Emerald Oil Industries, listed on the capital market, has been put on auction as the Spondon-branded edible oil producer from rice husk could not pay back money to its lender, BASIC Bank Limited.
Despite defaulting on a loan payment of Tk102 crore, the company declared a 2% cash dividend for fiscal 2021-22, as it made a profit of Tk1.21 crore after five years since 2017.
The lender BASIC published an auction notice on Tuesday in line with a court order for the sale of properties owned by Emerald Oil to retrieve the loan taken by its previous owners. The bank has sought applications from interested parties by 16 August.
Minori Bangladesh – a subsidiary of the Japanese farming company Minori Co Ltd – took over the oil producer in 2021 and declared dividends instead of clearing the loan dispute.
With a fresh investment by the new owner, Emerald Oil returned to production in January last year.
Recently, Emerald Oil shares soared by 249% to Tk182.5 on 12 July this from Tk42.3 at the end of April.
Although, after reaching the peak, the shares have now declined to Tk154.5 each on 27 July.
Afzal Hossain, managing director of Emerald Oil Industries, told The Business Standard, "We are talking with the bank. Amid discussions, an auction notice has been floated as per court order."
"We have urged investors not to panic over the auction notice. We had several meetings with the lender. We proposed to pay the principal amount with a grace period. We will come to an amicable solution very soon," he added.
Afzal Hossain said the factory was closed for five years, but now it is running and also making profit.
"We signed a memorandum of understanding with a Japanese company to export oil," he added.
The loan, cases, and defendants
Emerald Oil Industries, formerly Emerald Oil and Poultry Industries, took Tk72.45 crore from BASIC Bank to expand its business by mortgaging its 704 decimals in Sherpur and Jamalpur.
When it failed to pay back the loan, the lender filed a case with Artha Rin Adalat in 2017.
According to the bank, total dues stood at Tk102 crore till July 2018.
Not only BASIC Bank, but its other lenders, Bank Asia, Prime Finance and Investment, and Midas Finance, also sued Emerald Oil, seeking to retrieve their loans.
According to Emerald Oil, as of June 2022, the total loan stood at Tk130 crore, including Tk26.29 crore from Bank Asia, Tk7.33 crore from Prime Finance, and Tk24.36 crore from MIDAS Finance.
According to bank documents, in the case, the respondents included the company, its ex-MD Syed Hasibul Gani Galib, ex-chairman Syed Monwarul Islam, ex-directors Sajan Kumar Basak and Amitabha Bhowmik, and Liakat Ali and Syed Mahbubul Gani.
In an auction notice, the bank stated that the mortgaged land and machinery will be auctioned, and the shares held by Emerald Oil's directors and others have already been frozen.
The bank said 73 decimals of land and constructed and under construction infrastructure assets in Jamalpur, as well as shares of sponsor-directors, have been frozen.
In Emerald Oil, Galib holds 1,27,82,000 shares, Monowarul 12,10,000 shares, Basak 13,31,000 shares, and Amitav 13,31,000 shares.
Incorporated in 2008 to produce edible oil, Emerald Oil Industries was listed with the Dhaka Stock Exchange and Chittagong Stock Exchange in 2014 by raising Tk20 crore through an initial public offering.
Its factory is located in Sherpur Sadar upazila.
With its signature product, the rice bran edible oil, branded as Spondon, Emerald Oil was a profitable firm until 2016.
The following year, when a loan scam by its founder came to light, the company started losing business, and operations got halted due to a shortage of working capital.
Facing corruption charges, the founder fled the country, and it was the shareholders who suffered the effects of a share price drop.