After unusual price hikes, three OTC returnees’ shares dumped

Three companies in the country's paper sector have enjoyed an unusual increase in their share prices on their return to the main market from the over-the-counter (OCT) market and now their corporate directors seek to sell shares from their holdings with regulator exemptions.

After languishing in the over-the-counter (OTC) market for 12 years, Bangladesh Monospool Paper and Paper Processing and Packaging, both belonging to the Magura Group, returned to the main market last year

Although business in the paper sector suffered heavily due to the closure of schools and colleges amid the Covid-19 pandemic, an unusual jump in their share prices just after their return to the main market raised questions among stakeholders concerned.

Sonali Paper and Board Mills, another OTC return company in the paper sector, is seeking regulator exemption from the commission on increasing its paid-up capital.

After returning to the main market, the sponsor-directors could not sell the shares for a year, but this time they have taken legal exemption in issuing the right shares.

The sponsor-directors of the company will be unable to sell any shares for three years now due to the right shares.

Corporate sponsors of Bangladesh Monospool Paper and Paper Processing and Packaging Company have announced the sale of shares in the secondary market with legal exemption from the regulator after the unusual price increase of the relatively weak companies.

It is learned that the commission allowed some companies to return from the OTC market to the mainboard of the DSE subject to certain conditions.

One of these conditions was that the sponsor-directors of the companies could not sell shares from their holdings for a certain period of time after returning to the main market.

OTC means the facilities provided by an exchange for the purpose of buying or selling unlisted or delisted securities from the stock exchanges, which have failed to meet exchange listing requirements also.

Although the company's business was not good, the announcement of the sale of shares by the sponsor-directors after the unusual rise in the share prices of the two companies has once again raised questions in the minds of those concerned.

Those concerned are also expressing concern over the legal exemption to sell shares of the companies with low paid-up capital in the secondary market.

BSEC Chairman Professor Shibli Rubayat-ul-Islam told The Business Standard, "The two companies are heavily indebted. Originally, the sale of shares was allowed for a repayment of the loans."

"Sales of a certain amount of shares have been allowed so that they can repay their loans. They will not be able to sell shares more than that. This will help the companies get rid of their loan complications," he added.

According to the DSE's announcement, two directors of Paper Processing and Packaging will sell a little more than two lakh shares and the directors of Bangladesh Monospool Paper Manufacturing will sell 73,684 shares.

Paper Processing and Packaging Company

According to data available with the country's premier bourse, the share price of Paper Processing and Packaging was Tk17.10 on 13 June 2021 when it returned to the main market from the OTC market.

On 20 February 2022, its shares were traded at the highest price of Tk313.7 in eight months. 

Although the sale of the company's products was almost stopped during the pandemic, after this period its share prices are now declining. On 23 June, the share price fell to Tk180.6.

In response to a letter from the Commission's Supervision & Regulation of Markets and Issuer Companies, Mustafa Kamal Mohiuddin, sponsor director of the company, expressed interest in selling 1,00,980 shares in the public market in the next 30 days, according to the DSE website.

Mustafa Kamal Mohiuddin holds 13,09,416 shares, which is 13.50% of the total number of shares.

In another announcement on 23 June, the Magura Group expressed its intention to sell 1,00,000 shares out of its holding of 9,21,306 shares at the prevailing market price (in the Public Market) through the Dhaka Stock Exchange within the next 30 working days.

Bangladesh Monospool Paper Manufacturing

According to the DSE, Bangladesh Monospool Paper Manufacturing was trading at Tk55 per share on its return to the main market. The share price rises several times in a few months. Its share price rose to a maximum of Tk272.9 on 20 February.

The company's share price has been declining since then. The last time each share was traded was on June 23 at Tk171.

According to the DSE website, the company's corporate director Pearl Paper and Board Mills has expressed its intention to sell 55,000 shares out of its holding of 2,18,526 shares.

The company said it will sell the shares at the prevailing market price through DSE within the next 30 working days.

Referring to the BSEC letter on 28 April by SRMIC, it said, that one of the sponsor directors, Mustafa Kamal Mohiuddin, has expressed his intention to sell 18,684 shares out of his holding of 20,58,684 shares of the company at the prevailing market price. ***