GPH Ispat seeks Tk967.77cr rights issue to repay debt

Infographics: TBS

GPH Ispat, one of the leading steel manufacturing companies in Bangladesh, will raise nearly Tk968 crore through issuing rights shares, mainly to repay bank loans amid sluggish demand and persistent energy shortages affecting the steel industry.

The company's board approved the issuance of 967.77 crore rights shares at Tk10 each at a meeting held on Saturday, according to a disclosure to the stock exchanges.

Under the proposed rights offer, existing shareholders will be entitled to receive two rights shares for every ordinary share they hold.

The rights issue is expected to raise Tk967.77 crore, subject to approval from the company's shareholders at its annual general meeting (AGM) and final approval from the Bangladesh Securities and Exchange Commission (BSEC).

GPH Ispat will announce a separate record date to determine shareholders' entitlement to the rights shares after receiving the necessary regulatory approvals.

GPH Ispat's decision comes as its debt burden remains substantial. As of 31 March 2026, the company had long-term loans of Tk3,439 crore and short-term borrowings of Tk3,145 crore, taking its total borrowings to around Tk6,584 crore.

A senior company official, speaking on condition of anonymity, said the steel market has been facing weak demand while persistent energy shortages, particularly the gas crisis, have severely affected production.

"Business is going through a difficult period because demand has slowed, while the gas shortage has also hampered production. But loan instalments have to be paid on time despite the weak business environment," he said.

The company is also negotiating with banks to reschedule its loans, while its management is in discussions with Bangladesh Bank over the matter, he added.

GPH Ispat accumulated the high debt largely after making heavy investments to expand production capacity through new plants. However, delays in infrastructure development and a subsequent slowdown in demand have left the company facing pressure to service the borrowings, according to the official.

The latest rights issue is not the company's first attempt to raise fresh capital. In August 2024, GPH Ispat announced a plan to raise Tk242 crore through a rights offer, proposing one rights share for every three existing shares at Tk15, including a Tk5 premium. The proceeds were intended to finance a new expansion plant expected to generate Tk450 crore in annual revenue.

The BSEC, however, cancelled that rights-share application in May 2025, saying the documents submitted by the company were not satisfactory.

A month later, in June 2025, the securities regulator also rejected GPH Ispat's proposal to raise Tk500 crore through preference shares to repay loans.

The latest proposal therefore marks a significant shift in the company's capital-raising strategy, with debt repayment now taking priority over production expansion.

Meanwhile, GPH Ispat has recommended a 2% cash dividend for the financial year ended 30 June 2026, exclusively for general shareholders. Sponsors and directors holding 14.62 crore shares will not receive the dividend. The proposed payout to eligible general shareholders amounts to Tk6.75 crore.

The company's AGM is scheduled for 25 October, where shareholders will vote on both the dividend recommendation and the rights issue. The record date for participation in the AGM and entitlement to the proposed dividend is 1 October.

GPH Ispat returned to profitability in FY26, though earnings remained thin. The company posted a net profit of Tk3.38 crore, translating into earnings per share (EPS) of Tk0.07, compared with a loss per share of Tk0.51 in FY25.

Its net asset value stood at Tk51.81 per share, while net operating cash flow per share was Tk15.73.

Despite the return to profit, investors remained cautious. GPH Ispat shares fell 3.09% to Tk15.70 on the Dhaka Stock Exchange today (13 September). The company's market capitalisation stood at around Tk759 crore against paid-up capital of Tk483.88 crore.