Submarine Cable allowed to allocate shares to govt at 53% discount
The securities regulator has granted its consent to the Bangladesh Submarine Cable Company to allocate shares to the government against a share money deposit at a 53% discount on the prevailing price at the Dhaka Stock Exchange.
The Bangladesh Securities and Exchange Commission approved the proposal of the state-owned internet provider during a commission meeting on Tuesday, according to a BSEC press release.
On 15 February, the company received shareholders' approval at an extraordinary general meeting to allocate 2.21 crore shares to the Posts and Telecommunications Division in exchange for a share money deposit of Tk166 crore.
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The company will now transfer the shares, which closed at Tk159.70 each on Wednesday, at Tk75 apiece, including a Tk65 premium.
A share money deposit is the money paid in exchange for shares that have not yet been acquired.
In the 2016-17 and 2017-18 fiscal years, the company received equity funds of Tk166 crore from the government for a development project called the Regional Submarine Telecommunications Project.
A senior officer at the company told The Business Standard, "The government has requested shares at Tk75 each, and our shareholders have accepted that."
"Since the government has not received any dividends or interest on this share money deposit for the past six years, we feel the government has made a reasonable proposal. However, issuing shares at a discounted rate will somewhat deprive the general shareholders," he added.
The company will issue the shares in exchange for the share money deposit in accordance with a directive from the Financial Reporting Council, issued in February 2020.
As per the directive, share money deposits must be converted into the company's capital within six months of receiving the funds. Additionally, the issue price of the shares against the share money deposit may be determined based on the last closing price on the stock exchanges.
The directive further states that companies must include share money deposits when calculating earnings per share and dividends as soon as the money is deposited, even before securitisation.
In 2020, the company appointed ICB Capital Management Ltd as its issue manager to determine the share price.
The following year, the company proposed issuing 1.48 crore shares at Tk110.20 each, as determined by the issue manager, to the government.
Currently, the company's paid-up capital is Tk164.90 crore, with the government holding 73.84% of its shares. Institutional investors hold 15.72%, foreign investors hold 2.70%, and general investors hold 7.74%.
For the fiscal year 2022-23, the company paid a record 51% cash dividend to its shareholders.
According to the company's disclosures, its revenue grew by over 16% year-on-year to Tk515 crore in FY23, while net profit grew by 13% to Tk279 crore.
