Committee approves $440m foreign loans for multinational, local cos

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Siddique Islam
Local and multinational companies operating in the country will be able to get access to more loans -- amounting to an aggregate sum of US$440 million -- from the overseas sources shortly to help expand their business activities, officials said.
The cases for their obtaining loans were approved at a meeting of the scrutiny committee for approval of foreign loans held in the central bank on Thursday with Bangladesh Bank Governor Atiur Rahman in the chair.
"We expect that all the funds will be received from the overseas sources within the next three months," a senior official of the central bank, who is now working at the foreign loan security desk in the Board of Investment (BoI), told the FE after the meeting.
Of the approved loans, Bangladesh Export Import Company (BEXIMCO) Limited will receive $350 million through issuing convertible bonds against its shares, he said, adding that Barclays Capital Plc will act as the lead manager of the bonds.
"Barclays Capital will arrange the fund from Singapore market," the BB official said that the shares of BEXIMCO Limited will be traded in the Singapore Stock Exchange after the sale of the convertible bonds.
Besides, the committee approved six other cases of external loans -- $15 million for JMS Holdings Limited, $20 million for Color City Limited, $17 million for Nestle Bangladesh Limited, $ 5.3 million for Confidence Salt Limited, $3.6 million for Crown Polymer Bagging Limited and $15 million for Natore Agro Limited.
Furthermore, the committee cleared two proposals relating to deferred payments -- one of $ 9.45 million for Banglalion and $ 4.1million for Energyprima Limited.
"We'll use the fund for expansion of our existing businesses," Managing Director of DBL group MA Jabbar told the FE, adding that the DBL group is planning to borrow more funds from the overseas sources to finance their upcoming project.
Color City Limited, a sister concern of the DBL group, is expected to receive $20 million as an approved loan from DEG, a leading German investment and development company within May this year, Mr. Jabbar added.
The country's cell-phone operators have emerged as the major receivers of overseas loans for purchasing equipment to expand their networks.
Out of the six mobile phone operators, four operators -- Banglalink, Airtel, Robi and Citycell -- received a total fund of US$281 million in the first nine months of the current fiscal year (2011-12) from foreign sources.
The companies in power and energy sector have received the second highest amount of external loans -- around $100 million -- from the same.
"Overseas borrowing of corporate houses has increasingly become popular because of lower rate of interest and easier processing," another BB official said, adding that the average highest interest rate of the loans is six-month LIBOR+4.00 per cent, which is no more than 5.00 per cent.
"We've urged the country's private sector to look for foreign loans, as it is cheaper and easier to get the same now," the official said, adding that it will also help ease pressure on the country's money market.
Currently, the local banks are providing loans to large and medium-scale industrial units at rates of interest ranging between 12.50 per cent and 17.00 per cent, and to small industries, at between 13.00 per cent and 19.50 per cent, according to the central bank statistics.
"Such foreign funding will be helpful to keep the country's foreign exchange market stable. It will also help to improve the balance of payments situation," the central banker said.