BSEC rejects GPH Ispat's Tk500cr fundraising plan thru preference shares
The company had floated the plan in October last year, seeking to issue redeemable, cumulative, non-convertible, and non-participating preference shares
The Bangladesh Securities and Exchange Commission (BSEC) has rejected a proposal by GPH Ispat Limited to raise Tk500 crore through preference shares for loan repayment.
The company had floated the plan in October last year, seeking to issue redeemable, cumulative, non-convertible, and non-participating preference shares. The proposal required approval from both shareholders and the BSEC.
However, in a price-sensitive disclosure, GPH Ispat stated, "The BSEC has informed that the commission is not in a position to accord consent to the company for raising capital through issuance of preference shares."
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Preference shares are treated separately from a company's ordinary shares in its financial statements. They do not count toward earnings per share (EPS) and do not confer ownership rights.
However, preference shareholders are entitled to receive dividends before ordinary shareholders and have priority in asset redemption if the company goes bankrupt.
According to the company's financial statement for July–March of FY25, its long-term loans stood at Tk2,613.88 crore –14% higher than the same period a year earlier.
During the nine-month period, the company reported a 2% increase in revenue to Tk4,510 crore, while net profit dropped by 53% to Tk30.30 crore.
In a statement filed with the Dhaka Stock Exchange, GPH Ispat said the decline in profit was due to higher production and finance costs compared to the corresponding period.
Earlier in May this year, the BSEC cancelled GPH Ispat's rights share application, stating that the submitted documents were unsatisfactory and the proposal was not acceptable upon full consideration.
Previously, the company had proposed issuing one rights share for every three existing shares at Tk15 each, including a Tk5 premium. The planned issuance aimed to raise Tk242 crore through 16.12 crore rights shares.
GPH Ispat stated that the funds from the rights issue would be used to expand its production capacity by setting up a new plant, which is expected to generate Tk450 crore in annual revenue.
On Thursday, GPH Ispat shares closed 0.58% lower at Tk17.20 on the Dhaka Stock Exchange.
It had paid a 10% cash dividend only to its general shareholders for the last fiscal year.
