The central bank has classified Appollo Ispat Complex Limited as a loan defaulter due to its failure in repayment of money borrowed from five commercial banks, including a foreign bank operating in Bangladesh.
The company had intended to offer primary shares to mobilise fund from the market and repay a loan of Tk1.5bn to the banks, but Bangladesh Securities and Exchange Commission ordered suspension of subscription to its initial public offering.
In their latest regulatory report on January-March quarter of this year to Bangladesh Bank, five banks reported that the company’s bad and doubtful loans stood at around Tk240m against a loan of about Tk673m.
The banks which provided loan to the company are: Brac Bank, Eastern Bank, Standard Chartered Bank, Mutual Trust Bank and Social Islami Bank, says a document obtained by the Dhaka Tribune. Appollo Ispat Chairman Deen Mohammad, Director Abdur Rahman and Md Shoeb, all of them having relations with Phonix Finance and Investment Limited, took the loans for the company.
In accordance with the quarterly report, Deen Mohammad and Abdur Rahman jointly took loan of Tk60m from Brack Bank in December, 2011. Of the amount, about Tk13m has been classified as doubtful as on March 31, 2013.
From Eastern Bank, Deen Mohammad and Md Shoeb jointly took a loan of over Tk295m in March, 2012 and about Tk7m became classified as bad loan as on March 31, 2013. From Standard Chartered Bank, they took a loan of Tk80m in August, 2002 and Tk10m turned classified as bad loan as on December 31, 2012.
Deen Mohammad also took a loan of Tk200m from Mutual Trust Bank and about Tk38m from Social Islami Bank and against the amounts Tk179m and Tk29m classified as doubtful respectively.
Earlier in February, Finance Minister AMA Muhith had directed the Bangladesh Securities and Exchange Commission (BSEC) to suspend subscription to the IPO (initial public offering) of the company amid alleged irregularities. BSEC suspended the subscription on February 12 and decided to go for further investigation.
Muhith advised the BSEC to probe what interest the Appollo’s former company directors have in Phoenix Finance to realise taxes from them. The minister also ordered to get the company audited and to probe its letters of credit to find out suspected fund embezzlements.
The company has outstanding loans of about Tk3.5bn from banks and financial institutions as on June 30, 2012, according to its prospectus. The company had an intension to pay off loans of Tk1.5bn from the IPO proceeds, the document said. Appollo Ispat Complex Limited was incorporated on December 31, 1994 as a private limited company under the Companies Act 1994. It has been converted into a public limited company on March 30, 2010.