FE REPORT
The share price of Bangladesh Submarine Cable Company jumped 8.82 per cent on Wednesday after the news that the company is going to issue over 14.86 million shares to the government against share money deposit.
Share money deposit is the money paid in exchange for shares that have not been acquired yet.
"The board has taken the decision to issue 14,869,037 shares in favour of the government subject to approval of relevant ministry, securities regulator and other authority," the company said in a filing with the Dhaka Stock Exchange (DSE) on Wednesday.
After the news, the state-run company's share price rose 8.82 per cent or Tk 16.80 each to close at Tk 207.30 on Wednesday.
The state-run telecommunication company had received a total Tk 1.66 billion from the government as share money deposit for implementing the "Regional Submarine Telecommunication Project, Bangladesh".
The BSCCL received Tk 1.40 billion from the government as share money deposit in the FY 2015-16. Therefore, the company has decided to issue over 12.70 million shares against the deposit money at the closing price of the company in the FY 2015-16 of Tk 110.20 each.
And the company received Tk 260 million in the FY 2016-17 from the government as share money deposit. So, the company decided to issue over 2.16 million shares against the deposit money at the closing price of the company in the FY 2016-17 of Tk 120.10 each.
The share issue plan will be implemented after approval from the Bangladesh Securities and Exchange Commission, relevant ministry, and other authority, according to the filing.
Last year, the BSCCL appointed ICB Capital Management Ltd as issue manager to determine the share price.
The company has decided to issue shares at this rate so that the general shareholders are not harmed, said a high official of the company, asking not to be named.
In February last year, the Financial Reporting Council (FRC) issued a directive saying, share money deposits must be converted into the company's capital within six months of receiving the money.
The board of BSCCL made the decision to issue shares against the government's share money deposit considering recommendations of ICB Capital Management, interest of the government, company act, FRC rules on share money deposit, securities rules, and interest of shareholders, according to a company statement.
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