BASIC Bank wants Mithun Knitting, Bangas sponsor-director shares as loan recovery

In a move to recover its loans to two publicly listed Bangas Tallu Group companies, state-owned BASIC Bank Ltd wants to have the sponsor-director shares of the firms transferred to its beneficiary owners' (BO) account.

Mithun Knitting and Bangas borrowed from the bank's Shantinagar branch, using their sponsor-director shares as collateral, according to the bank officials. Both companies share the same sponsor-directors.

At present, the sponsor-directors of Bangas own 31% shares in the company. But at Mithun Knitting, the sponsor-directors failed to maintain the minimum 30% shareholding and currently hold only a 17.2% stake, according to Dhaka Stock Exchange (DSE).

The officials did not disclose exactly how much of these shares were kept in lien for the loan.

Seeking anonymity, an official at Mithun Knitting told TBS, "Mithun Knitting borrowed around Tk3 crore from the BASIC Bank, mortgaging a portion of the sponsor-directors shares."

An official at BASIC Bank's Shantinagar branch said the loan amount is now nearly Tk5 crore.

On 28 December 2023, the bank wrote to the Bangladesh Securities and Exchange Commission (BSEC) and the DSE for transferring the lien shares to its BO account.

In the letter, the bank stated that it had requested to transfer the lien shares to its BO account and sent updated information as demanded.

"Even though a long time has passed, we have not received any update on the matter yet. As a result, the loan recovery process has been delayed," the letter reads.

In 2023, the BSEC sat with Mithun Knitting and BASIC Bank officials in a tripartite meeting.

The commission emphasised on finding an interested entrepreneur who would bring Mithun Knitting back in production without handing over the shares against the loan to the bank.

A BSEC director, who was present at that meeting told TBS, "Mithun Knitting's majority shares are now held by general shareholders, and a small number of shares by the owners."

"Now if the bank takes away the mortgaged shares, the owners will have nothing. This is why we advised the company to find an investor and settle the loan, keeping the interest of general shareholders in mind."

He said there is an obligation to hold 30% shares by the sponsor-directors of listed companies. But Mithun Knitting failed to maintain it.

Mithun Knitting's Company Secretary Mohamad Shohel Rana told TBS, "There is a complexity over this loan with the bank. The bank wanted to take the mortgaged shares in its own name."

"We had a tripartite meeting last year, when the bank applied to the commission to take the shares in its name. The commission has given its opinion not to transfer the shares in the name of the bank," he added.

Mithun Knitting and Dyeing Limited had changed its name to Toyo Knitex (CEPZ) Ltd. The company had remained non-operational since September 2019.

Mithun Knitting's factory was located at Chittagong Export Processing Zone (CEPZ).

According to its 2022-23 annual report, the company owes CEPZ Tk10.68cr for lease, rent and others. And owing to the payment failure, the CEPZ took over the firm's assets, and cancelled the lease agreement.

Mithun Knitting was established in 1991 and got listed on the DSE in 1994.

It last paid a 20% stock dividend in FY16. Its shares are stuck at the floor price of Tk15.6 each on the DSE.