BASIC Bank to auction off Associated Oxygen assets to recoup defaulted loan

Infographic: TBS

BASIC Bank has announced plans to auction off the assets of publicly listed Associated Oxygen in a bid to recover an outstanding loan of Tk3.15 crore. 

An auction notice issued by the Chattogram Agrabad branch of the bank, published in daily newspapers on Thursday, invited interested buyers to submit price quotations by 12 August. The auction follows provisions of the Money Loan Court Act, 2003.

As per the notice, 87.10 decimals of land in Sitakund at Chattogram — including the factory building and machinery —are up for auction.

In the auction notice, the bank stated that the company had taken a loan by mortgaging its land. According to the agreement, the bank was granted the authorities to sell the mortgaged land without court approval to recover the loan. However, as the company failed to repay the loan instalments on time, the mortgaged land will be auctioned to recover the dues.

Ismat Jahan, managing director of Associated Oxygen, could be reached as her number found switched off. Later, when contructed to its Chief Financial Officer Delwar Hossain said, I am not aware over the bank's auction call.

Bank sources said the company took the loan as long-term in 2014. The company repaid Tk2 crore of the bank's loan using funds raised from the stock market through its IPO. However, loan repayments became irregular again afterward. Over the past year, the company has not paid any installments, causing the loan to become classified. As a result, the company's assets are now being put up for auction to recover the loan.

According to the company's financial statement, BASIC Bank is the lone lender of the company. Its all assets and machineries are mortgaged with the bank against loans.

Earlier in April, the Bangladesh Securities and Exchange Commission (BSEC) has given approval to the Dhaka Stock Exchange (DSE) to inspect financially struggling Associated Oxygen, which intended to assess the true condition and business status of the company. 

The BSEC approved this inspection after reviewing DSE's application, with a focus on protecting the interests of general investors. The inspection will involve visiting the head office, factory, and other relevant sites of the company to assess their current status.

Meanwhile, the company did not disclose any financial statements since FY23. In that year, it reported that the earnings per share dropped by 5% to Tk1.59 and recommended a 1% cash dividend only for its general shareholders.

But it could not disburse the recommended dividend as the company failed to conduct annual general meeting (AGM).

Due to the AGM conducting failure, the DSE downgraded the company's share to Z category. On Thursday, its shares ended 2.56% higher at Tk16.

Earlier, in 2020, the BSEC approved the company's IPO to raise Tk15 crore. Ex-NBR official Matiur Rahman and his family members were the placement shareholders of the company.

According to the shareholding report for June, sponsors and directors hold 30.65% shares, while institutional 12.89%, foreign 0.13% and the remaining 56.33% shares holds by the general shareholders.