The subscription to Ashuganj Power Station Company Ltd bonds begins on Monday as the company plans to raise Tk100 crore from public offering. The offer will remain open till October 6 for investors.
AMM Sazzadur Rahman, managing director of Ashuganj Power, told The Business Standard that the fund will be used to build a 400MW power plant. The plant will go into commercial production towards the end of 2020.
Asked about why issuing bonds instead of shares, Sazzadur Rahman said it is the government's decision to raise the money in the shortest possible time. The company will float two lakh bonds, with each bond priced at Tk5,000.
Among those, 50 percent (1 lakh) bonds are reserved for eligible investors, including collective investments and mutual funds. The remaining 50 percent will be offered for general investors, including non-resident Bangladeshis.
The bonds could be purchased using the City Bank outlets. The lowest annual interest rate of those 7-year bonds is 8.50 percent, while the highest rate is 10.50 percent. The investors could draw their interest in every six months.
Although the cost of the power plant was primarily estimated at Tk3,020 crore, it later dropped to Tk2,310 crore. The company has taken Tk1,737 in loans from the Asian Development Bank and the Islamic Development Bank.
Besides, the company has issued bonds worth Tk500 crore through the private placement for state-owned banks and financial institutions.
Financial experts raised voices for enhancing debt securities, including bonds for equity based share market.
Dr Osman Imam, professor at the finance department of the Dhaka University, said entrepreneurs will be able to pull up their investments, if the bond market expands. Investors will also get diversified securities which will benefit the market at the end of the day.
Ashuganj Power posted Tk2,177 crore as revenue in the accounting year ended on June 30, 2018.
After paying the government tax, its net profit stood at Tk330 crore. The company's last five years' weighted average earnings per share is Tk10.63.
With eight power plants, the Ashuganj Power Station Company has a power production capacity of 1,690MW. However, it is producing 1,580MW electricity.
ICB Capital Management and BRAC EPL Investment Limited are the issue managers for Ashuganj Power, while the ICB Capital also works as the trustee of the power company.
The long-term credit rating of Ashuganj Power is 'AAA', while the short-term rating is ST-1. This will be valid till December 5, 2019. After analysing the financial reports and other issues of the company till June 30, 2018, Credit Rating Information and Services Limited titled those ratings.