HC now approves RN Spinning-Samin Food merger

Merger summary
●    RN Spinning shareholders to get shares at 1: 5.59 ratio 
●    Samin Food shareholders to get at 1:1 ratio
●    New paid-up will be Tk303.45cr
●    New firm's authorised capital will be Tk750cr

The High Court has now approved another merger of two more Far Group concerns – publicly listed RN Spinning Mills and non-listed Samin Food & Beverage Industries and Textile Mills.

After the merger, the new entity will be known as RN Spinning Mills. 

Earlier this week, the High Court approved the merger of Far Chemical and SF Textile, which are both concerns of the Far Group. 

According to a stock exchange filing by RN Spinning Mills on Tuesday, all existing equity shares of both RN Spinning and Samin Food will be cancelled.

Besides, all the assets and liabilities of Samin Food will be transferred to RN Spinning as per the terms of the Scheme of Amalgamation. 

As per the amalgamation rules, RN Spinning's existing shareholders will get the shares at a 1:5.59 ratio. In other words, they will get one new share of post-merger RN Spinning, against their 5.59 shares held in the company before the merger.

The pre-merger RN Spinning currently has 392,544,834 ordinary shares. For the share allocation at a 1:5.59 ratio, 70,265,525 new shares will be issued at Tk10 each by the post-merger RN Spinning.

On the other hand, Samin Food's existing shareholders will get the shares at a 1:1 ratio, that is, they will get one new share of post-merger RN Spinning against each share held in Samin Food before the merger.

At present, Samin Food has 233,186,584 ordinary shares. For the 1:1 share allocation, the post-merger Samin Food will issue the same number of new shares at Tk10 each.

Hence, the total number of shares of the new entity RN Spinning will be 3,034,521,09 and its paid-up capital will be Tk303.45 crore. 

The new entity's authorised capital will be Tk750 crore – Tk500 crore of pre-merger RN Spinning plus Tk250 crore of Samin Food – as per the High Court's order.

Sudeep Banik, manager of Far Group, said the merger scheme has been planned so that the listed company can begin production and generate profits for shareholders.

"We have already applied to the Bangladesh Securities and Exchange Commission (BSEC) and other stakeholders after getting approval from the High Court," he said.

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

Samin Food & Beverage Industries and Textile Mills started operations in 2018-19 FY.

It has a textile unit with an annual production capacity of 79,848 spindles of cotton, viscose, and CVC yarn, but does not have any food and beverage unit yet.

RN Spinning, on the other hand, produces synthetic and acrylic yarn. 

Back in April 2019, its factory closed because of a fire incident.

According to the company's auditor, RN Spinning's factory and assets were under Tk132.46 crore insurance coverage. After the blaze, an inspection was conducted, but no assessment report was filed.

As a result, the company has not yet got insurance benefits.

The company was in profit in 2016-17 FY and 2017-18 FY. In 2018-19 FY, it incurred a Tk607.11 crore loss due to the fire incident.

The firm continued to incur losses in the following years.