BSEC rejects right shares application of Gemini Sea Food
According to a disclosure to the Dhaka Stock Exchange on Thursday, the company said the commission is “not in a position to consent to the company raising capital of Tk128.21 crore only through the issuance of right shares”
The Bangladesh Securities and Exchange Commission (BSEC) has cancelled the right shares application of Gemini Sea Food due to the frozen shrimp and fish exporter's failure to submit the required documents on its sales.
According to a disclosure to the Dhaka Stock Exchange on Thursday, the company said the commission is "not in a position to consent to the company raising capital of Tk128.21 crore only through the issuance of right shares".
On Thursday, the share price of Gemini Sea Food stood at Tk230.40 on the Dhaka stock exchange.
Earlier in February this year, the company decided to issue more than 2.13 crore rights shares to bolster its paid-up capital, settle outstanding bank loans, and facilitate business expansion.
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The shrimp exporter prepared a plan to issue the right shares at a ratio of two shares for every existing share (2R:1), priced at Tk60 each, including a premium of Tk50 per share.
A BSEC official seeking anonymity said the regulator has conducted an inquiry against the company's financials where it found around Tk27 crore sales statements were fake and fabricated. The report is pending for enforcement action.
The company has also failed to submit supporting documents to the commission. It also sought a high premium, which is unacceptable per the company's financial health.
In August last year, the BSEC formed a three-member committee to probe "inflated revenue figures" during a preliminary inquiry by the Dhaka bourse.
The committee found that during the nine months from July 2022 to March 2023, revenue from local sales amounting to Tk27.36 crore was falsified and fabricated.
Besides, the committee found the company had falsely claimed to have sold products to seven local buyers. The buyers informed the BSEC that they had not received any products from Gemini during the specified period.
A company official declined to comment on the matter, while the phones of two other officials were switched off.
In December 2021, the BSEC instructed the listed companies to maintain Tk30 crore paid-up by next year. To comply with the regulator's instructions, Gemini Sea Food in FY23 paid a 100% stock dividend to increase its paid-up capital.
Considering Gemini's financial health, the BSEC allowed it to pay a 75% stock dividend, which had already been paid to its shareholders. A stock dividend is a payment to shareholders in the form of additional shares in the company.
A stock dividend might be distributed by a company to compensate its investors, especially when it lacks available cash or chooses to reserve it for alternative purposes.
Gemini Sea Food, a pioneer in exporting certified organic shrimp to EU retailers, processes, packages, and exports quality frozen raw shrimp, cooked shrimp, and whitefish.
Listed on the Dhaka Stock Exchange in 1985, the company exports its products to the US, the UK, Germany, Denmark, the Netherlands, Belgium and Russia.
The shrimp exporter witnessed a drastic fall in revenue and profit when the pandemic struck in 2020. However, it made a comeback and in 2021-22, it reported a more than double revenue and profit to Tk72.64 crore and Tk5.86 crore, respectively. In FY23, its revenue increased to Tk77.65 crore and net profit to Tk9.44 crore.
According to the DSE, at the beginning of 2023, the share price of Gemini Sea Food began to increase abnormally, and the share price increased to Tk934.4 each on 7 May.
