Troubled C&A Textiles wants to increase its paid-up capital by Tk50 crore through issuing new shares to Alif Group, for reopening its factory which has not been in operation for more than four years.
To get approval from its shareholders, the listed textile manufacturer will arrange an extraordinary general meeting (EGM) on 30 March. Shareholders will need to hold the company's shares till 9 March, the record date, to attend the EGM.
On 15 February, the C&A Textile Limited board made the EMG decision and appointed Azimul Islam its managing director. Azimul is also the managing director of Alif Group, which is engaged in different businesses including textiles.
Earlier, the Bangladesh Securities and Exchange Commission (BSEC) accepted the Alif Group's proposal to acquire C&A Textile "in the greater interest of investors".
In March last year, the market regulator restructured the C&A Textile board and nominated seven individuals as independent directors for the company.
According to the new decision, the current board approved the textile company to raise its capital by Tk50 crore through the issuance of fresh shares to Alif Group according to securities rules.
Last year's weighted average share price of C&A Textile on the Dhaka Stock Exchange will be the issue price.
The company will use the fund to deposit the required down payment to its lender, paving the way for rescheduling its total outstanding loans.
Besides, the company will invest Tk5 crore for ongoing repair and maintenance to make the factory ready for trial production. The board has also approved the existing shareholding directors of C&A Textiles to enter into a share sale or transfer agreement with the Alif Group.
In a media call last year, arranged by the Alif Group to disclose details on the acquisition, Azimul Islam had said, "Previously we have bought CMC Kamal Textile and Sajeeb Industries which are currently doing rather well under Alif Group. Likewise, we want to take C&A Textiles forward."
Alif Group started its business in the country in 1967 through oil trading. From there, its business has expanded to various sectors such as readymade garments, textiles, yarn, financial institutions, the housing sector, electronic media, education and technology. The group earns about Tk2,500 crore a year.
In its presentation on C&A Textiles, it said the company's factory in the Bangladesh Small and Cottage Industries Corporation area in Chattogram closed down in 2016. By 2021, its loans amounted to Tk250 crore plus around Tk22 crore in interests and other debts.
He hoped to reopen the factory this month.
Its share price soared 360% in the past year as news spread that C&A Textiles was about to change ownership and start production.
Its share closed at Tk9.20 on the Dhaka Stock Exchange on Wednesday.
Earlier in 2020, C&A Textiles' managing director Rukshana Morshed was arrested in Chattogram in a case filed over a defaulted loan.
Police officials said, C&A Textiles borrowed around Tk20 crore from Union Capital in 2013 but did not repay the loan on time. Union Capital filed a case in 2019 with the Artha Rin Adalat, which deals with loan-related cases. A warrant was subsequently issued against Rukshana Morshed.
In 2015, the Chattogram-based C&A Textiles got listed on the Dhaka Stock Exchange (DSE) by floating 4.5 crore ordinary shares at a face value of Tk10. It raised Tk45 crore through an initial public offering to purchase machinery, construct buildings and repay bank loans.
The market regulator had also found that C&A Textiles' managing director Rukshana Morshed, director Sharmin Akther Lovely and Bangladesh Shoes Industries Limited had together sold around 1.22 crore shares of the company without prior declaration, earning around Tk12 crore from these sales.
As a penalty for violating several rules, the regulator imposed a Tk19 crore fine on the company's directors, further banning them from assuming the roles of directors at any other listed company.