RN Spinning to merge with its sister concern
The company was in profit in 2016-2017 and 2017-2018 fiscal years. In the 2018-19 fiscal, it incurred a Tk607.11 crore loss due to the fire incident
Listed company RN Spinning Mills, a concern of FAR group, is going to be merged with Samin Food and Beverage Industries and Textile Mills, another non-listed firm of the group, as the Cumilla-based spinner could not get back to production after a massive fire incident in 2019.
"The merger scheme has been planned so that the listed company can begin production and generate profits for shareholders," said A Raquibul Islam, company secretary of RN Spinning.
"The board of directors has decided to relocate the facility to the premises of Samin Mills in Gazipur," he told The Business Standard, adding that RN shareholders would get shares in the new entity.
Samin Food and Beverage Industries and Textile Mills started operation in the 2018-2019 fiscal year. It has no food and beverage business yet. The textile unit of the company currently has a capacity of producing 79,848 spindles of cotton, viscose, and CVC yarn annually.
The fatal fire accident sufferer RN Spinning was producing synthetic, and acrylic yarn. It raised Tk30 crore through an initial public offering (IPO) in 2010.
After two years of being listed, it raised an additional Tk278 crore by issuing the right shares to enhance production capacity through the installation of new machinery.
The company was in profit in 2016-2017 and 2017-2018 fiscal years. In the 2018-19 fiscal, it incurred a Tk607.11 crore loss due to the fire incident.
The firm continued to incur losses in the following years. In the last fiscal (FY21), its cumulative loss stood at Tk446.68 crore.
RN Spinning shares shot up to over Tk135 in the first year of its debut, which tumbled to Tk2.2 in late 2019. At the end of 2021, the stock closed at Tk6 on the Dhaka Stock Exchange.
On top of the huge financial dent, the spinner is also struggling to get its insurance money from Union Insurance.
According to RN's auditor, the factory and its assets were under the coverage of Tk132.46 crore. After the blaze, an inspection was conducted in this regard, but no assessment report was filed.
As a result, the company did not get insurance benefits as yet.
According to the company secretary Raquibul, the planned merger would help RN Spinning to resume operation, bring synergy.
The merger and amalgamation scheme, however, would depend on the approval of the court, shareholders and the securities regulator, he added, saying that it was likely that fewer Samin shares were to be issued against more RN shares.
"The securities regulator BSEC will finally determine the share exchange rate between the listed company and the non-listed one owned by the same entrepreneurs," said Far Group Manager Sudeep Banik.
