How rumours led Mithun Knitting shares soaring
The company, established in Chittagong Export Processing Zone (CEPZ), has remained non-operational since September 2019
The share price of non-operational Mithun Knitting and Dyeing jumped by a whopping 93.75% in just 14 trading days based on an ownership change rumour.
Its factory, established in Chittagong Export Processing Zone (CEPZ), has remained non-operational since September 2019.
On 28 January, the share price of Mithun Knitting and Dyeing was Tk12.80 on the Dhaka Stock Exchange. But after 14 trading days, it rose by 93.75% to Tk24.80. Its closing price stood at Tk21.60 yesterday.
According to the regulatory and company officials who preferred not to be named, a China-based company has recently shown interest in investing in the company. However, there is no more progress in this regard since then.
Keep updated, follow The Business Standard's Google news channel
CEPZ authorities had terminated the lease agreement with the company effective from 26 February 2019.
After that, dues on gas, electricity, and water bills and the plot lease exceeded several crores of taka. In September 2019, the Bangladesh Export Processing Zones Authority (Bepza), which runs many export processing zones including CEPZ, stopped all services at Mithun Knitting, forcing the owners to close the factory.
The factory owed about Tk20 crore to various institutions, including Bepza.
Bepza later sold all the assets, including machinery, of Mithun Knitting in an auction to clear some of its debts, including the arrears of workers' wages.
An official of the Bangladesh Securities and Exchange Commission (BSEC) told The Business Standard that now the company exists only on paper. "There are no remaining assets for sale. The company now has no option but to exit the stock market if no one comes to invest," he said.
The official said company owners did not carry out the reforms required by the Accord, an independent agreement designed to make all garment factories in Bangladesh safe workplaces. "Then the company was blacklisted by foreign buyers and they stopped placing orders."
Investors were unaware of the fragile state of the company because it did not make disclosures about the price-sensitive information on time, he said.
Officials concerned said the company got listed on the stock market in 1994 without clearance from Bepza. It did not even inform the BSEC while selling the factory, they said.
