Subscription starts today (Nov 26)
Argon Denims will use the raised funds from public for improving its financial indicators, including profit.
The export-oriented company will get relief from interest burden by using the proceeds of initial public offering (IPO), through which the firm will raise Tk 105 crore.
Argon Denims will also repay Tk 84.80 crore that it took from One Bank as ‘bridge financing’ to set up a new unit to double its production capacity, a top official said.
The company mainly produces medium and premium range denim fabrics, and after the project expansion its current production capacity is 1.70 crore yards of denim fabrics per year
Although the IPO was for setting up the new unit, the company was determined to complete the new project within September this year, said Anwar-ul Alam Chowdhury, managing director of Argon Denims.
The company went for the bridge financing, as the project could have been delayed had they waited for the IPO fund, he said.
“We have completed the expansion with the bridge financing and went for commercial production in September,” he said.
Argon Denims submitted its IPO proposal to the Securities and Exchange Commission in March and the regulator approved it in May with an offer price of Tk 44 per share.
Later in October, the SEC approved the IPO with an offer price of Tk 35 per share, after the company submitted a revised IPO plan in June.
Now the company will issue three crore ordinary shares of Tk 10 each at an offer price of Tk 35, including Tk 25 as premium.
Using a portion of the IPO proceedings, the company will also repay Tk 16.40 crore that it took from One Bank and Mercantile Bank as short-term loan.
“As we are going to be listed soon, the additional production from the new project will ultimately benefit the investors,” he said.
The IPO subscription of Argon Denims will start tomorrow and close on December 2.
After the completion of the IPO, the company’s paid-up capital will rise to Tk 60 crore, from Tk 30 crore now.
As per the latest financial statements of Argon Denims, its earnings-per share was Tk 5.46 and net asset value per share was Tk 20.71.
Source: The Daily Star, November 25, 2012