The securities regulator has approved Power Grid Company’s proposal to issue another 1.32 billion irredeemable and non-cumulative preference shares in favour of the power division secretary against share money deposits.
The state-run electricity transmission and distribution service provider will issue the shares at Tk 10 each, totalling Tk 13.24 billion, against share money deposits as of June 2024.
The company has received funds from the government on several occasions since its inception in 2000 to implement various projects.
Earlier, in April 2024, Power Grid issued 7.64 billion irredeemable and non-cumulative preference shares worth Tk 76.4 billion.
Preference shares are a class of stock whose dividends are paid to shareholders before dividends are issued to common stockholders.
The preference shares will be non-cumulative in nature, meaning the government will not be entitled to any missed dividends.
The preference shares will not be included in the company’s ordinary shares; therefore, its paid-up capital will not increase after the issuance. The new shares, however, will affect the company’s ability to pay dividends to general shareholders.
Although the preference shares will not enhance the equity size, the huge number of shares will increase fixed payment liabilities for the company in the future.
Share money deposit is the money paid in exchange for shares that have not yet been allotted.
Meanwhile, the company has further received Tk 33 billion from the government as share money deposits.
In a 2020 gazette, the Financial Reporting Council (FRC) directed state-run entities to convert share money deposits into paid-up capital amid concerns over such funds piling up.
In the order, the FRC said such funds should be incorporated into the share capital within six months after the money is deposited into a company’s bank account to prevent fund anomalies.
The directive was issued because the government had been, and still is, deprived of dividends in return for its equity investment.
Meanwhile, Power Grid suffered a loss of Tk 2.10 billion in FY25, and cumulative losses stood at around Tk 13 billion over the past three years to June 2025 due to exchange losses stemming from the repayment burden of foreign loans.
https://today.thefinancialexpress.com.bd/stock-corporate/power-grid-to-issue-132-billion-more-preference-shares-against-govt-funds-1771348399