Berger plans to increase free-float to 10% with right shares
After the disclosure, shares prices of Berger Paints rise by 1.65% to Tk1,998.5 each on the Dhaka Stock Exchange on Thursday
Berger Paints Bangladesh — a publicly-traded multinational company — has decided to issue right shares for increasing its free-float shares to 10% in the secondary market to meet a regulatory requirement.
The company offered 27,28,111 right shares at a ratio of 1 right share against 17 existing shares at Tk1,376 each (including a Tk1,366 premium) and its parent J&N Investments (Asia) Limited, holding 95% of the existing shares, will not exercise its right to buy the shares so that general shareholders' stake rises to over 10% as instructed by the securities regulator.
On Wednesday, its board had decided to issue the right shares and the news was published on the stock exchanges website on Thursday.
After the disclosure, its shares prices increased by 1.65% or Tk32.4 each to Tk1,998.5 each on the Dhaka Stock Exchange.
Keep updated, follow The Business Standard's Google news channel
The renounced shares are being divided between two groups: employees of Berger Paints Bangladesh and existing general shareholders.
Out of the total renounced shares, 4,08,971 are designated for Berger Paints Bangladesh employees. These shares will be issued to eligible employees as part of their benefits or compensation. The remaining 21,82720 shares will be offered to the existing general shareholders of Berger Paints Bangladesh.
The distribution to general shareholders follows a ratio of 16:17 meaning that if a general shareholder currently holds 17 shares, he is entitled to purchase 16 additional shares from the pool of renounced shares.
Thus existing general shareholders will be entitled to buy 1 right share against their existing shares finally.
The company expects its free float shares to increase to 10.28% of the total from 5%.
Berger Paints will raise Tk375 crore from right shares issuance, and the raised fund will be used for new factory at Bangabandhu Sheikh Mujib Shilpa Nagar.
The offer is subject to shareholders approval at the extraordinary general meeting (EGM) and also the approval from the securities regulator.
Earlier, in December last year, the Bangladesh Securities and Exchange Commission (BSEC) had exempted Berger Paints from issuing right shares to its sponsors, directors and investors holding 5% and above shares of the company.
After the exemption, the multinational paint manufacturer had no barrier to issuing right shares only for the general shareholders to increase public shareholding to 10% or above.
Tk813cr investment plan in third factory
Berger Paints decided to invest Tk813 crore for setting up its third factory at Bangabandhu Sheikh Mujib Shilpa Nagar.
In October 2022, Berger Paints announced through the stock exchanges that it decided to invest Tk480 crore approximately to establish a third factory, and the project is expected to complete by April 2025.
Now, it decided to revise up its project cost to Tk813 crore, and the third factory is expected to commence production by April 2026.
As per Berger's decision, the company will raise Tk375 crore from the issuance of right shares, and the fund will be utilised for financing a portion in the third factory.
11.82% growth in profit in Apr-Dec
Berger Paints Bangladesh has reported an 11.82% growth to Tk229 crore in the April-December period of 2023.
At the end of the period, it reported an earnings per share (EPS) at Tk49.38, which was Tk44.16 in the same time of the previous year.
The company said its EPS increased significantly mainly due to soft raw-materials price and increase in investment income though partially impacted by foreign exchange loss.
