The Bangladesh Securities and Exchange Commission (BSEC) has asked the Dhaka Stock Exchange (DSE) to investigate unusual increases in the price of Paper Processing and Packaging Limited shares, said sources at the commission.
The company belonging to Magura Group returned to the mainboard from the over-the-counter (OTC) market in June last year when the price of each share was Tk17.6.
Although its core business has been affected by Covid-19, the share price continued to rise unusually since then.
On 8 September 2021, three months after its return to the main market, each share price soared to Tk253 and on 20 February this year, the price rose to Tk313.
Then the share price took a downward turn and stood at Tk175 each on 10 August.
On 25 August, the price again rose to Tk272, before falling back to Tk222 on Thursday last week.
In response to a query from the DSE, the company said on 23 August that there is no undisclosed price-sensitive information regarding the increase in the share prices.
Share sales of sponsor-directors to avoid loan complications
Paper Processing and Packaging Limited got into trouble with bank loans due to business losses caused by the pandemic.
As business was not well, it plunged into a risk of bank default. In such a situation, the commission allowed the sale of shares by the sponsor-directors only to repay its bank loans.
Following the approval, corporate directors Bangladesh Development Group and Magura Group sold 4.36 lakh shares and 4 lakh shares, respectively, while sponsor-director Mustafa Kamal Mohiuddin sold 100,980 shares, according to the data from the company.
The company said the sale proceeds have been utilised for adjustment of bank loan liability with the principal branch of the Social Islami Bank Ltd.
Paper Processing and Packaging Limited got listed on the capital market in 1990.
Later, the company failed to pay dividends to its shareholders due to deteriorating business conditions. As a result, it was moved from the mainboard to the OTC market.
Its paid-up capital is Tk10.45 crore, with a total number of shares of more than 1.4 crore.
As of June 2022, sponsor-directors held 35%, institutional investors 0.54% and general investors 64.46% shares in the company.