C&A Textiles to merge with Alif Industries

Scam-hits C&A Textiles will now merge with Alif Industries Limited – a concern of Alif Group – subject to approval from banks, other creditors and shareholders.

After the merger, the entities, both listed on the capital market, will operate as Alif Industries Limited, according to a stock exchange filing on Sunday.

Following the news, Alif Industries' shares soared over 8% and closed at Tk90.30 each, where C&A shares rose 2.59% to Tk11.90 each at the Dhaka Stock Exchange (DSE). 

Md Azimul Islam, managing director of the both companies, told The Business Standard, "Now, we will appoint an auditor to decide the base price of shares for the merger of the companies."

He also said that following the securities law, base price will be determined by considering three factors – earnings per share, net asset value and market value of shares on stock exchanges.

The shares gained momentum because investors believe that C&A Textile shares will be converted into Alif shares after the merger, resulting in a higher value for C&A Textile shares.

However, Azimul Islam said, market price of shares is not the only factor to determine the base price for merger. So, investors should be cautious about it. 

He also said, "Firstly we have to prepare a merger scheme by appointing an auditor. After that, approval from banks and lenders will be required. Then, it should be approved by shareholders. After that, permission should be taken from the High Court."

"Finally, it needs approval from the Bangladesh Securities and Exchange Commission (BSEC) to complete the merger process which will take about a year," he added.

Earlier, C&A Textiles raised Tk45 crore from the capital market with an Initial Public Offering (IPO) in 2015.

According to its prospectus, the company paid Tk30.87 crore towards loan repayments and business expansion.

In June 2017, C&A Textiles announced a sudden shutdown of production for renovation work, and its offices have remained closed since then.

In 2020, C&A Textiles former managing director Rukshana Morshed was arrested in Chattogram in a case filed over a defaulted loan.

The BSEC also found that Rukshana, directors Sharmin Akther Lovely and Bangladesh Shoes Industries Limited had together sold around 1.22 crore shares of the company without prior declaration, earning around Tk12 crore from these sales.

In February 2021, the commission restructured the underperforming company's board, appointing seven directors.

In November 2021, Alif Group reached an agreement with C&A Textiles to take over the firm.

Alif Group's Managing Director Azimul Islam said earlier, "Previously, we have bought CMC Kamal Textile and Sajeeb Industries which is currently doing rather well under Alif Group. Likewise, we want to take C&A Textile forward."

CMC Kamal being traded as Alif Manufacturing and Sajeeb as Alif Industries at the DSE.

After the acquisition, Alif Group initially invested Tk40 crore as share money deposit to C&A Textile to bring it back into operation.

Azimul Islam said, "We will now apply for issuance of shares against the share money deposit for C&A Textile. After issuance of shares and transfer of existing sponsor shares, we will take over the board of C&A officially." 

"This issuance of shares will also be used to make our holding of 30% as per BSEC law as now the existing board only has 8% shares. So, the new shares issued, will be locked-in as it will be used to fulfil the 30% criteria," he added.

The group also rescheduled the textile miller's loan and got an interest waiver of Tk28.68 crore. Currently, C&A Textile's total loan amount stood at Tk180 crore in two banks.

C&A Textile started partial production on a trial basis in August last year with the efforts of Alif Group.

Azimul Islam said Alif Industries decided to raise capital of Tk200 crore from its sponsor-directors by issuing new shares at 40% discount from the existing market price. The fund will be used to offset C&A Textiles loan amount.

Alif Group has also announced the release of the company's six-year financial report and the date of the annual general meeting with the approval of the High Court.

Also, it declared a 0.40% cash dividend for shareholders for the first time in C&A's history. It declared the dividend for the fiscal 2021-22.

In that year, its net profit after tax was Tk2.37 crore, which was a loss of Tk121.24 crore a year ago.

Its net asset value per share was Tk3.61 negative, as its liabilities exceeded the assets.