Summit Industrial and Mercantile Corporation has claimed that the diversion of initial public offering proceeds of Summit Purbanchol Power Company Limited to buy stakes of another company of the SIMC would benefit general investors.
In a statement following a report headlined ‘Summit Unit move to divert IPO fund draws controversy’ published in New Age on April 24, the SIMC also claimed that the SPPCL board decision to buy share of Summit Narayanganj Power Limited, without redemption of preference shares would bring Tk 53 crore in additional profits for general investors during the tenure of the SNP contract with Bangladesh Power Development up to 2016.
It also claimed that the decision would create an opportunity of Tk 24 crore more profit a year if the contract is extended. If the agreement is not extended, it would not diminish the profitability in anyway.
The SIMC expects that the general shareholders will approve the board decision at the annual general meeting on April 28.
Capital market experts and stakeholders earlier told New Age that the decision of the SPPCL to divert IPO proceeds to buy share of a company of the same group was ‘unfair.’
‘This is an unfair and unlawful practice as the SPPCL has changed its IPO fund purpose after raising it from public,’ Mahmood Osman Imam, who teaches finance in Dhaka University, told New Age.
-With New Age input
