An extreme liquidity crisis has brought Beximco Ltd, the largest company of Beximco Group, on the verge of collapse.
So says Salman F Rahman, vice chairman of the group, in a letter to the central bank governor early this month.
“Beximco Ltd is facing an extreme liquidity crisis and is on the verge of closing down,” Salman said in the letter.
He blamed the situation on two factors -- politically motivated credit restrictions on the group between 2001 and 2008 and repayment of Tk 800 crore in bank loans in the last three years.
The group is beset by huge loans worth Tk 5,245 crore to seven banks and requires urgent restructure of its debt to survive, the letter said.
Beximco Ltd owes Tk 4,315 crore to four state-owned banks -- Sonali, Janata, Agrani and Rupali -- and the rest Tk 930 crore to three private banks -- AB, Exim and National.
The group also came up with a restructuring plan of all its debt. It wants to reschedule the loans up to 2026 with a moratorium period for 2.5 years. The group wants to pay only 10 percent interest against these loans, much lower than the market rates of 13-14 percent.
Beximco Ltd (Bangladesh Export Import Company Limited) operates in multiple industrial areas, including textiles, real estate, hospitality, marine food, commodities trading, ICT, ceramics and aviation. The company's largest division is Beximco Textiles, which was amalgamated with Beximco Ltd in 2011. The company's paid-up capital is Tk 601 crore and the public own more than 65 percent stakes in the company.
In the letter, Salman claimed Beximco's textile division is a pioneer in the country's backward linkage industry, which has paved the way for increased exports of value-added garments.
Over the last 10 years, Beximco Group exported goods worth $1.5 billion (Tk 11,625 crore on yesterday's exchange rate).
"Because of politically motivated credit restrictions on the group from 2001 to 2008 as well as other forms of harassment in the past, the group has been facing insufficiency of working capital for some time," Salman told The Daily Star.
Despite the challenges, different companies of the group rescheduled their loans since 2009 till date to avoid becoming defaulters though the cash flow and ability to pay did not match, he said.
“Unfortunately, this resulted in long-term structural mismatch between cash generation and repayment schedule as well as mismatch between tenure of the loan and the underlying income generating capacity of assets to repay those,” the letter said.
“We would be extremely grateful if you kindly advise the banks concerned to help us by restructuring in a manner that will meet our cash flows,” Salman urged the governor.
“We may mention that we are not requesting any additional credit lines, but amendment in terms only,” he said.
A top BB official admitted yesterday that the central bank has written to the managing directors of the seven banks seeking their opinion about the Beximco's proposal.
“This is not a blanket [proposal]…we have sought the banks' opinion. Let them do it,” the official said, asking not to be named.
But the official said the BB would not allow any breach of its rules and regulations to meet Beximco's demand.
Salman said he wanted to restructure the debt at the group level. He also said he came up with the loan restructuring plan based on the assessment of a private audit firm.
Four companies of Beximco Group -- Beximco Ltd, Beximco Pharmaceuticals, Shinepukur Ceramics and Beximco Synthetics -- are listed on the stockmarket.
Share prices of Beximco Group's companies have been rising for the past two weeks.
Beximco Ltd's share price jumped to Tk 44 on August 24 from Tk 34 on August 13 on the Dhaka Stock Exchange, while Beximco Pharma's price rose to nearly Tk 58 yesterday from Tk 43 on August 18.