The board of directors of the company decided on Monday, August 4, that the listed cement producer Confidence Cement PLC would sell a 50 percent stake in its subsidiary Confidence Cement Dhaka Limited for approximately Tk 141 crore in order to meet its immediate financial needs. The entire stake will be sold or transferred to Confidence Power Holdings, another subsidiary of Confidence Group, which is a for-profit company with four power plants in Bogra, Rangpur, and Chittagong with a combined generation capacity of 393.6 MW.
Confidence Cement PLC’s Vice-Chairman, Imran Karim, described the decision as strategic, stating, “The funds generated from the investment in the Dhaka factory will be allocated to settle the current debts of the listed company.” He further mentioned, “We have opted to divest from the Dhaka plant to protect the interests of our small shareholders. While the ownership of the factory will still belong to Confidence Group, it will be separated from the listed company.”
He noted that the overall viability of the business is currently under strain due to the economic climate. Had the Dhaka factory remained part of the listed company, it would have posed challenges in providing sufficient dividends to the small shareholders.
In September of the previous year, Confidence Cement announced its intention to raise Tk 100 crore through the issuance of rights shares. Half of this amount was earmarked for investment in the Dhaka plant, while the other half was designated for debt repayment. However, on June 29, the stock market regulator, BSEC, rejected this proposal. Following the BSEC’s decision, the company chose to divest from the Dhaka plant, although it has requested the commission to reconsider.
A new cement facility, named Confidence Cement Dhaka Limited, is currently under construction in Danga, Palash Upazila of Narsingdi, with an expected annual production capacity of 1.8 million tons. The total estimated cost for the plant is Tk 815 crore, and Prime Bank has arranged a syndicated credit facility of Tk 558 crore for this initiative, serving as the lead manager.
Confidence Cement’s revenue increased slightly to Tk 317.64 crore in the first nine months of the 2024-In the 25 fiscal year (July-March), the total profit experienced a slight decline; however, the net profit rose by 20 percent to Tk 833.6 crore, attributed to a dividend of Tk 941 crore from its subsidiary, Confidence Power Holdings.
As of March, the company reported short-term debt of Tk 566.78 crore and long-term debt of Tk 169.4 crore.
Recently, the company submitted a letter to BSEC requesting a reconsideration of the rights offer. They indicated that despite facing profit pressures from foreign exchange fluctuations and increasing raw material costs, the rights share issuance proposal was a strategic initiative aimed at bolstering the company’s financial foundation. By utilizing the proceeds from the rights shares to repay the debt, the company could save over 7 crore taka in interest expenses annually, thereby enhancing future cash flow.
Additionally, the company noted that for the past decade, it has consistently paid dividends, averaging 23.75 percent. This demonstrates the company’s dedication to the interests of its common shareholders.
