Chinese firm DEX-I renews bid to acquire Mithun Knitting

Infographic: TBS

Chinese company Destination Express International (DEX-I) Limited has once again applied to the Bangladesh Securities and Exchange Commission (BSEC) to acquire the shares of the sponsors of Mithun Knitting.

Earlier, in October last year, the BSEC cancelled the ownership transfer approval as the company failed to meet the acquisition conditions. After about 10 months, the firm has recently reapplied for the ownership acquisition.

Mithun Knitting and Dyeing, now known as Toyo Knitex (CEPZ) Limited, is set to be acquired by Destination Express International (DEX-I) Limited, a China-based courier company well-known for its courier services within China, particularly in the garment industry.

The company has a strategic partnership with a world-renowned logistics conglomerate.

The company's share price closed at Tk16 on the Dhaka Stock Exchange today.

Officials of consulting firms, who spoke on condition of anonymity, said the company had earlier failed to meet regulatory requirements due to political unrest across the country. In addition, it did not properly repay its loans to Basic Bank as directed by the BSEC.

A BSEC official, who preferred not to be named, yesterday told TBS that they have received the application. He added that the company has reapplied after failing to meet the required conditions earlier. 

Now, with the political and economic situation gradually improving, the prospective new owner wants to complete the acquisition process properly. Officials said the regulator has primarily directed the company to resolve its loan issues with the concerned bank first. Once the loan problems are resolved, the acquisition process will move forward.

The officials added that the new owner has been in discussions with the bank to settle the loan issues in order to proceed with the takeover.

When the takeover was initially approved, the company failed to meet any of the conditions set by the regulator. Consequently, the BSEC decided not to consider the company's request for an extension. The company had cited political unrest as a reason for the delay and sought an extension until 30 November to complete the process, but the BSEC rejected the request.

In June last year, DEX-I Limited received BSEC's approval to take over Mithun Knitting. The approval was intended to protect investor interests and resume business operations.

As per the initial approval, 5,449,058 shares held by the company's original owner, late Md Mozammel Haque, through his legal heirs and others, were to be transferred to DEX-I Limited under a share purchase agreement.

The legal heirs include Rabeya Khatun, Md Rafiqul Haque, Md Mahbub-Ul-Haque, Md Atikul Haque, Md Rabiul Haque, Syeda Hasina Haque, Mahbuba Haque, Mahmuda Haque, Mahfuza Haque, and Monsura Haque.

The commission had also set conditions for the takeover approval. The sponsors and directors must collectively hold at least 30% of the company's paid-up capital at all times. The company is required to establish a board of directors that incorporates new shareholders holding 2% or more of the shares.

Additionally, shares held by directors and shareholders would be locked in for an additional three years in a block module, meaning they could not be used as collateral or a mortgage for any loans from financial institutions.

The share transfer settlement must be processed through a banking channel, with the buyers and sellers required to submit a compliance report to the commission within seven days of execution. The transaction had to be completed within 30 days from the issuance of the approval letter.

Mithun Knitting's factory in the Chattogram Export Processing Zone (CEPZ) has been non-operational since September 2019. Its lease was terminated by zone authorities in February 2019 due to unpaid dues of nearly Tk20 crore owed to several institutions, including Bepza, after failing to meet safety reforms mandated by the Accord. 

Safety compliance failures led to blacklisting by foreign buyers, who subsequently stopped placing orders at the factory. To recover some outstanding debts, including workers' wages, Bepza auctioned off the factory's assets.

The company was listed on the stock market in 1994. As of 28 February 2025, sponsor-directors hold 17.20% of Mithun Knitting's shares, institutional investors 15.49%, foreign investors 0.16%, and general shareholders 67.15%.