Emerald Oil secures BSEC nod to issue 3.15cr fresh shares
Emerald Oil Industries, an almost forgotten rice-bran oil producer, has secured the approval of the Bangladesh Securities and Exchange Commission (BSEC) to issue 3.15 crore fresh shares against an investment by its new owner as a share money deposit.
In its recent meeting, the BSEC approved the issuance of new shares at Tk10 each – a price much lower than the shares' last trading price of Tk34.7.
The new shares will be issued in favour of Minori Bangladesh, a subsidiary of Japanese farming company Minori Co Limited, which took over the company in 2021 and has resumed production since January 2022. The shares will be locked-in as per rules.
BSEC spokesperson Md Rezaul Karim told The Business Standard, "The commission has allowed the company to issue new shares on some conditions. A letter of intent has already been given to the company."
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Asked about the lower than market price, he said, "When the decision was made to change the ownership of the company, the share price was low. Its net asset value was low. There was no income because there was no production. Considering this matter, the commission has allowed each share to be issued at Tk10."
In a letter, the BSEC said the company has applied to issue ordinary shares against its investment of Tk31.55 crore as share money deposit to raise its paid-up capital from Tk59.71 crore to Tk91.27 crore.
The commission has directed Emerald Oil to conduct all pending AGMs with due permission as per the company act and to submit all pending audited financial statements up to June 2022.
Also, the BSEC directed the company to submit the particulars of its directors and its pending litigation status with supporting documents within 45 days.
In January this year, shareholders of Emerald Oil approved the new share issuance decision at an extraordinary general meeting (EGM).
In 2021, Minori Bangladesh got the BSEC nod to bring the company back into production by investing more than Tk40 crore.
The publicly listed firm, producer of the most forgotten rice-bran oil, Spondon, was out of production for five years as its original owners fled for a loan scam.
In January, Afzal Hossain, managing director of Emerald Oil Industries, said, "The company has small resources. The net asset value is also negative. As a result, debt is much higher than assets. So it is logical to issue shares at Tk10, for which the shareholders have given their consent."
Why the issuance of new shares?
Although original sponsors are supposed to get shares while a company is brought back to production, it did not happen in the case of Emerald Oil.
Company sources said Minori Bangladesh has invested around Tk31 crore to revive the defunct company after getting approval from the BSEC.
Minori Bangladesh bought about 46.66 lakh shares from the secondary market, which is 7.81% of the total stake in Emerald Oil.
The main sponsor of the company, Syed Hasibul Gani Galib, holds 21.41% shares, of which about 18% are mortgaged to banks, according to sources.
As a result, the new owner is struggling to take control of the board as it failed to hold the minimum 30% of shares except the old owners'.
So, taking control of the board, Minori Bangladesh, which injected fresh funds to resume production at the company, decided to issue new shares against its investment of Tk31.55 crore.
Emerald Oil Industries resumed production in January 2022. But it could not go into production at full capacity due to a gas shortage.
It is now producing de-oiled rice bran (Dorb) along with Spondon brand oil.
Incorporated in 2008, Emerald Oil Industries Ltd began production of its Spondon-branded rice-bran oil in 2011 and entered the bourses in 2014.
The company raised Tk20 crore by issuing two crore general shares at a face value of Tk10.
However, as soon as the founder's loan scams became public, it melted down in both its business and the stock market, and it has been inactive since 2017.
