Wise Star Textile keen to take over Ring Shine

Wise Star Textile Mills Ltd – a private company run by Queen South Textile's Managing Director Wong Jammy Kwok Chan – is interested in taking over the struggling Ring Shine Textiles Ltd.

Recently, the Bangladesh Securities and Exchange Commission (BSEC) has allowed the Bangladesh Export Processing Zones Authority (Bepza) to transfer the sponsor-director shares of Ring Shine to a suitable buyer.

An official of the Bepza said already a few meetings have been arranged with Wise Star Textiles in this regard. He declined to comment further on this matter.

Earlier, the Bepza sought no objection certificate (NOC) from the commission about transferring the company's sponsor-director shares as it is publicly listed and general investors are involved, a BSEC official said, seeking anonymity.

He added that the commission is trying for Ring Shine to somehow be back in business in order to protect the interest of investors.

Now that the BSEC has given the NOC to Bepza, it will be able to hand Ring Shine over to an interested party if it complies with the rules.

Earlier, Union Group showed interest in taking Ring Shine over, but ultimately did not go through with it because of the huge debt burden of the company.

Mohammad Rezaul Karim, executive director at the BSEC, said the commission is trying to rescue all the poorly performing companies for the sake of their investors.

Since Ring Shine is one of the companies that has been struggling for quite some time, the BSEC has issued the NOC, he added.

Ring Shine's new Chairman Mejbah Uddin said the company is in dire straits mainly because of its inability to open letters of credit (LCs) for raw material imports as the board of directors of the company is classified.

A classified board of directors is a board with members who serve terms of varying, staggered lengths of time and can help protect a company against a hostile takeover by another company.

What went wrong with Ring Shine

Ring Shine Textiles was listed on the stock exchanges in 2019. By issuing pre-IPO shares, also known as placement shares, to its existing sponsor-directors and 73 external local shareholders, the company became a Tk285.05 crore paid-up capital company from Tk9.95 crore.

But 11 sponsor-directors and 33 external shareholders did not make any payment against their allotted shares.

In September 2020, its production stopped because of the Covid-19 pandemic.

Working capital shortfall, decline in orders from foreign buyers, and raw material shortage led the factory shutdown.

In January 2021, the stock market regulator restructured the company's board of directors in a move to bring the company out of its worsening condition.

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

In June 2021, the factory went back into production but at only 25% of its total capacity.

Ring Shine mainly manufactures dyed yarn, and gray and finished fleece fabrics of various qualities for both local and international markets.

The company recommended 1% cash and 1% stock dividends for fiscal 2019-20.