Beximco to issue Tk1,500cr bond to invest in Sreepur Township

Beximco Limited has announced its plan to raise Tk1,500 crore with a zero-coupon bond for investing in Sreepur Township Limited, which is involved in the development of a multipurpose affordable real estate project in Gazipur.

In a stock exchange filing on Monday, one of the country's leading conglomerates said the bond issuance is subject to the approval of the Bangladesh Securities and Exchange Commission (BSEC).

It further mentioned that the remaining funds will be used to pay back its existing loans. However, Beximco did not specify allocations for investment in Sreepur Township and loan repayments.

The nature of the bond is secured, redeemable, non-convertible, and non-tradable zero-coupon, which will be issued to investors with a 15% discount.

In July 2023, the BSEC approved Sreepur Township to raise Tk1,000 crore through a bond, with IFIC Bank serving as its guarantor.

Through promotional activities under the name "IFIC Amar Bond," Sreepur Township successfully sold the bond to 7,173 investors within a month.

According to the terms outlined in the IFIC Amar Bond, Sreepur Township successfully raised Tk1,000 crore, and upon maturity, it plans to repay Tk1,600 crore to the investors.

Currently, IFIC-guaranteed bond is being traded on the alternative trading board at the DSE.

Earlier, in 2021, Beximco floated a Tk3,000 crore Sukuk to finance its two solar power plants and its textile division's expansion.

The investors, mainly banks and some other institutions, have the right to convert 20% of their Sukuk units a year into Beximco shares at 25% discounts from the 20-day average closing price of the shares prior to the record date. Unexecuted conversion rights can also be exercised in later years.

Joining Sreepur Township

Beximco Limited also decided to enter into a joint venture development agreement with Sreepur Township for the development of the "Mayanagar" project.

Currently, Beximco Ltd owns 75% of the project land, while Sreepur Township owns the remaining 25%. The profit generated from the project will be distributed proportionally between the two entities, as stated by Beximco in its official statement.

Mayanagar, as described in the statement, is a mixed-use, multipurpose affordable real estate project planned for development on a 100-acre plot along the Nabinagar-Chandra Highway in Gazipur.

The project is set to cover a total space of 76 lakh square feet in Gazipur, with 53 lakh square feet allocated for commercial purposes and 23 lakh square feet for residential use. The anticipated project cost is Tk6,095 crore, with an expected revenue of Tk6,585 crore.

The company further said, the development will be a fully secured, gated, and self-contained township comprising 18,000 apartments. Facilities within the township will include healthcare, education, entertainment, sports, and recreation, as well as all necessary civic and lifestyle amenities.

The commercial space will have serviced apartments, hotels, offices, a convention center, and a shopping mall. The entire project will be developed as a green and eco-friendly township.

Sreepur Township was incorporated in March 2023. Its paid-up capital is Tk335 crore.

Beximco financials

Beximco Limited reported a 64% year-on-year revenue decline in the July–December period of the ongoing fiscal year compared to the previous fiscal year, owing to a drop in exports and local demand for products.

During the period, the company earned a revenue of Tk1,441 crore, which was Tk4,008 crore in the same period of the previous year.

As stated in the statement, the company also witnessed an increase in sales costs owing to disruptions in the international supply chain due to the dollar crisis, the Russia-Ukraine war, and the price hikes of gas and electricity. The company made a minimum profit during the period.

In the first half of FY24, the company reported a profit after tax of Tk3.11 crore, marking a significant 99% drop from Tk659 crore in the same period a year ago.

During the period, its earnings per share stood at Tk0.03, and its net asset value per share was Tk93.98.

At the end of December last year, its long-term loans stood at Tk4,271 crore, and the short-term loans were Tk1,828 crore.

It had paid a 10% cash dividend for the last fiscal year, which was 30% cash a year ago.

Its shares are stuck at the floor price of Tk115.60 each on the DSE.