HC approves Far Chemical-SF Textile merger

The High Court has allowed Far Chemical Industries Limited – a publicly listed textile-based chemical firm – to merge with the non-listed SF Textile Industries Limited. 

After the merger, the new entity will be known as Far Chemical Industries Limited.

According to a stock exchange filing by Far Chemical on Sunday, all existing equity shares of both Far Chemical and SF Textile will be cancelled. 

And, all the assets and liabilities of SF Textile will be transferred to Far Chemical as per the terms of the Scheme of Amalgamation. 

As per the amalgamation rules, Far Chemical's existing shareholders will get the shares at a 1:3 ratio. In simple words, they will get one new share of post-merger Far Chemical, against their three shares held in the company before the merger. 

The pre-merger Far Chemical currently has 218,093,423 ordinary shares. For the share allocation at 1:3 ratio, 72,697,808 new shares will be issued at Tk10 each by the post-merger Far Chemical. 

On the other hand, SF Textile's existing shareholders will get the shares at a 1:1.96 ratio. This means, they will get one new share of post-merger Far Chemical against their 1.96 shares held in SF Textile before merger. 

At present, SF Textile has 157,695,630 ordinary shares. For the 1:1.96 share allocation, the post-merger Far Chemical will issue 80,399,525 new shares at Tk10 each.

Hence, the total number of shares of the new entity Far Chemical Industries will be 1,530,973,330, and its paid-up capital will be Tk153 crore.

The new entity's authorised capital will be Tk501 crore – Tk300 crore of pre-merger Far Chemical plus Tk201 crore of SF Textile – as per the High Court's order.

Sudeep Banik, a manager of Far Group, said "We have already applied to the Bangladesh Securities and Exchange Commission (BSEC) and other stakeholders after getting approval from the High Court".  

"We will be able to complete the amalgamation after the BSEC's approval," he added.

In November 2021, Far Chemical announced its amalgamation with SF Textile. 

Earlier, it also decided to shift its factory from Cumilla EPZ to its premises at Rupganj, Narayanganj.

SF Textile is a 100% export-oriented yarn-spinning company that has been in operation since 2016. 

The production capacity of the company is 42,250 spindles of cotton, viscose, and CVC yarn.

The company did not take any decision yet about the utilisation of its EPZ land. 

Far Chemical Industries is a concern of the Far Group.  The group was established in 1993 based on the 100% export-oriented sweater industry. 

The group has two other firms – ML Dyeing and RN Spinning Mills – that are listed in the capital market. 

For the 2021-22 fiscal year, Far Chemical recommended no dividend for its shareholders.

From July to March 2022, its revenue stood at Tk3.49 crore, which was Tk48.61 crore in the same period of the previous year.

During the period, its net loss was Tk7.22 crore and loss per share was Tk0.33.

As of November 2022, the sponsors and directors jointly held 30.24%, institutions 13.77%, and the general public 55.99% shares in Far Chemical.

The last trading price of each share of the company Tk10.60 on Sunday at the Dhaka Stock Exchange.