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 OFFLINE | The Daily Star
Singer share sale deal falls apart
Thursday, March 17, 2011
Sajjadur Rahman
Turbulent stockmarket conditions have forced Singer's owners to terminate a proposed share sale deal with a consortium led by Beximco Group Vice Chairman Salman F Rahman .
Retail Holdings that owns majority shares in Singer Asia, including Bangladesh, India and Sri Lanka, announced the termination yesterday.
“Retail Holdings announced that because of the turbulent equity market conditions in Bangladesh, the company has terminated the agreement to place with Bangladesh investors a majority stake in the company's Bangladesh subsidiary,” the company said in a statement.
Bangladesh's stockmarket has been fluctuating dramatically since early December last year. The benchmark index rose to nearly 9,000 points and came down to almost 5,000 in two months.
But Rahman of Beximco cited a different reason for the cancellation of the deal.
“There was a cut-off time for transferring the shares of the company to us. The sellers did not get approval of the Bangladesh Bank to repatriate their sales money within the timeframe,” Rahman told The Daily Star yesterday.
As per the share purchase agreement dated November 4, 2010, the cut-off time for transferring the Singer Bangladesh's shares to new the buyers was on March 7. According to the deal, Singer Bangladesh was supposed to sell 1,234,124 shares (55 percent stakes) out of its total holding of 1,682,731 shares.
Of the remaining 45 percent stakes, 20 percent is blocked shares and general shareholders own 25 percent.
Singer Bangladesh has been earning hefty profits for years. The company has recommended 600 percent cash and 75 percent stock dividends for the year that ended on December 31, 2010. It is the highest dividend announced for 2010 by a company listed in the country's capital market, which has over 250 listed companies.
Commenting on the developments, Stephen H Goodman, Retail Holdings' chairman, president and CEO, noted: “The Bangladesh business, as well as the company's other operations, especially Sri Lanka, is performing extremely well. The company and many of the operations realised record profits in 2010.”
Goodman said the market values of the other -- individual Singer Asia companies -- continue to grow. While no discussions to sell any of the company's assets are pending, the strategy remains, to monetise Retail Holdings' investments and to distribute the proceeds to the shareholders.
“I believe that the potential realisation from this exercise continues to increase,” he added.
The price offered for a Singer Bangladesh share was in between $18 and $25.
“Pricing was not a problem,” said Rahman, refuting the speculations that there was a disagreement between the seller and the buyer on the price of a share. “We agreed on the price.”
Singer Bangladesh is the largest retailer in Bangladesh of durables for the home and has significant market shares across several product categories including a 24 percent share in refrigerators, a 21 percent in televisions and a 10 percent in washing machines as well as a 25 percent in consumer sewing machines. Sales of sewing products represent approximately 2 percent of Singer Bangladesh's total sales.
It also sells other companies' goods at its Singer Plus outlets. The company operates 231 Singer Plus retail stores and 43 smaller satellite shops. It has 826 employees in Bangladesh.
Singer Bangladesh owns a 35.6 percent interest in a publicly listed, non-bank financial company, International Leasing and Financial Services Ltd.
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Originally Posted by Reefat Zaman Shourov: