The stock market regulator has finally allowed Premier Cement Mills to raise Tk 1.61 billion by issuing preference shares to high-net-worth individuals, including commercial banks.
As per the regulatory approval, the cement manufacturer will issue 322 preference shares, fully redeemable and non-convertible in nature, with a five-year tenure.
Raising money through preference shares is a more-than-a-year-old plan of the company's board to bring down borrowing costs through the prepayment of expensive short-term debts.
Premier Cement's short-term debts stood at Tk 16.94 billion, taken from private commercial banks, according to data available until December last year.
The recent spike in interest rates has increased repayment pressure. The company's finance expenses shot up to Tk 1.23 billion in the first half of FY26 through December last year from Tk 981 million in the same period a year earlier.
The Bangladesh Securities and Exchange Commission (BSEC) rejected the company's application in June last year, citing a lack of necessary provisions in its memorandum of association to issue preference shares.
As per the rules, if a company wants to issue preference shares, it must define the authorised capital, including the preference shares' fixed dividend rate, redemption terms, and preference rights over equity.
The company submitted a fresh application to the regulator in October last year, complying with regulatory rules.
BSEC spokesperson Md Abul Kalam said the regulatory approval was given since the company abided by the rules in its second attempt.
The terms and conditions attached to the issuance of the preference shares will remain unchanged.
Premier Cement had previously decided to offer 322 preference shares at a face value or issue price of Tk 5 million each for a tenure of five years and proposed that the dividend would be paid semi-annually, payable in arrears.
A portion of the company's high-cost loans will be paid back with the funds to be raised, which will reduce the burden of interest payments, thereby increasing the company's financial strength, said company secretary Kazi Md Shafiqur Rahman.
Premier Cement will issue the shares to eligible investors - commercial banks (excluding 100 per cent Shariah-based banks), non-bank financial institutions, and high-net-worth individuals, including sponsor-directors of companies, trusts, brokerage firms, and asset management firms.
Investors and issuers may review the rate of dividends at the end of the 12th, 30th and 42nd months, considering market conditions at the time. The rate may be decided based on the average interest rate on deposits for a period of more than six months but less than one year in scheduled commercial banks. It will not go above or below 1.50 per cent of the reference rate.
The company secretary said the main purpose of issuing the shares would be to restructure the balance sheet.
A preference share, also known as preferred stock, is an exclusive share option that enables shareholders to receive dividends announced by the company before equity shareholders.
Preferred shares typically pay steady dividends, while common stock only pays dividends if they are approved by the board of directors based on the firm's financial performance.
Meanwhile, Premier Cement's profit plunged 81 per cent year-on-year to Tk 136.5 million in FY25 due to lower sales and a significant jump in finance costs.
The cement maker's sales dropped 16 per cent year-on-year to Tk 23.8 billion in FY25.
Despite the decline in profit, Premier Cement paid a 10 per cent cash dividend for FY25, compared with 21.5 per cent paid for FY24.
Its half-yearly profit also dropped 48 per cent year-on-year to Tk 20 million through December last year.
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