Why a Chinese investor’s bid to take over Mithun Knitting failed again

Destination Express International (DEX-I) Limited, a China-based courier service provider, had earlier received approval from the Bangladesh Securities and Exchange Commission (BSEC) to take over listed Mithun Knitting and Dyeing Limited, now renamed as Toyo Knitex (CEPZ) Limited.

However, the company failed to complete the transfer of sponsor shares due to unresolved bank loans and political instability.

In a second attempt, BSEC has rejected the company's application to acquire Mithun Knitting's sponsor shares. Last week, the Commission sent letters to the company seeking explanations and supporting documents.

According to BSEC, the company's response was unsatisfactory and lacked adequate documentary evidence. Furthermore, the submitted Memorandum of Understanding (MoU) was incomplete and deficient in key particulars.

In view of these shortcomings, the Commission is not in a position to approve the transfer of 5,449,058 shares of Toyo Knitex Ltd at this stage.

Today (14 October), Mithun Knitting and Dyeing Limited's share price closed at Tk14.50 on the Dhaka Stock Exchange.

Earlier, in October last year, BSEC had cancelled the ownership transfer approval after the company failed to meet acquisition conditions. After about ten months, the company reapplied for the takeover.

DEX-I Limited has a strong presence in the garment industry. The company also has a strategic partnership with a globally renowned logistics conglomerate. 

According to local representatives of DEX-I Limited, who spoke on condition of anonymity, the regulator has primarily directed the company to resolve its loan issues with the concerned bank first. In line with this, the company attempted to settle the matter with the bank. Initially, the bank agreed to resolve the issue through a partial payment. However, they later raised objections and increased the amount, adding one year's interest. This has prevented the loan issue from being fully resolved. The company continues efforts to settle it, and it is likely that the acquisition application will need to be resubmitted to BSEC once the issue is resolved.

In June last year, DEX-I Limited received BSEC's initial approval to take over Mithun Knitting. This approval aimed to protect investor interests and resume business operations.

According to the approval, 5,449,058 shares held by the late Md Mozammel Haque of Mithun Knitting, through his legal heirs and others, were to be transferred to DEX-I Limited under a share purchase agreement. The legal heirs include: Rabeya Khatun, Md Rafiqul Haque, Md Mahbub-Ul-Haque, Md Atikul Haque, Md Rabiul Haque, Syeda Hasina Haque, Mahbuba Haque, Mahmuda Haque, Mahfuza Haque, and Monsura Haque.

The Commission had also set strict conditions for the takeover approval. Sponsors and directors must collectively hold at least 30% of the company's paid-up capital at all times.

The company must establish a board of directors that includes new shareholders holding 2% or more of shares. Shares held by directors and shareholders would be locked for an additional three years, prohibiting their use as collateral or mortgage for loans.

The share transfer settlement must be processed through a banking channel, with buyers and sellers submitting a compliance report to BSEC within seven days of execution. The transaction had to be completed within 30 days of the issuance of the approval letter.

Mithun Knitting's factory in the Chattogram Export Processing Zone (CEPZ) has been non-operational since September 2019. Its lease was terminated in February 2019 due to unpaid dues of nearly Tk20 crore owed to several institutions, including BEPZA, after failing to meet safety reforms mandated by the Accord. Safety compliance failures led to blacklisting by foreign buyers, who subsequently stopped placing orders at the factory. To recover some outstanding debts, including workers' wages, BEPZA auctioned the factory's assets.

The company was listed on the stock market in 1994. As of 30 September 2025, the shareholding structure was: sponsor-directors 16.77%, institutional investors 9.90%, foreign investors 1.30%, and general shareholders 72.03%.