Years of non-payment by Sea Pearl Beach Resort & Spa to the state-run Investment Corporation of Bangladesh (ICB) against bonds worth Tk 3.25 billion has led to a legal tussle between the parties.
To help recover the money, the securities regulator accepted a proposal that 20 per cent convertible bonds be converted into shares of Sea Pearl but attached some conditions to it.
In an order, the Bangladesh Securities and Exchange Commission (BSEC) said the company belonging to the travel and leisure sector of the bourses would have to withdraw two court petitions tied to the matter of repayment.
One of the petitions was filed to challenge the ICB's decision to cut interest waiver and the other to confront the central bank's decision to declare Sea Pearl a defaulter.
On the other hand, the ICB will have to hold on to the shares, price set at Tk 94 each, for at least three years, according to the order.
The settlement of bond conversion now depends on whether the parties involved meet the BSEC conditions.
As per the regulatory order, the conversion should be executed within three months from the issuance of the order on February 27. Otherwise, the permission will become null and void.
The ICB seeks no lock-in period against shares worth Tk 1.2 billion.
Its board today [Tuesday] will decide how it will go about settling the matter.
ICB Managing Director Md. Abul Hossain said, "The board can either accept the lock-in [period] or impose some other conditions [to be met by Sea Pearl], agreeing to the lock-in period."
The board may demand that the company buy back shares after three years if the ICB fails to make good profit from the shares.
Md. Azaharul Mamun, company secretary of Sea Pearl Beach Resort & Spa, said they were working to execute the bond conversion plan in compliance with the regulatory order.
Sea Pearl issued debt securities in 2017 with a coupon rate of 10 per cent, all of which were subscribed by the ICB. Twenty per cent of the bonds were convertible.
The company has so far paid back only Tk 730 million, with outstanding dues reaching Tk 3.84 billion.
In 2021, Sea Pearl made a plea to the ICB to waive interest payment in consideration of the sluggish business during the initial months of the Covid pandemic.
The ICB then cut interest payment by Tk 550 million and rescheduled the payments for two years. But the company this time too failed to adhere to the terms of the loan repayment, according to ICB officials.
The ICB board in a meeting in 2022 reduced the waiver to Tk 280 million for Sea Pearl's failure to give installments.
In June 2022, Sea Pearl filed a writ petition with the HC, challenging the ICB board's decision. The court is yet to deliver any order on that.
Meanwhile, the ICB informed the central bank's Credit Information Bureau (CIB) of the company's breach of the debt repayment deal. The CIB label a borrower as defaulter if it has failed to give two installments in a row.
Sea Pearl in October 2023 filed a case with the judge court, challenging the CIB report, at a time when its Managing Director Md. Aminul Haque Shamim was preparing to contest in the 2024 nation election.
Without CIB clearance, no one is allowed to take part in national elections.
In November 2023, the company filed a writ petition with the HC, seeking a stay order on the CIB report, due to a delay in getting an order from the judge court.
The HC stayed the CIB report for three months, subject to payment of Tk 100 million. Later, it extended the stay order for another six months to July this year.
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