Emerald Oil’s reboot plan hits snag

Investors of the Emerald Oil Industries pinned hopes on the company's announcement to resume operations on 1 September this year, but the company now says it cannot meet the deadline.

According to the company, the resumption of operations is getting delayed as it failed to renew its required licenses due to closure of relevant offices amid nationwide strict lockdown.

Also, the rescheduling of liabilities with banks and NBFIs and share transfer of the company issues are delaying the process.

The operation of Emerald Oil Industries – the producer of the almost forgotten Spondon branded rice bran oil – has remained halted since 2017 due to shortage of working capital.

The founder of Emerald Oil fled the country a few years back as he faced a corruption trial over irregularities in taking loans from BASIC Bank.

Since then, the company has been left inoperative, deepening the pains of its shareholders. The share price of the company kept declining and no dividend has been announced over the last five years.

After long negotiations, Minori Bangladesh Limited, a subsidiary of Japanese farming company Minori Co Limited, planned to invest Tk45 in the company to help it resume production.

Based on the hope for resumption production, its share price soared by 225% in the last six months from Tk10.1 to Tk32.8 each on 26 August.

When declared to resume operation in July, a member of the company's reconstructed board told the Business Standard, Minori Bangladesh Ltd would inject Tk45 crore working capital to Emerald Oil Industries. And the investor will get the sponsors' 30% stake in the company, if it takes the responsibility to repay the defaulted loans, he added.

Sources at the company said Emerald Oil Industries took around Tk75 crore in loans from scam-hit BASIC Bank and Bank Asia. Including the interest, the total bank liability now stands at Tk120 crore.

The new board, as part of a constructive solution, has urged the banks concerned to receive only the unpaid principal and waive the interest, added the sources.

On Thursday, the company said the rescheduling of bank and NBFI liabilities and share transfer activities of the company are also delayed due to the strict lockdown, The company also said it requires more time to resolve the aforesaid issues.

However, the company will notify the production date after solving the aforesaid issues.

In July, the company announced resuming full-fledged production with daily rice bran inputs of 330 tonnes against which the daily edible oil output would be 48 tonnes alongside 282 tonnes of de-oiled rice bran.

Earlier, in March this year, the securities regulator reconstructed the failed company's board by appointing five distinguished professionals, while a representative of its Japanese investor Minori Bangladesh too joined the board.

Once creating a vibe in the Bangladesh market, Spondon posted Tk276 crore in revenue from Emerald Oil in FY16.

Also, the company secured a decent profit margin then.

The company was listed on the stock exchanges in 2014. In FY16, the company published its financials for the last time.

In FY16, the company made a profit of Tk18.07cr and paid a 10% stock dividend to its shareholders.