The board of directors of the Dhaka Stock Exchange on Sunday rejected the listing application of Mobil Jamuna Lubricants Ltd.
The board, headed by DSE president Shakil Rizvi, rejected the company's latest proposal that it would issue 30 per cent bonus share to all shareholders before listing.
A source in the meeting told New Age that even if the company issued 30 per cent bonus share, price earning ratio of a share would remain over 60, meaning the price was still too high.
He said that with the rejection of the DSE, the company might have to refund the initial public offering subscription fees to the shareholders as the deadline to settle the listing issue is April 14.
The company's IPO process and listing issue fell into controversy after the January's stock market debacle as stock market experts and general investors criticised the company for its over-priced shares, which was set by the controversial book-building method.
The MJL on January 2 went for initial public offering with a share price of Tk 152.40 under the book-building method with a condition set by SEC that the company would buy back its shares if the price of share comes down below the issue price.
After the government suspended book-building method on January 20, The SEC on March 22 asked DSE to list the company with a condition that it would compensate the shareholders from its premium account if the share price comes below the issue price in six months. There was legal complication to go for buy-back as the existing rules do not support such move.
The DSE board, however, on March 24 rejected the listing application of MJL Bangladesh under the SEC condition saying that the relevant rules do not support such compensation.
The SEC extended the MJL listing time by 15 days as per the company application as the original deadline was supposed to expire on March 31.
After holding some informal discussions with some DSE directors, the company informed DSE that it would issue 30 per cent bonus shares for shareholders to bring down the share price to around Tk 116.
'The board finally decided to reject the listing of the MJL today [Sunday] as the issue became very complicated,' said a director of the bourse.
The director also said that in the probe committee report there was heavy criticism of the book building method and recommendation to reform it. 'As the method is currently suspended so it would be wise not to enlist the company at this moment,' he said.
Source: New Age
