Berger Paints calls EGM for shareholders’ nod of right offer

Berger Paints Bangladesh — a publicly-traded multinational company — has called an extra-ordinary general meeting (EGM) for getting shareholders' approval of issuance of right shares and renunciation offer of right shares by J&N Investments (Asia) to other shareholders and employees of the company.

According to a notice of the company, the date for the EGM, to be held on hybrid platform, has been fixed on 10 March.

In January, the Berger Paints' board decided to issue right shares for increasing its free-float shares to 10% in the secondary market to meet a regulatory requirement.

After the shareholders' approval, the company will apply to the commission for final consent of issuing right shares to increase its free-float shares in the market.

According to Berger Paints' previous disclosure, it had offered 27,28,111 right shares at a ratio of 1 right share against 17 existing shares at Tk1,376 each including Tk1366 premium per share.

From the issuance of right shares, Berger Paints planned to raise Tk375 crore for financing a portion of the establishment of its third factory at Bangabandhu Sheikh Mujib Shilpa Nagar located in Chattogram and Feni. The total cost of the entire project has been estimated at Tk813 crore.

As per the decision, Berger Paints' parent J&N Investments (Asia) Limited — holding 95% of the existing shares — will not exercise its right to buy right shares so that general shareholders' stake rises to over 10% as instructed by the securities regulator.

Of the 25,91,691 new shares renounced by J&N Investments (Asia), 4,08,971 shares will be issued to Berger Paints' employees and the remaining 21,82720 shares to be offered to the existing general shareholders.

The general shareholders will be offered the renounced shares at 16:17 ratio meaning that to general shareholders who hold 17 shares of the company will get 16 of the right shares renounced by the parent firm.

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%.

Earlier, in December last year, the Bangladesh Securities and Exchange Commission had exempted Berger Paints from issuing right shares to its sponsors, directors and investors holding 5% and above shares of the company.

11.82% growth in profit in Apr-Dec

Berger Paints reported an 11.82% growth to Tk229 crore in the first nine months of its fiscal year 2023-24 starting from April.

At the end of the first nine months, 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 material prices and increase in investment income though partially impacted by foreign exchange loss.

On Tuesday, Berger Paints shares closed at Tk1902.50 each at the Dhaka Stock Exchange (DSE).

In the last fiscal year (April to March 2023), the company had paid a 400% cash dividend to its shareholders.