Alif Industries now allowed to issue new shares to help C&A Textiles

The Bangladesh Securities and Exchange Commission (BSEC) has allowed Alif Industries – a publicly listed textile company – to issue new shares on behalf of its sponsors and directors, and use the fund to help the scam-hit C&A Textiles.

Back in May last year, the securities regulator allowed Alif to issue a Tk300 crore convertible bond for the same purpose. But that bond is yet to get a subscriber.

Therefore, since the company is not getting anywhere with its bond plan to help revive C&A Textiles, it has now decided to issue new shares.

Through these new shares, Alif Industries plans to raise Tk200 crore, and use this fund to pay off loans taken by C&A Textiles.

C&A Textile, which is also publicly listed, has been non-operational since 2017. The Alif Group acquired C&A in 2021, and now the new management is planning to merge with Alif Industries – a concern of the group.

According to sources, the merger plan is yet to be disclosed as there are too many procedures to be followed. But the BSEC is always kept updated regarding the matter.

The BSEC has approved Alif's new share issuance in a commission meeting that was held a week ago. The final consent letter is expected to be issued this week, said BSEC sources.

The new shares will be issued at Tk22 each, which is a 40% discount on the weighted average share price in six months. The last trading price of each share of Alif Industries was Tk43.4 at the Dhaka Stock Exchange.

BSEC Chairman Professor Shibli Rubayet-Ul Islam told The Business Standard, "Alif Industries will inject the fund in C&A Textiles in exchange of shares to run it in full swing."

"C&A Textiles had loans in some banks, which has been classified for a long time. Alif Industries will repay the loans, which will not only help C&A, but also the banks."

According to sources, after issuing the new shares, Alif's paid-up capital will increase by more than four times. Currently, its paid-up capital is Tk44.25 crore.

After Alif's merger with C&A, shareholding of the sponsors and directors will come down to below 30%.

Therefore, these new shares will also help C&A Textiles sponsor-directors maintain minimum 30% shareholding, as required by the BSEC.

Currently, C&A Textiles sponsor-directors hold 22.14% shares. The company's paid-up capital is Tk239.31 crore.

Alif's Managing Director Md Azimul Islam told TBS, "We will pay off C&A's loans which is Tk198 crore in total."

"It needs capital support in order to be run in full swing. We are working for the betterment of the shareholders," he added.

What went wrong with the bond plan

Alif's Tk300 crore convertible bond was to be subscribed by institutional investors through private placements.

The company wanted to use the fund for business expansion – acquire C&A, repay loans, purchase machinery, and meet working capital requirements.

But because of liquidity crunch and economic uncertainties, the bond was left unsubscribed.

Thus, the company came up with the new share issuance plan.

Company info

Alif Industries, previously known as Sajib Knitwear and Garments Ltd, was listed on the stock exchanges in 1995.

In 2007, the company got delisted from the mainboard of the bourses, and then returned to the mainboard in 2017.

In the 2021-22 fiscal year, the company made a profit of Tk6.86 crore, and decided to pay a 12% cash dividend only for the general shareholders.

Its annual general meeting was held in December 2022, but the company is yet to disburse the dividend to the shareholders.