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Bondholders of the Beximco Green Sukuk may have to wait up to six more years for repayment of their principal, as a working committee has recommended extending the maturity to 2032 amid growing uncertainty over the issuer’s ability to settle obligations.

The 21-member committee, formed by the trustee—the Investment Corporation of Bangladesh (ICB)—submitted its findings to the central bank last month. The recommendations were based on meetings with bondholders, mostly banks, and inspections of the solar projects financed by the sukuk.

Beximco raised Tk 30 billion in 2021 through the Shariah-compliant bond to build the 200 MW Teesta Solar Plant, the 30 MW Korotoa Solar Plant, and partially expand its textile division.

The committee proposed two timelines: extending maturity until December 2031 if the Korotoa plant becomes operational soon, or pushing it to the end of 2032 if delays persist. “We held meetings with experts and bondholders. We made separate proposals considering the overall situation,” said Md Nurul Huda, chief of the committee and deputy managing director of ICB. The final decision now rests with Bangladesh Bank.

Base Rate Dispute

During consultations, many bondholders demanded that the sukuk’s base rate be raised from 9 per cent to as high as 11 per cent. The sukuk currently offers a 9 per cent base rate plus an additional profit margin tied to Beximco’s cash dividends. If dividends exceed 9 per cent in any year, holders receive one-tenth of the excess.

But Beximco’s finances weakened sharply after the political shift last August. The company posted a Tk 358 million loss in FY24, compared with a Tk 7.1 billion profit a year earlier, making dividend declarations impossible.

Experts advised that the base rate should not exceed the deposit rates of Islamic banks—currently around 9 per cent. They warned that raising the rate could increase financial stress, as settlement of the sukuk at its original December 2026 maturity is already in doubt. These observations were included in the report submitted to the central bank.

Repayment Challenges

Beximco needs Tk 1.26 billion every six months to meet sukuk repayment obligations. While the Teesta Solar Plant has been fully operational since January 2023, the Korotoa plant is still not generating power.

The company currently pays its dues using about Tk 500 million in monthly revenue from the Bangladesh Power Development Board (BPDB) under a 20-year power purchase agreement that runs until 2041. The trustee said it receives roughly Tk 3 billion every six months, keeping a portion aside for principal repayment.

ICB also noted that Beximco is seeking new investors to complete the Korotoa project. The cost overrun stemmed largely from exchange rate shocks, as project estimates were prepared in 2019 when the dollar traded at Tk 86.

Weak Interest in Share Conversion

Investors have shown limited interest in converting sukuk units into Beximco shares, despite the option to convert up to 20 per cent of their holdings annually. Only Tk 1.91 billion worth of sukuk units were converted before the company’s financial strain became visible.

With Beximco now struggling with large unpaid bank loans, the central bank in July asked ICB to submit a revised settlement plan for the Beximco Green Sukuk—leading to the current proposal for extending the maturity.