BSEC free to pursue enforcement action in Best Holdings bond conversion case

The Appellate Division's Chamber Court has vacated a High Court status quo order, clearing the path for the Bangladesh Securities and Exchange Commission (BSEC) to proceed with enforcement actions against Best Holdings PLC regarding alleged misconduct in its bond-to-equity conversion.

The order was passed today (17 June) by Justice Farah Mahbub's Chamber Court following an application by the BSEC.

According to lawyers of BSEC involved in the matter, the regulator can now take action on its inquiry report concerning the company's conversion of corporate bonds into equity shares, which were allotted to major state-owned banks and private mutual funds.

The investigation centres on the "BHL 25% Convertible Secured Bond," a Tk1,200 crore instrument issued by Best Holdings in 2019. The bond was intended to refinance high-cost syndicated loans taken for its flagship luxury hotel, Le Méridien Dhaka.

Allegations of misconduct surfaced after the company issued 7.69 crore shares each to Sonali Bank, Agrani Bank, and Janata Bank, alongside 4.61 crore shares to Rupali Bank. Furthermore, 3.67 crore shares were allotted to ten mutual funds managed by RACE Asset Management. These shares were issued at a significant premium over the Tk10 face value just before the company's Initial Public Offering (IPO).

Previously, Sentinel Trustee and Custodial Services Limited, the BSEC-approved trustee involved in the conversion process, filed a writ petition before the High Court and secured a stay order on the BSEC's enforcement work. However, the BSEC moved the Chamber Court to lift this restriction.

In May, the BSEC has launched a special audit into Best Holdings to examine how it utilised funds raised through various public and private channels.

The move aims to ensure compliance with securities regulations governing the deployment of capital raised via the company's Initial Public Offering (IPO), corporate bonds and private placements