Beximco paid bond profits from raised capital, now faces payment crisis

Beximco Limited paid monthly profits to bond investors from the capital it had raised by offering high returns, rather than from business income, company officials have said.

With most of the raised funds used to repay loans and cover profit payouts, the company is now struggling to continue payments as the money has run out.

The company had assured investors a 15% return under the slogan "At the highest rate, above all", promising Tk1,250 per month for every Tk1 lakh invested. Investors were told that profits would be transferred to their bank accounts at the end of each month.

According to company sources, Beximco requires around Tk6 crore per month to pay interest against the bond capital.

However, since October last year, profit payments have become irregular. The profit for November was paid one week before the February national election, but payments for December and January are overdue.

In May 2024, the Bangladesh Securities and Exchange Commission (BSEC) approved Beximco Limited's issuance of bonds worth Tk1,500 crore to repay its own loans and to provide Tk1,000 crore in loans to Sreepur Township Company, a Beximco Group entity, for investment in real estate projects.

Sandhani Life Insurance Company Limited acted as trustee of the "Beximco 1st Unsecured Zero Coupon Bond".

However, according to Md Mizanur Rahman, company secretary of Sandhani Life Insurance, Beximco was able to raise only Tk541 crore out of the approved Tk1,500 crore. Of that amount, Tk500 crore was used to repay loans.

Beximco's Chief Financial Officer Md Luthfor Rahman said the remaining funds were kept in the company's account and used to pay monthly profits to investors.

He said as the factories are closed and bank accounts were frozen during the interim government, the company currently has no income of its own. As a result, a crisis has emerged in paying profits.

Mizanur Rahman said a meeting was held with Beximco before the election where the issuer assured that all outstanding profits would be paid.

He said that, to his knowledge, profits have been paid up to December and that the company has assured payment for January or the current month of February.

Individual investors have expressed concern.

Shipra Rani, an investor from Narsingdi, invested Tk60 lakh in the bond after selling land. She initially received profits regularly but is no longer receiving payments on time.

Her family told TBS that they depended on the monthly profit and are now facing uncertainty.

Another investor who invested Tk50 lakh said he is anxious about whether he will recover his principal investment at maturity.

Following the fall of the Awami League government, subscription to the bond declined sharply.

Institutional investors who had earlier expressed interest reportedly withdrew. 

An official of Beximco, speaking on condition of anonymity, said the company had previously paid more than Tk100 crore per month in salaries and allowances but is now unable to pay investors' profits.

He said several thousand workers have been laid off and that many senior officials have not received salaries and allowances for over a year.

Although there were plans to provide Tk1,000 crore in loans to Sreepur Township, it is learnt that the loan was not provided from this bond. Sreepur Township had earlier undertaken the Mayanagar housing project in Gazipur.

Kaisar Ahmed, company secretary of Sreepur Township, said that after the change of government in August 2024, vandalism took place in the project area and work has not resumed fully.

He said machinery and equipment security remain a concern, although project activities are continuing.

He added that interest payments on the Tk1,000 crore bond raised earlier for the project are ongoing and there are no arrears.

Between 2021 and 2023, Beximco Group raised nearly Tk4,000 crore through two other bonds, including a Tk3,000 crore Sukuk bond in 2021 to finance solar power plants and expand its textile division.