Mymensingh mayor, family acquiring Bangladesh Welding 

Infographic: TBS

Mymensingh City Corporation Mayor Ekramul Haque and two of his family members are going to acquire Bangladesh Welding Electrodes Ltd, which is listed on the country's stock market and has been out of production for years.

Ekramul, his brother Aminul Islam, and Aminul's son Samiul Haque Shafa will buy the company's sponsor-directors' entire holdings for Tk23.40 crore.

Currently, Aminul, Ekramul, and Samiul are all engaged with Sea Pearl Beach Resort and Spa, which is also listed on the capital market, as the managing director, a director, and a shareholder, respectively.

The Investment Corporation of Bangladesh (ICB) owns the majority –25.25% – out of the 31.01% of shares held by the sponsor-directors of Bangladesh Welding.

The ICB will sell its entire holding at an agreed price of Tk17.50 per share, while the new buyers will pay Tk17 for each of the remaining shares held by the company's main entrepreneur SM Nurul Islam, and foreign investors.

On Monday, each share was traded at Tk29.30 on the Dhaka Stock Exchange (DSE).

On January 25, the ICB and the interested buyers agreed to transfer shares.

The BSEC approved the proposal last week, allowing the Sea Pearl Beach Resorts owners to acquire Bangladesh Welding Electrodes.

As per the decision, after acquiring the shares, the new owners will take an initiative to bring the company back into production.

"Bangladesh Welding Electrodes has not been in production for a long time," BSEC Chairman Professor Shibli Rubayat-Ul-Islam told The Business Standard.

"So, for the interests of shareholders of the company, the commission has approved the acquisition proposal, which will bring the company back into production," he added. 

Despite repeated attempts, the interested buyers could not be reached on their mobile phones for comments.

ICB is the major shareholder

According to sources, the ICB is the major shareholder of Bangladesh Welding Electrodes and the controlling board chairman.

Currently, the ICB holds 25.25%, or 10,945,699 shares of sponsor-directors, while SM Nurul Islam owns the rest, or 5.76%.

As five out of eight sponsors decided to sell their entire holdings in the company in 2009, the state-owned investment entity ICB bought the shares.

As per sources, out of the total holdings, the ICB bought 6,245,962 shares from its own portfolio and the rest, 4,699,737, from the ICB Unit Fund portfolio.

Now, the ICB will sell its entire holdings to Aminul Hoque, and his brother Ekramul Hoque for Tk17.50 each.

Aminul will buy 6,567,419 shares and Ekramul 4,378,280 shares from the ICB at Tk19.15 crore.

SM Nurul Islam, the former managing director, who recently died of cancer, and foreign investors together hold 2,500,256 shares of Bangladesh Welding.

These shares will be transferred outside of the stock exchanges to Aminul, Ekramul, and Samiul at a negotiated price of Tk17 each.

After selling these shares, the money will be kept in the depository participatory of the client code of the brokerage firm, and the fund will be distributed among the heirs or nominees in accordance with the court succession certificate, according to BSEC sources.

Bangladesh Welding at a glance  

Bangladesh Welding Electrodes Limited, which was established in 1969, was the first welding electrode manufacturing facility in then-east Pakistan.

The company was taken over by the government of Bangladesh in 1973 as an abandoned property.

In 1984, the government divested it, and a former bureaucrat as the highest bidder purchased the factory.

It was a private company until 1997 and was engaged in manufacturing welding electrodes for the world-renowned brand Oerlikon for about 12 years under a technical collaboration and a licencing agreement with Oerlikon Welding Ltd, Zurich.

In 1999, the company entered the stock market to raise funds for setting up an oxygen plant in Chattogram.

It fell into crisis when raw material imports were disrupted because of loan defaults.

To repay the loans to the South East Bank, in 2016 the company sold its factory in Chittagong to Bangladesh Steel Re-rolling Mills and planned to set up a new factory in Dhaka. It purchased land but failed to build a factory to run the company.

According to the DSE, the company paid a 1% stock dividend to its shareholders despite incurring a loss of Tk35 lakh in the fiscal 2018-19.

After that, the company did not publish any financial updates.

Earlier, at the beginning of 2021, the BSEC appointed five nominated directors in the company, and a special auditor to conduct an audit.

In July 2019, the ICB and Alif Group entered into an agreement to buy the ICB's portion of the company.

But finally, the group did not take over the company due to some complexities.