Directors want Alif Industries’ fresh shares at 40% discount

Alif Industries seeks to raise Tk200 crore to increase its capital by issuing fresh shares to its sponsor-directors at Tk22 each, which were traded on the Dhaka Stock Exchange at Tk53.40 on Thursday.

In a stock exchange disclosure on 16 November, the garment manufacturer said it wants to issue new shares at a 40% discount to the weighted average share price of the last six months or 180 working days.

In that calculation, the company has applied to the Bangladesh Securities and Exchange Commission (BSEC) for its permission to issue each share at Tk22.

On how logical the issuance of new shares at such a big discount than the market price, Md Azimul Islam, managing director of Alif Industries, said, "The Tk200 crore will be invested for the betterment of the company. The shareholders will be its beneficiaries."

"So, we are not doing any injustice to the shareholders. Once the money is invested, the income of the company will increase and the shareholders will get higher dividends."

Md Azimul Islam said, "Basically, the fund will be used to repay loans of C&A Textiles which was acquired in 2021. Currently, the company has a debt of Tk198 crore."

Alif Group now plans to merge C&A Textiles with Alif Industries, according to BSEC sources.

In May this year, Alif Industries received approval from the regulator to issue a Tk300 crore bond which, on its maturity, will be converted into shares of the company.

However, since bondholders are individual or institutional investors, the general investors' stake increases when new shares are issued. But the shareholding of the sponsor-directors will be reduced.

In that case, the merger of C&A Textiles will reduce the shareholding of the sponsor-directors below 30%, for which Alif wants to issue new shares at Tk22 to raise Tk200 crore for investment.

Alif Group has brought C&A Textiles, which was shut down in 2017 due to loan defaults by its former owners, back into production in August this year.

After the acquisition, Alif Group invested around Tk50 crore.

Md Azimul Islam said, "The regulator has approved the bond, but the response is not that good. This is why its sponsor-directors have come forward to make the company better."

"The debt will be repaid with the money from the new share issuance and the bond money will be used for business expansion," he added.

Alif Industries, previously known as Sajib Knitwear and Garments Ltd, was listed on the stock exchanges in 1995.

In 2007, the company was delisted from the mainboard of the bourses.

In 2017, the company returned to the mainboard of stock exchanges.