Stock investors stare at losses as firms fold | The Daily Star
12:00 AM, March 18, 2019 / LAST MODIFIED: 12:06 AM, March 18, 2019

Stock investors stare at losses as firms fold

Investors of C&A Textiles and Tung Hai Knitting stocks stand to lose as much as Tk 260.10 crore after the two companies shuttered their factories and remain nonoperational.

The managing director of Tung Hai Knitting died in a factory fire, after which the board of directors fell into dispute, according to Mahbub H Mazumdar, managing director of AFC Capital, one of the issue managers of the two companies.

The chairman and managing director of C&A Textiles were a husband-wife duo who divorced, leaving the company in a state of disarray, he added.

“It is very tough for companies to become functional again after such chaos, so the investors' money is on the line,” said a top official of a merchant bank requesting anonymity due to the sensitive nature of the matter.

The Dhaka Stock Exchange is aware of the two companies' situation.

Mazumdar declined to accept any responsibility over the state of affairs of the two companies. “Our job as issue manager was legally complete the moment the listing process ended.”

It is up to the Bangladesh Securities and Exchange Commission or the investors now to take initiatives to recover the money.

“Investors can go to the court demanding liquidation as the companies have huge amounts of lands -- they would benefit from it,” he added.

General investors hold 62.19 percent of C&A Textiles stocks and institutional investors 15.67 percent.

C&A Textiles shares, whose face value is Tk 10, traded at Tk 3.4 on Thursday, meaning the general and institutional investors stand to lose Tk 185.5 crore.

In Tung Hai Knitting, general investors hold 64.34 percent of the shares and institutional investors 5.62 percent. The company's stocks traded at Tk 3.9 on Thursday, meaning Tk 74.60 crore stand to be written off of the investors.

“A decision will be taken -- whatever it is -- at the next board meeting and we will send it to the BSEC,” said KAM Majedur Rahman, managing director of the DSE. The regulator has many tools in hand to handle non-functional companies.

“All we can do is delist the companies or suspend the trading of the companies' shares,” Rahman said, adding that the BSEC should take the final call on the two companies' future. Delisting though is not a solution when a company becomes non-functional, according to Kamal Hossain, a stock investor of LankaBangla Securities.

The BSEC can come up with management change.

“It would be helpful for general investors. Otherwise, they will lose money,” he added.

BSEC's Spokesperson Saifur Rahman said the regulator will take a decision after hearing out the DSE's recommendation.

Asked whether BSEC would go for management change, he said: “We have to think long and hard before taking such a step. But, investors always have the option to force liquidation of the companies.”

Stay updated on the go with The Daily Star Android & iOS News App. Click here to download it for your device.

Type START <space> BR and send SMS it to 22222

Type START <space> BR and send SMS it to 2222

Type START <space> BR and send SMS it to 2225

Leave your comments

Top News

Top News