It appears that no action taken by the market regulator to repatriate the Aman Cotton Fibrous Ltd IPO fund is working.
None of the various initiatives taken on behalf of investors have been successful so far. Rather, the company has been taking “unethical” benefits from IPO funds for several years.
The Bangladesh Securities and Exchange Commission (BSEC) has decided to form a new investigative team to recover the IPO money.
To seek anonymity, senior commission officials said the committee will be formed soon and will work to determine the location and current status of the money and how to get it back.
It will also check the company’s terms and conditions.
This correspondent called company secretary Shariful Islam for comment, but did not answer his mobile phone.
Back in August 2018, Aman Cotton raised Tk80 crore from the stock market through an IPO to buy new machines and repay loans.
But instead of buying machines, it pledged Tk73 crore of the IPO fund as collateral for credit facilities for two of its sister companies – Akin Carriers Limited and Aman Food Limited.
Akin Carriers enjoys a Tk38 billion credit facility as an overdraft facility on the balance in its Fixed Deposit Slip (FDR) with Meghna Bank and Tk15 billion with Al-Arafah Islami Bank.
Aman Food also enjoys a similar facility of Tk20 crore in Commercial Bank of Ceylon PLC.
In June 2020, the regulator appointed a special auditor – Howladar Yunus & Co – to examine the use of proceeds from the IPO and to audit the company’s financial statements.
The company’s directors have been fined a total of Tk12 crore by the regulator for irregularities in the IPO fund allocation plan and financial statements. And also ordered the release of the company’s Tk73 crore lien on fixed assets within seven days.
The regulator also fined its auditor, ATA Khan & Co. Chartered Accountants, Tk10 lakh, for failing to raise concerns about false information to the company.
But the company was looking to commission until July 2023 to use its IPO proceeds for the original project. And the company has obtained an order from the court to stay the BSEC fine.
In order to recoup Tk73 crore of investor funds, the BSEC directed these banks to tie up their lien with Aman Cotton Fibrous Ltd.
But regulators have yet to recover the IPO funds.
The company also made loans to one of its sister companies without the consent of its general investors. As a result, investors were deprived of profits and lost large amounts of capital.
From October to December 2022, Aman Cotton revenue was Tk 57.22 million.
But the company suffered a loss of Tk25 lakh and the loss per share was Tk0.02.
As of January 31, 2023, sponsors and directors combined held 49.58%, institutions 14.24%, foreign investors 0.10% and the general public 36.08% of the Company’s shares.
The last trading price of each share of the company was Tk26.50 on the Dhaka Stock Exchange on Wednesday.
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