BASIC Bank moves to auction Emerald Oil’s assets again

After multiple attempts to recover loans, BASIC Bank Limited, a state-owned lender, is once again auctioning off the assets - land and machinery - pledged as collateral by Emerald Oil Industries.

Previously, Emerald Oil's assets were put up for auction at least three times, but no bids met the bank's expectations, according to sources at BASIC Bank.

The lender is now pursuing a new auction, having received authorisation under Section 33(5) of the Money Loan Court Act, 2003, on 30 July last year to seize and sell the property until the loan is fully repaid. 

An auction notice issued on 1 February invited bids, with the deadline set for 25 February.

According to the notice, the lender claims outstanding dues of Tk91.95 crore as of 12 February 2018. A total of 541 decimals of land, along with local and international machinery, will be auctioned if suitable bidders come forward.

Sk Jalal Md Khalid Bin Hafiz, assistant general manager of Special Asset Management Unit at BASIC Bank, told The Business Standard that the company's assets were previously auctioned by court order but remained unsold. 

He added that the new auction notice is part of the bank's efforts to recover the loan provided to the company. The Money Loan Court has authorised the seizure and sale of the property until the loan is fully repaid.

Hafiz further stated, "If the property remains unsold, we will file an application with the court to determine the next course of action. Future steps will be taken as per the court's directives."

Addressing the change in the company's ownership, he clarified, "The Bangladesh Securities and Exchange Commission (BSEC) has appointed an institution to manage the company, but the new owner has not settled the outstanding loan. The properties pledged against the bank's loans will be auctioned as per the court order."

Afzal Hossain, managing director of Emerald Oil, said the bank's previous auction failed due to overvalued properties, mortgaged for loans, which deterred buyers. 

"Although we held discussions with the bank to halt the auction, no fruitful resolution was reached. We are currently managing the company after injecting fresh capital, so the current board cannot be held responsible for the loans taken by the previous owners," he said.

Minori Bangladesh – a subsidiary of the Japanese farming company Minori Co Ltd – took over the oil producer in 2021. With a fresh investment by the new owner, Emerald Oil returned to production in January 2022. 

The loan, cases, and defendants

Emerald Oil Industries, formerly Emerald Oil and Poultry Industries, took loans from BASIC Bank to expand its business by mortgaging its lands and factory in Sherpur and Jamalpur.

When it failed to pay back the loan, the lender filed a case with Artha Rin Adalat in 2017.

According to BASIC Bank documents, in the case, the respondents included the company, its ex-MD Syed Hasibul Gani Galib, ex-chairman Syed Monwarul Islam, ex-directors Sajan Kumar Basak and Amitabha Bhowmik, and Liakat Ali and Syed Mahbubul Gani.

In an auction notice, the bank stated that the mortgaged land and machinery will be auctioned, and the shares held by Emerald Oil's directors and others had already been frozen.

Not only BASIC Bank, but its other lenders, Bank Asia, Prime Finance and Investment, and Midas Finance, also sued Emerald Oil, seeking to retrieve their loans.

According to Emerald Oil's financial statement, as of December 2023, the total loan stood at Tk130 crore, including Tk26.29 crore from Bank Asia, Tk7.33 crore from Prime Finance, and Tk24.36 crore from MIDAS Finance.

The company has not published the financial statements since then.

Operation suspended

The Dhaka Stock Exchange (DSE) downgraded Emerald Oil Industries to the Z category in December 2024 following the suspension of its operations for more than six months. 

In November, the company informed the DSE that the production at its factory has been halted since 1 January 2024 due to a severe gas supply shortage.

About the company

Incorporated in 2008 to produce rice bran oil, Emerald Oil was listed with the stock exchanges in 2014 by raising Tk20 crore through an initial public offering.

With its signature product, the rice bran edible oil, branded as Spondon, Emerald Oil was a profitable firm until 2016.

The following year, when a loan scam by its founder came to light, the company started losing business, and operations got halted due to a shortage of working capital.

Facing corruption charges, the founder fled the country, and it was the shareholders who suffered the effects of a share price drop.

In 2021, Minori Bangladesh took charge of the company's board by acquiring 7.81% shares from the secondary market and injecting funds to reopen the factory.

On Thursday, its share closed at Tk25, which was lowest since July 2023 at the DSE.