Written by The Banking Post
The Bangladesh Securities and Exchange Commission (BSEC) has rejected a proposal by Daffodil Computers to issue 46.7 million shares at Tk 10 each to convert a loan from Creative International — a concern of the Daffodil business group — into equity.
The listed IT company disclosed the decision in a filing to the Dhaka Stock Exchange (DSE) on Monday.
BSEC spokesperson Md Abul Kalam said the proposal would have allowed the common owners of both companies to acquire shares at a fraction of the market price — currently above Tk 50 — significantly undervaluing the equity and diluting general shareholders’ holdings.
“The loan could have been settled by issuing only one-fifth of the proposed shares at market rates,” Kalam said. “Had the plan gone through, the owners would have gained five times the loan amount while ordinary investors bore the dilution risk.”
Daffodil Computers had announced the plan in December last year, citing board approval for the share issuance. Company secretary Md Monir Hossain said that while both companies operate under the Daffodil Family umbrella, Creative International is a separate legal entity, albeit with a common director.
Market analysts and investor groups had earlier warned that the transaction would disproportionately benefit related parties at the expense of minority shareholders.
