladesh Bank will review the proposals before sending a final recommendation to the BSEC, which must legally approve any change to maturity or repayment terms. BSEC spokesman Abul Kalam said the commission has not yet received any application regarding the Sukuk extension.

The working committee, formed in July under instructions from a high-powered Bangladesh Bank panel, includes representatives from BSEC, ICB, banks, and the power board.

Investors divided over extension

IFIC Securities, which holds 12.06% of the Sukuk, said it has no objection to a maturity extension but has proposed increasing the profit rate by 2%. "We hope investors' interests will be considered," said Rafiqul Islam, director of IFIC Securities and spokesperson for IFIC Bank.

A senior Beximco official said efforts are ongoing to restart the Korotoa plant and revive the textile unit with foreign investment. "With a six-year extension, full principal repayment is possible," he said.

The Tk3,000-crore Sukuk at a glance

Beximco raised Tk3,000 crore in 2021 through the country's first private-sector, asset-backed corporate green Sukuk. Banks and their subsidiaries invested Tk2,439 crore through private placement, while Tk558 crore came through a public offering.

Of the allocated funds:

• Tk2,155 crore was ultimately spent on the Teesta Solar Plant (allocated: Tk1,886.83 crore)
• Tk39 crore was spent on the Korotoa Solar Project (allocated: Tk308.31 crore)
• Tk806 crore was used for the textile expansion (allocated: Tk805 crore)

The Korotoa plant, with a planned 30MW capacity, was expected to begin production by June 2026, but a fire in August 2024 damaged its transformers and site office.