Premier Cement reapplies to BSEC for Tk161cr fundraising thru preference shares
The cement maker has urged the stock market regulator to approve its fundraising plan through issuing preference shares to high-net-worth individuals, including commercial banks, and others.
Premier Cement Mills PLC, a leading cement manufacturer in the country, has submitted a fresh application to the Bangladesh Securities and Exchange Commission (BSEC) seeking permission to raise Tk161 crore through the issuance of preference shares.
This move comes after the company's initial fundraising plan was denied in mid-June this year. The BSEC argued that Premier Cement did not have the necessary provision in its Memorandum of Association to issue preference shares.
The cement maker has urged the stock market regulator to approve its fundraising plan through issuing preference shares to high-net-worth individuals, including commercial banks, and others.
Confirming the reapplication to the BSEC, Kazi Md Shafiqur Rahman, company secretary of Premier Cement Mills, told TBS, "The commission had previously denied the company permission for fundraising. We have now made a fresh application seeking approval to repay high-cost bank borrowings."
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Upon reapplication by Premier Cement, a listed firm labelled as an A category due to paying consistently over 10% dividends, the commission sought an opinion from the Dhaka Stock Exchange (DSE), a premier bourse in the country.
The commission, in a letter issued on 5 October, directed the bourse to provide its opinion regarding the issuance of preference shares of Premier Cement within 15 working days.
Fundraising plan
The cement maker unveiled its fundraising plan around a year ago in the first week of November last year to raise up to Tk161 crore through a fully redeemable non-convertible, non-participating cumulative preference shares, which was subject to approval of the commission.
The main purpose of the issuance of the shares was the balance sheet restructuring and prepayment of existing high-cost debt.
It had previously decided to offer 322 preference shares at a face value or issue price of Tk50 lakh each for a tenure of five years and proposed that the dividend would be paid semi-annually, payable in arrears.
According to a disclosure in September last year, the investors and company may choose to review the rate of dividend at the end of the 12th, 30th, and 42nd months, depending on the then-existing market conditions, based on average interest rates on deposits of more than six months and less than one year of scheduled commercial banks, with a range of 1.50%.
Eligible investors include scheduled local commercial banks (excluding 100% shariah-based banks), corporates, non-bank financial institutions (NBFIs), high-net-worth individuals, including sponsors and directors of the company, and other institutional investors, the disclosure read.
Explaining the rationale behind the plan, Kazi Md Shafiqur Rahman said, "The interest rate on bank loans has increased significantly. That is why the company is going to issue preference shares. The company has both local and foreign loans at different interest rates. Now, lending rates from local banks are over 13%. If a portion of the existing loans is repaid, interest payments will decline."
Financial health
According to its financial information, in the first nine months of 2024-25 fiscal year, Premier Cement had reported a year-on-year 12.59% decline in its revenue while its net profit fell by 87% compared to the same time of the previous fiscal year.
During the July to March period, its revenue declined to Tk1,785.9 crore, and net profit to Tk7.16 crore.
Its net profit significantly declined during the third quarter ended on 31 March, due to an increase in finance costs, the company said.
As of March 2025, the company reported Tk52 crore in long-term loans from several banks, alongside Tk1,613 crore in short-term borrowings. It also owed Tk24 crore to its directors. Finance costs surged to Tk145 crore during the period – up from Tk108 crore a year earlier –mainly due to higher interest rates.
Premier Cement previously attempted a similar fundraising initiative in 2019, when it offered 1,243 preference shares at Tk25 lakh each to raise Tk310 crore. However, it managed to secure only Tk151 crore from that issuance.
