Al-Arafah Islami Bank puts Familytex assets on auction

Infographic: TBS

Al-Arafah Islami Bank has announced an auction to sell the collateral assets of Familytex BD Limited, a publicly traded company on the stock exchanges, in order to recover a default loan amounting to Tk48.86 crore.

The bank has published an auction notice inviting interested buyers to submit tenders for purchasing the company's assets in Chattogram by 10 July.

An official of the bank, speaking on condition of anonymity, said, "We provided them with enough time to repay the loan, but they failed to do so. Hence, we have initiated the auction of their assets."

According to bank sources, Mohammed Morshed, managing director of Familytex, secured the loan in 2014 by mortgaging three plots and a flat in Chattogram.

Familytex entered the readymade garments sector in 2003, establishing its factory in the economic zone in Chattogram.

In 2013, it raised Tk34 crore through an initial public offering (IPO), offering shares at a face value of Tk10 each to repay high-cost loans. Banco Finance and Investment Limited served as the issue manager for Familytex's IPO.

The company disbursed a 100% stock dividend in the first year after its IPO. However, it has experienced deteriorating business performance and incurred losses since the fiscal year 2016-17.

While the company published its financial report up to December 2020, it has not disclosed any financial results thereafter, according to the Bangladesh Securities and Exchange Commission (BSEC) sources.

In 2021, the Dhaka Stock Exchange (DSE) formed an inspection team to investigate the company's situation. However, the team discovered that the company's office and factory were closed.

Subsequently, the BSEC reconstituted the company's board by appointing five independent directors to safeguard the interests of the general shareholders.

However, the new directors were unable to assume control of the company as the sponsor shareholders did not cooperate with them.

A senior officer of the BSEC, speaking anonymously, mentioned that the newly appointed independent directors resigned after their attempts to take charge failed. Following this, no shareholders with significant holdings stepped in to salvage the company.

He explained that the sponsors and directors collectively held only 4% of shares, falling far short of regulatory requirements, making it challenging to transfer control to other parties.

In 2021, the BSEC uncovered irregularities in the sale of shares by Familytex directors, who had been selling shares since 2015 without declaring. By 2017, they had disposed of 41% of their total holdings, reducing their stake from 22.43% at the end of 2018 to just 4.02% by January 2019.

During the IPO, sponsors and directors held 45.16% of shares.

Despite the managing director initially selling around two crore shares with declaration, the board subsequently sold 11 crore shares without declaration when the share price was Tk15 each.

Additionally, Korean citizen Jun Kyung Won, a sponsor, sold 4.19 crore shares in 2015, while in 2016, the chairman, Roksana Morshed, and another director, Meraj‐E‐Mostafa, collectively sold around 1.5 crore shares.

Despite these actions, the stock market regulator failed to take decisive action against the company's sponsors and directors over the years.

Efforts to reach Mohammed Morshed, managing director of Familytex, were unsuccessful, as he has reportedly absconded due to outstanding loans and involvement in a share scam, according to BSEC sources.

According to the DSE, the paid-up capital of Familytex is Tk354 crore and the number of shares is 35.41 crore. Among the shareholders, institutional investors hold 18.41% shares and the public holds 77.57%.

Its share price closed at Tk3.30 each on Wednesday (12 June) and the market capitalisation stood at Tk116.87 crore.