Submarine Cable approved to allocate shares to govt at 55% discount

Shareholders approved the Bangladesh Submarine Cable Company to allocate its shares to the government at a 55% discount on the prevailing market price on the Dhaka Stock Exchange (DSE).

At an extraordinary general meeting held on 15 February, the state-owned company obtained shareholders' consent to allot 2.21 crore shares to the Posts and Telecommunications Division against the share money deposit of Tk166 crore.

The company will now transfer the shares, which closed at Tk165.70 each on Thursday, at Tk75 apiece, including a Tk65 premium, subject to approval from the Bangladesh Securities and Exchange Commission.

A share money deposit is the money paid in exchange for shares that have not been acquired yet.

In the 2016-17 and 2017-18 fiscal years, the company received equity money of Tk166 crore from the government for a development project named the regional submarine telecommunications project.

A senior officer at the company told The Business Standard, "The government has asked for shares at Tk75 each, and our shareholders accept that."

"Since the government has not received any dividends or interest against this share money deposit for the last six years, we feel that the government has made a reasonable proposal."

"But if the shares are issued at a discounted rate, the general shareholders will be somewhat deprived," he added.

The company is going to issue the shares in accordance with the directive of the Financial Reporting Council issued in February 2020.

As per the directive, share money deposits must be converted into the company's capital within six months of receiving the money.

Also, the issue price of the shares against the share money deposit might be determined considering the last closing price on the stock exchanges.

The directive further said that the companies must include share money deposits while calculating earnings per share and dividends as soon as the money is deposited, even before the securitisation.

In 2020, the company appointed ICB Capital Management Ltd as its issue manager to determine the share price.

The next year, the company proposed to issue 1.48 shares at Tk110.20 each, which was determined by the issue manager, to the government.

Currently, the company's paid-up capital is Tk164.90 crore, and the government holds 73.84% of its shares. Institutional investors have 15.63%, foreign investors have 2.75%, and general investors have 7.78%.

For the fiscal 2022-23, the company paid a record 51% cash dividend to its shareholders.

According to the company's disclosure, its revenue grew over 16% year-on-year to Tk515 crore in FY23, and net profit grew by 13% to Tk279 crore.