The board of directors of IDLC Finance Ltd has decided to issue a zero-coupon bond worth Tk500 crore to strengthen its capital base.
The nature of the bond is unsecured and non-convertible, stated the company disclosure on the Dhaka Stock Exchange (DSE) website on Sunday.
The tenure of the bond is four years and it will be issued only through private placement, the disclosure added.
The bond issuance is also subject to the approval of the regulatory authorities – the Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC).
A zero-coupon bond is simply a discount bond which is originally sold at a discount from its face value instead of periodic dividend payments or interests. Face value is the amount paid to the bondholders at maturity.
IDLC Finance reported a consolidated net profit of Tk66 crore during the first half of this year, which was 34% lower as compared to the same period of the previous year.
The non-bank financial institution in its financial disclosure said the company's net profit decreased mainly because of reduced fee incomes and poor investment returns due to low business activities during the government declared countrywide general holidays to curb the spread of Covid-19.
Meanwhile, the three subsidiary companies of IDLC Finance – IDLC Securities, IDLC Investments and IDLC Asset Management – posted losses of Tk13 crore, Tk5 crore and Tk2.5 crore respectively during the first half of this year.
The company also said in the report that poor capital market performance and significantly low trade volumes, especially due to the market closure during the period, led to losses for the subsidiaries.
In the first half of 2020, the company's consolidated earnings per share (EPS) was Tk1.77, while its consolidated net asset value (NAV) per share was Tk35.44.
Last year, the company's net profit was Tk169.99 crore and EPS was Tk4.51.
IDLC Finance paid a 35% cash dividend to its shareholders for the 2019 financial year.
The company was listed with the DSE in 1992. Its paid-up capital is Tk377 crore.
Out of total shares of IDLC Finance, sponsors and directors jointly own 56.66%, institutional investors 21.24%, foreign investors 11.34% and general investors own 10.76% of the shares.
The closing price of the company's each share was Tk56.40 on Sunday at the DSE.