Ring Shine to use Tk40cr from IPO funds to resume production

Bangladesh Securities and Exchange Commission (BSEC) on Thursday allowed Ring Shine Textiles Ltd to use Tk40 crore from its initial public offering (IPO) funds raised, to resume production.

The company will use some of the funds to pay for operating costs and clearing dues.

It will use Tk15 crore for workers' retrenchment, Tk3 crore to clear dues with Bangladesh Export Processing Zones Authority, and Tk3.5 crore to pay Titas Gas dues.

The textile mill will also repay Tk10 crore towards bank loans from Premier Bank, and Tk6 crore to Dhaka Bank.

It will spend Tk2.5 crore towards miscellaneous expenses.

Ring Shine Textiles raised Tk150 crore from investors in 2019 to set up denim plants and repay bank loans. It issued each share at a face value of Tk10. 

From the funds raised, the company has already repaid bank loans of Tk50 crore. But in January 2020, the regulator imposed an embargo on the IPO funds on charges of violating rules.

In a meeting on Thursday, BSEC also allowed Ring Shine to change the utilisation of the IPO proceeds of the company through an annual general meeting.

The commission will also confiscate the placement holders' shares including bonuses as they were issued without payment. As a result, the company's current paid-up capital will come down.

Sources said 1,940 garment workers used to work in the company before the factory went out of operation. It will reduce 940 workers from the factory step by step.      

Sources said the company collected Tk275 crore through private placements before the IPO, but a number of placement shareholders did not pay against the shares.

On 26 January this year, the securities regulator restructured the board of directors of Ring Shine Textiles to rescue the company from a worsening condition.

For this to be attained, the BSEC appointed seven independent directors to observe the company's overall condition and make a plan for how to operate it.

BSEC also appointed Hoda Vasi Chowdhury and Co as special auditor to review their financial statements, including export data.

The company exported goods worth Tk982.37 crore in fiscal year 2018-19 but faced a shortage of working capital within the first nine months of fiscal year 2019-20.

The company's sales declined and it incurred a loss in the third quarter of the last financial year.

Due to a shortage of working capital, a decline in orders from foreign buyers, and a shortage of imported raw materials, the company's factory has been closed since September last year.

Meanwhile, Ring Shine has not been able to use its initial public offering funds yet.