BSEC seeks CIB report of Paramount Textile over IPO fund utilisation

February 25, 2014

The Bangladesh Securities and Exchange Commission has moved to bring to book Paramount Textile, a newly-listed company, on charge of violation of securities rules in utilising initial public offering fund worth Tk 21 crore. The BSEC on Sunday sent a letter to Bangladesh Bank credit information bureau general manager seeking detail information regarding PTL’s account with Standard Chartered Bank.
The BSEC letter said that the capital market regulator in July 2013 approved the IPO of PTL worth Tk 84 crore.
‘But, the company’s IPO fund utilisation report seems suspicious and ambiguous,’ the BSEC latter said.
In this situation, it is essential to know, whether the loan amount worth Tk 20.92 crore was in the name of Paramount Textile under Standard Bank or the loan amount was adjusted in the name of PTL, the BSEC letter said.
The company in its IPO prospectus did not mention of having any such loan. Using the IPO fund other than the use of proceeds mentioned in the IPO prospectus is a violation of the BSEC rules.
The PTL in the prospectus said that it had no subsidiary or holding company. But, Paramount Holding Company and Paramount
Spinning hold 17.78 per cent and 26.67 per cent shares of the company respectively.
In 2008, PTL received loan amounting to Tk 5.34 crore from Paramount Holding and Tk 6.99-crore loan from Paramount Spinning, and both of the loans were repaid
by the company within June 30, 2010, said the company in its IPO prospectus.
A Chittagong Stock Exchange report submitted to the BSEC said that the company provided contradictory document regarding its IPO fund utilisation by fabricating financial documents.
The first statement regarding the IPO fund utilisation showed that the company repaid Tk 20.92 crore for term loan of Paramount Spinning under Standard Bank.
The company again, following a CSE query, submitted another bank statement of Standard Bank showing that the loan amount was repaid for PTL.
Another report of Standard Bank said that PTL in 2010 took over Tk 23-crore loan of Paramount Spinning.

-With New Age input

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