BSEC seeks feedback on GPH Ispat’s preference share proposal

The Bangladesh Securities and Exchange Commission (BSEC) has decided to seek the opinions of the stock exchanges regarding GPH Ispat Limited's application to issue preference shares worth Tk500 crore. GPH Ispat is one of the leading steel manufacturers in Bangladesh. 

In October, the steel manufacturer decided to issue preference shares to raise Tk500 crore to refinance its existing loans.

BSEC Executive Director and Spokesman Mohammad Rezaul Karim said that the commission aims to increase the involvement of stock exchanges in matters such as preference shares and rights shares, similar to initial public offerings (IPOs).

He emphasised that the regulator will consider the opinions of stock exchanges when making decisions on such issues. Although this requirement is not explicitly mentioned in the relevant regulations, the commission values the input of stock exchanges, he added.

Yesterday, the company's share price closed at Tk21.10 on the Dhaka Stock Exchange.

In December last year, the company decided to increase the authorised capital from Tk1,000 crore to Tk1,500 crore. The company's new authorised capital will be divided into 150 crore ordinary shares, each valued at Tk10. Additionally, the company plans to amend the necessary clauses in the Memorandum and Articles of Association to reflect this change.

Earlier in August, GPH Ispat unveiled a plan to raise Tk242 crore by issuing rights shares to enhance its production capacity and meet growing local and international demand.

According to the stock exchange information, the issuance of non-convertible, cumulative, redeemable, and non-participative preference shares is subject to approval from the BSEC.

Preference shares are company stock with dividends that are paid to shareholders before common stock dividends are paid out.

However, the company recommended a 10% cash dividend only for the general shareholders, except for sponsors and directors, for the fiscal 2023-24. In FY23, it paid 5% cash and 5% stock dividends to its shareholders.

According to the disclosures, its sponsors and directors hold over 22.62 crore shares out of a total of over 48.38 crore shares, and the cash dividend payable to the general shareholders is Tk25.76 crore.

In the July to September quarter, its earnings per share (EPS) stood at Tk0.14, which was a loss of Tk0.34 in the same period of the previous year.

The company stated that the exchange loss from foreign currency transactions decreased by 82.57% compared to the same quarter of the previous year. This reduction has positively impacted the earnings per share.