Why Ring Shine postponed its AGM

• Ring Shine raised Tk150cr through IPO in 2019
• In FY23, its per-share loss stood at Tk2.53
• It did not declare any dividends for FY23
• 6 companies want to take over Ring Shine
• Currently, it I running at 40% capacity
• Shares closed at Tk6 each at DSE

Ring Shine Textiles Ltd has postponed its Annual General Meeting (AGM), citing "unavoidable circumstances," according to a stock exchange filing on Sunday.

Originally scheduled for 20 January this year, the AGM was later rescheduled to 6 March. The company has yet to set a new date for the general meeting.

Explaining the reason for deferring the AGM yet again, Company Secretary Aniruddha Paul told The Business Standard, "The new board has been recently appointed and is currently working on rearranging related issues to ensure the effectiveness of the AGM. Therefore, they require a little more time."

On 18 January, the Bangladesh Securities and Exchange Commission (BSEC) appointed five independent directors to the company for a three-year term, effective from 26 January. However, the High Court stayed this board for six months and issued a rule to the authority concerned to explain why the new board should not be repealed. Additionally, the court allowed the continuation of the board consisting of the existing sponsors and directors.

In August of last year, the market regulator conditionally allowed Wise Star Textile Ltd and five Singapore-based companies to purchase shares of Ring Shine, including those held by the sponsor-directors.

However, the existing board of directors of Ring Shine Textile expressed concerns about the credibility of the six companies set to collectively take over a 38% stake in the textile firm.

Complexity of transferring ownership

Even after five months of approval by the BSEC, the transfer of ownership of Ring Shine has not been possible for its new directors. According to company officials seeking anonymity, the existing directors are delaying the transfer of their shares to the new owners because they have not implemented the Sales and Purchase Agreement (SPA).

Wise Star will hold only 2% of the shares, while the remaining 36% will be held by the other five companies. They claim that Bepza's liabilities are around Tk100 crore, and customs, VAT, and other liabilities amount to Tk35 crore, but the new owners have not resolved these issues.

Furthermore, the existing board provided lenders with personal and corporate guarantees, which were transferred along with ownership. However, the new owners have not agreed to provide these guarantees. If the company collapses after the ownership transfer, all bank liabilities will fall on those who provided the bank guarantees.

Given this situation, the existing owners have not agreed to transfer their shares to the new owners.

In FY23, the company incurred a per-share loss of Tk2.53. As a result, it was unable to declare any dividends for its shareholders for that year.

Earlier, Sung Weyn Li Angela, managing director of the company, stated that its productivity is gradually improving, reaching 40% in current capacity utilisation from the previous 7%-8%.

Ring Shine was the first major manufacturing company to raise Tk150 crore through an initial public offering using the fixed price method in 2019. However, after being listed, it faced difficulties in conducting business properly due to various problems.