BASIC, Bank Asia extend hands to revive Emerald Oil

BASIC Bank and Bank Asia have come forward to revive Emerald Oil Industries – the producer of the almost forgotten Spondon rice bran oil – by waiving loan interest.

The company owes Tk61 crore to BASIC and Tk20 crore to Bank Asia in principal amounts. Including interest, the size of the loans went beyond Tk100 crore.  

Minori Bangladesh Limited – a subsidiary of Japanese farming company Minori Co Limited – the interested company to take over Emerald Oil, will take care of the loans after they are regularised.

In return, Minori Bangladesh will get a 30% stake in Emerald Oil Industries, which is held by sponsors and directors of the company.

Organic farming company Minori's Bangladesh operations are based in Tangail.

Minori had earlier bought more than 8% shares of the company from the secondary market.

After receiving the stakes, Minori will inject around Tk45 crore as working capital to rejuvenate Emerald Oil – a loss-making entity in the food and allied sector of the capital market.

The production of Emerald Oil is halted since 2017 due to a shortage of working capital following its founders' loan scams. Later, they landed in jail and fled the country on their release.

As part of transferring shares held by sponsors and directors, the company is likely to sign a deal with Minori Bangladesh on Wednesday.

The company authorities will later send an application to the banks for rescheduling the loans and the reconstituted board will announce a timeframe to resume production.

Earlier, the board had a target to restart production in September but it failed as licence renewal, share transfer and other tasks were unfinished due to the Covid-19 pandemic.

An independent director of Emerald Oil, seeking anonymity, said the new board is on the verge of bringing the company back to business after completing all necessary tasks.

"This week, a deal will be signed with the interested company over its taking over the 30% stakes," he added. 

BSEC initiatives and interest waiver

Keeping the interest of investors in mind, Bangladesh Securities and Exchange Commission (BSEC) in March this year reconstituted the board by appointing five distinguished professionals to revive the company.

In a joint meeting with BSEC and the reconstructed board, the high officials of the two banks have recently agreed to waive the interest and receive only the principal amount of their loans.

To recover the classified loans, the bank officials have agreed but the final approval will come from the boards of the lenders.

As the bank officials agreed, the new board of the company is very hopeful of regularising the loans.

Sources said the two banks will now reschedule the loans with a 5% down payment for ten years with two years grace period.

About the company

Incorporated in 2008, Emerald Oil went into the production of Spondon rice bran oil in 2011 and entered the bourses in 2014.

But, in a few years, it melted down both in its business and in the stock market as soon as the founders' loan scams unfolded.

Once creating a vibe in the Bangladesh market, Spondon posted Tk276 crore in revenue from Emerald Oil in fiscal 2015-16.  

The company posted a profit of Tk18.07 crore and paid a 10% stock dividend to its shareholders.

After that, the company failed to publish its financials due to a halt in production.

The new board is seeing a great revival potential for Spondon and is planning to export the oil to Japan alongside selling the heart-friendly cooking oil in the local market.