With maturity looming, Beximco's sukuk repayment uncertain as incomes dry up

Infograph: TBS

Summary:

• Beximco must repay Tk2,800 crore by December 2026
• Solar park revenue alone is insufficient for full repayment
• Beximco faces financial crisis, factory closures, and unpaid salaries
• SPV controls assets but struggles with repayment solutions
• Only one Sukuk-funded project is operational

The Beximco Green Sukuk, a five-year financial instrument, is set to mature in December 2026, requiring Beximco Limited to repay approximately Tk2,800 crore to investors.

However, growing concerns surround the timely repayment as Beximco's Textile Division, a major revenue source of the group, remains closed, and other revenue sources are minimal, leaving the solar park as the primary income stream.

Solar Park income insufficient for full repayment

Sources indicate that the income from the solar unit alone will not be enough to cover the full repayment amount.

The solar park generates an average monthly revenue of Tk50 crore, with a significant portion used for semi-annual interest payments. Beximco receives Tk7 crore for operational costs, and the remainder is deposited into the Sukuk sinking fund, which has grown to Tk178 crore.

Beximco's financial woes deepen

Salman F Rahman, co-founder and vice chairman of Beximco Group, is currently jailed and faces multiple cases. The group's debt-ridden businesses are in severe crisis. The 16 factories at the Beximco Industrial Park in Savar are struggling to pay workers' salaries and allowances. The labour ministry recently provided a cheque for Tk525.46 crore to pay arrears to laid-off workers and staff of 14 affected Beximco Limited units.

Investor concerns and special purpose vehicle (SPV) role

The Beximco Green Sukuk Al Istisna has over 5,000 investors, primarily institutional, including listed banks and mutual funds. A Special Purpose Vehicle (SPV), managed by a governing board with the Investment Corporation of Bangladesh (ICB) as trustee, was established to protect investor funds.

An ICB official said investor interest payments are being made from the solar park's income. Previously, only Tk5 crore was deposited into the sinking fund, but this increased after the government change in August. The official questioned how the Sukuk money would be repaid, citing Beximco's ongoing financial crisis and loan defaults.

He warned that failure to repay the Sukuk would severely impact investor confidence and the country's first Green Sukuk.

SPV board acknowledges repayment challenges

An anonymous SPV board member acknowledged the difficulty of repaying the capital given Beximco's crisis but noted that the SPV controls all assets, which could be sold if necessary. They also suggested that an alternative solution, such as an extension, might be sought.

ICB Chairman Abu Ahmed, who also chairs the SPV governing board, affirmed that ICB is fulfilling its responsibility to manage the Sukuk, pay investor returns, and manage the sinking fund. He stated that efforts are underway to increase the sinking fund's size.

According to the trustee deed, if the trustee fails to make the final redemption payments on time due to willful default or gross negligence, it will be liable to Sukukholders.

Capital raising and investment plan

In 2021, Beximco Limited raised Tk3,000 crore through the Beximco Green Sukuk: Tk1,500 crore from a private offering, with Tk750 crore from existing shareholders and Tk750 crore via IPO. 

The sukuk offered a 100% conversion option into Beximco shares. By 2024, 1.90 crore units, worth Tk190 crore, had been converted. If no further conversions occur by December 2025, the remaining Tk2,800 crore must be repaid upon maturity in December 2026.

The plan was to repay capital using income from three Sukuk-funded projects: two solar parks and a Textile Division expansion. However, only Teesta Solar Limited, supplying 200MW to the national grid, is operational. 

Korotoa Solar Limited has not started, and Beximco's textile expansion, requiring Tk800 crore, has stalled due to complications following the government change. Therefore, Teesta Solar is the only active project funded by the Sukuk.

ICB manages monthly Tk50 crore income from Teesta project

Beximco's solar park in Gaibandha generates income of Tk50 crore monthly, selling electricity at $0.15 per kilowatt-hour to the Power Development Board. Since the government change in August, ICB manages all finances, paying only half of the interest owed to investors at a 9% rate.

The solar park operates with Tk7 crore, while the rest is deposited into a sinking fund for the full redemption of Beximco Green Sukuk. As per the trust deed, a maximum of Tk5 crore must be deposited monthly into the fund until the Purchase Agreements are executed and Exercise Prices are paid. These deposits are adjusted annually based on the Conversion Option's exercise.

Due to Beximco's crisis, the trustee has increased sinking fund deposits. Tk178 crore is currently held in Mudaraba Term Deposit Receipts (MTDRs) across various banks. 

ICB officials said that, even with all income from the Teesta project deposited into the fund, full repayment to investors is not feasible. However, gradual repayment may be possible with an extended term. Without alternative arrangements, fulfilling repayment at the Sukuk's end will not be achievable.

Amount earned from Teesta project

Teesta Solar Park went into operations in January 2023 and has earned approximately Tk1,200 crore by February 2025.

From January 2023 to August 2024, it earned Tk928.20 crore in tariff, and from September 2024 to February 2025, it generated Tk276.99 crore.

However, ICB has not received any payments from BPDB for the last six months, though payments are being made in stages. Half-yearly interest will be due next July.

From the income, Tk558 crore has been paid to investors as interest on their investment. A sinking fund of Tk178 crore has been established, with the remainder taken by Beximco.

However, after the government change, ICB has only been disbursing Tk7 crore for the project's administrative expenses.