The board of directors of Beximco Ltd has decided to issue the first-ever private sector asset-backed Islamic Shariah compliant Sukuk Al Istisna for Tk 30 billion.
This will be the largest ever issuance of securities in the private sector of Bangladesh.
The issuance of Sukuk is subject to the approval of Bangladesh Securities and Exchange Commission (BSEC), the company said in a filing with the Dhaka Stock Exchange (DSE) on Wednesday.
Sukuk will be issued for the purpose of construction of the solar projects of Teesta Solar and Korotoa Solar, the two subsidiaries of Beximco Power Company and financing and refinancing the machinery and equipment required for expansion of Beximco’s textile division, said the company.
Fifty per cent of the Sukuk would be privately placed while 25 per cent would be reserved for Beximco shareholders and the remaining 25 per cent would be floated through public offers as the Sukuk would be listed on the local bourses upon getting the regulatory approval.
The Sukuk units will have a face value of Tk 100 each, while minimum subscription size will be Tk 5,000 only in public offer with a five years tenure. Sukuk holders will receive their periodical profits twice a year.
The base rate of the Sukuk set at 9.0 per cent, which means investors would be getting 9.0 per cent secured annual return.
The margin was set at 10 per cent of the difference between the base rate and the annual dividend that Beximco will pay in a specific year.
The margin would be added to the base rate if Beximco’s dividend for the specific year surpasses the base rate. If the dividend is lower than the base rate, there would be no negative margin.
Sukuk holders can gradually convert their 100 per cent Sukuk to Beximco shares over its five-year tenure, but they can convert a maximum of 20 per cent of the total in a year.
Unexercised options to convert in a year can be exercised in the following year as well, along with the current year’s option.
25 per cent discount to the weighted average market price in Dhaka Stock Exchange (DSE) of 20 trading days prior to the record date for conversion.
The record date to determine Sukuk holders’ eligibility to convert into ordinary shares of Beximco will be 12 months after issuance of the Sukuk and the said date shall be the record date for the subsequent years till maturity.
The record date to determine Sukuk holders’ eligibility to receive half yearly periodic distribution amount shall be six months after the issuance of Sukuk and thereafter, every six months till maturity.
If any record date falls on a holiday, then the subsequent trading day shall be the record date.
If any Sukuk holder does not exercise the conversion option in full or in part during the tenure of the Sukuk, the remaining amount of the Sukuk holder will be redeemable at maturity in one bullet payment.
Beximco called an extraordinary general meeting (EGM) on April 15 at 11:00am using a digital platform. The record date for EGM is March 24.
Investment banking sources said City Bank Capital Resources Ltd is working as the advisor, arranger, and issue manager for the Sukuk.
Each share of Beximco, which was listed on the DSE in 1989, closed at Tk 85.40 on Tuesday.