• Thursday, July 31, 2014

Banks make attempt to rescue debt-ridden Mostafa Group

Sajjadur Rahman

More than a dozen of banks yesterday sat with debt-ridden Mostafa Group, which is burdened with around Tk 1,400 crore in default loans, to find a way that would benefit both the lenders and the Chittagong-based conglomerate.
The meeting discussed various issues such as down payments and loan rescheduling, security pooling, interest waiver and working capital financing, bankers said.
Several top bankers said they demanded 5 percent of the loans as down payments from Mostafa Group for rescheduling its loans; otherwise they cannot place the issue in their respective boards.
Mostafa Group asked for extending its loan tenure to 10 years, but the bankers said the tenure cannot be more than eight years. The group also sought a full interest waiver against the loans.
The talks that failed to reach a 'concrete conclusion' were brokered by a former banker at a city hotel.
Managing directors or representatives of Pubali, Agrani, Sonali, Uttara, Dhaka, Premier, Islami, National, Eastern, IFIC, Prime, Shahjalal, Mutual Trust and Alfalah attended the meeting, where Hefazatur Rahman, chairman of Mostafa Group of Industries, was present.
“We have asked Mostafa Group to come up with its proposals to respective banks so that the banks can place the issues in their board meetings,” said the managing director of a bank, to which the company owes more than Tk 100 crore.
The Chittagong-based business group owes the highest amount -- Tk 300 crore -- to National Bank Ltd, while Prime Bank's exposure is Tk 57 crore, Mutual Trust Bank's Tk 37 crore and City Bank's Tk 17 crore.
Bankers said it must be a 'win-win outcome' for both the parties, otherwise the banks will be in trouble and their profits will be affected in meeting the loan-loss provision.
Mostafa Group, a 62-year-old company, came under the spotlight last year after banks found it difficult to recover loans from the conglomerate, which owes the amount to more than a dozen of banks. All these loans have been defaulted.

Some of the banks alleged that Mostafa Group bought huge lands by diverting funds from bank loans.
The late Mostafizur Rahman of Chittagong founded Mostafa Group in 1952. Initially it was engaged in commercial trading and export and import. Later, it started manufacturing steel products, iron and MS rod and got involved in shipbreaking, artificial leather making, and shrimp cultivation, processing and export.
The group also has business in textile and readymade garments, paper, refined palm and soybean oil, coconut oil, iodised salt, tea, rubber plantation, transport, IT and the financial sector.

Published: 12:00 am Wednesday, July 16, 2014

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