Sonali opposes Keya cos’ amalgamation process

January 31, 2014

Unsettled Loans
Sonali opposes Keya cos’ amalgamation process
Sonali Bank has opposed a proposed amalgamation process of Keya Cosmetics Limited with its three other associate companies — Keya Knit Composite Limited, Keya Cotton Mills Limited and Keya Spinning Mills Limited — due to unsettled loans with different bank.
The state-owned bank’s letter sent to Bangladesh Securities and Exchange Commission on Wednesday also requested the capital market regulator not to approve the proposed amalgamation process of the companies without getting no-objection certificate from the banks.
According to the Sonali Bank’s letter, the Keya Spinning Mills is liable to different banks including Sonali bank worth arround Tk 321.07 crore.
The board of directors of Keya Cosmetics on October 20 last year took the decision to merge the company with three of its affiliated companies.
Keya Cosmetics deputy company secretary Mofizul Islam on Thursday told New Age that the company was not aware about the Sonali Bank letter to BSEC.
‘We will reschedule the loans of Keya Spinning Mills with Sonali Bank by the next week. We have already got no objection certificates from other banks. We are hoping to get the NOC from Sonali once we reschedule the loans next week,’ he said.
Of the amount, Tk 31.69 crore loans with the Sonali Bank of Keya Spinning Mills have already been classified as bad loans.
Keya Spinning Mills also have outstanding loans worth Tk 276.68 crore with Southeast Bank, Standard Bank, Pubali Bank, National Bank, Bank Asia, Social Islami Bank and Al-Arafah Islami Bank.
Keya Knit Composite Limited, Keya Cotton Mills Limited and Keya Spinning Mills Limited have around Tk 1,016 crore loans in different banks, BSEC sources said.
Sonali Bank head office deputy general manager Oashi-Ur-Rahman’s letter stating that as Keya Cosmetics Limited is affiliated with the Keya Spinning Mills Ltd, it is not possible for the bank to issue no-objection letter to the latter because of its loans due with the bank.
The Keya Spinning Mills without paying any installment for re-scheduling the loans, however, filed a writ petition with the court for not treating the company’s loans as classified in Bangladesh Bank’s Credit Information Bureau statement.
As Keya Spinning Mills did not rescheduled its loans and submitted its amalgamation related documents with the bank, its not possible for the bank to place the issue of NOC of the company before the board, Sonali Bank said.
As per the valuation disclosed by the company, Keya Cosmetics Limited’s share is valued at Tk 26, Keya Knit Composite Ltd Tk 19, Keya Cotton Mills Ltd Tk 37 and Keya Spinning Mills Ltd valued at Tk 41 against their face value of Tk 10 each.
Exchange rate of shares has been set as 1.36842 ordinary share of Keya Knit Composite Limited, 0.70270 ordinary share of Keya Cotton Mills and 0.63414 ordinary shares of Keya Spinning Mills for one ordinary share of Keya Cosmetics.
In 2011, Keya Detergent merged with Keya Cosmetics by showing earning per share of Tk 4.39 of the Keya Detergent. But, EPS of Keya Cosmetics fell to 1.55 just after the next year when the company issued rights shares.

-With New Age input

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