Emerald Oil Industries Limited, the producer of rice bran oil "Spondon", has decided to raise its paid-up capital by issuing fresh shares against a Tk30 crore investment made by Minori Bangladesh Limited.
Minori Bangladesh, a subsidiary of Japanese farming company Minori Co Limited, acquired Emerald Oil last year.
To raise the paid-up capital, the board of directors of Emerald Oil has decided to arrange an extraordinary general meeting (EGM) for securing general shareholder approval to issue new shares.
As per the decision of the board, the EGM date was initially slated for 27 December with a record date of 15 December.
An official of the company told The Business Standard that the EGM date has been shifted to 8 January.
Why is EGM being held to raise paid-up capital?
Emerald Oil was closed for more than four years. Bangladesh Securities and Exchange Commission (BSEC) gave permission when Minori Bangladesh showed interest in investing in the company.
As per the decision, Minori Bangladesh would take care of Emerald Oil's default loans and provide a working capital of around Tk50 crore for the company to resume production.
In view of this, Minori Bangladesh will get the shares held by the main sponsors and directors of Emerald Oil.
Emerald Oil returned to production last January with an initial investment of about Tk30 crore by Minori Bangladesh.
However, since a large part of the shares held by Syed Hasibul Gani Galib, the main sponsor of Emerald Oil, is mortgaged to the bank, Minori did not get the ownership of those shares.
According to sources, Minori Bangladesh is seeking permission to issue new shares against investment as it is facing some hurdles. It will gain control of the board of Emerald Oil if new shares are issued against the investment.
At present, Minori Bangladesh has bought 7.81% shares of Emerald Oil from the secondary market.
As per the plan, Minori Bangladesh is looking to issue shares at Tk10 each against its Tk30 crore investment and the company needs permission from its shareholders, aside from taking permission from the stock market regulator.
On Sunday, the shares of Emerald Oil traded at Tk36.40 each on the Dhaka Stock Exchange.
The company will seek permission from the regulatory body only after obtaining the permission of shareholders at the EGM.
Emerald Oil Industries Ltd, incorporated in 2008, began production of its "Spondon" rice bran oil in 2011 and entered the bourses in 2014.
The company raised Tk20 crore by issuing two crore general shares at a face value of Tk10.
But in a few years, it melted down both in its business and on the stock market as soon as the founder's loan scams unfolded, and has not been in operation since 2017.