National Tea to increase paid-up capital through private placements

Illustration: TBS

National Tea Company Limited has decided to increase its paid-up capital through private placements among the existing shareholders.

The general shareholders will be eligible to receive three newly-issued shares against each of their current holdings.

Each share will be priced at Tk118 – Tk10 as face value and Tk108 as premium, the company decided in its board meeting on Monday. The price is subject to the approval of the Bangladesh Securities and Exchange Commission (BSEC).

Currently, the government, the Investment Corporation of Bangladesh, and the Sadharan Bima Corporation hold 42.72% shares of the company, which will be increased to 51% through private placements. The remaining newly-issued shares will be allotted to the existing directors and general shareholders.

Three directors of National Tea hold 10% of its shares.

The company wants to increase its paid-up capital from Tk6.6 crore to Tk30 crore to comply with regulatory requirements. It has also decided to enhance its authorised capital from Tk25 crore to Tk40 crore.

The new shares will be issued at a 30% discount on the company's net asset value as per the report on 30 June 2021, the face value of its shares, its average earnings in the last five years and the average price of its shares in the last 12 months.

If any shareholder does not agree to accept the proposed shares, the company directors can take the unsubscribed shares at the fixed price.

The company will hold an extraordinary general meeting (EGM) on 20 October to secure the shareholders' approval. For this, the company has fixed 26 September as the record date.

It will apply to the BSEC after getting the shareholders' permission.

Earlier, when National Tea proposed to issue a right share, the stock market regulator suggested the company issue fresh primary shares – known as Repeat Public Offering (RPO) – as it was not eligible for issuing right shares as per the current public issue rules.

Incorporated in 1978 and listed on the capital market in 1979, the National Tea Company cultivates, manufactures, and sells tea and rubber in the local market.

The company's annual average production is about 5.2 million kg of tea, the major portion of which is sold through the Chattogram auction market.

In 2000, National Tea started selling tea in the local market on a small scale through its dealers. It has a sales centre at its registered office, which is open to all consumers.

There are about 12,500 permanent labourers in the company's 12 tea estates. Most of them are from ethnic groups and they stay in the gardens with their dependents.

The company has to provide food grain at a subsidised rate and free medical facilities for the labourers and their dependents along with free housing facilities.  

The company generated profits from 2000 to 2019. But the state-owned firm suffered losses over the last two years due to the Covid-19 pandemic.