An internet file photo shows an aircraft of out-of-operation United Airways (BD) Limited standing on the tarmac at an airport. Out-of-operation United Airways (Bangladesh) Limited has approached scam-hit Agrani Bank for a loan worth around Tk 300 crore after receiving no response from most of the financial institutions to its Tk 225-crore bond offer.
Out-of-operation United Airways (Bangladesh) Limited has approached scam-hit Agrani Bank for a loan worth around Tk 300 crore after receiving no response from most of the financial institutions to its Tk 225-crore bond offer.
Most of the financial organisations have already rejected proposal of the United Airways to subscribe its bond due to controversies surrounding it and out-of-operation status of the private sector airline for almost two years.
The operation of the loss-making airlines has remained suspended since May 5, 2015 as none of the 11 aircraft of the organisation is fit for flying.
State-owned Investment Corporation of Bangladesh, which was in the process of financing United Airways by subscribing its bond, also declined recently to subscribe the bond.
A senior ICB official last week told New Age that his organisation had already informed United Airways that it would not invest any fund in the bond considering long non-operation and poor financial state of the entity.
As the ICB was in doubt whether the airline would be able to resume flight operation with the funding and whether the investment would be recoverable or not, it did not accept the investment proposal, he said.
After the ICB rejection, United Airways initiated a move to take around Tk 300 crore in loan from Agrani Bank.
Agrani Bank, which has been facing severe criticism following disbursement of Tk 115 crore to Moon Group in 2011, has initiated processing of the loan proposal as the airline is lobbying hard, sources said.
The then managing director of Agrani Bank Syed Abdul Hamid, who was sacked over the Moon Group scam, acting managing director Mizanr Rahman Khan along with two other officials of the bank are facing legal proceedings over the irregularities.
Agrani Bank managing director and chief executive officer Mohammad Shams-Ul Islam told New Age on Monday that United Airways had recently submitted a credit proposal to the bank.
‘Anyone can submit such proposal. Now, we are verifying the proposal whether the bank will accept the proposal or not,’ he said.
Agrani Bank chairman Zaid Bakht, however, told New Age that he was yet to know about the issue as any such proposal was yet to be placed before the bank’s board.
Asked, former interim government adviser AB Mirza Azizul Islam told New Age, ‘Although the board of the bank would take decision regarding the loan proposal, but I do not find any reason for further financing the entity as there is no guarantee that the company would be able to become profitable and pay back the loan.’
Rather, he suggested, steps should be taken against the entity under the bankruptcy act.
Even after nine months of Bangladesh Securities and Exchange Commission’s approval, the aviation entity is yet to receive eight aircraft from a number of airlines of Singapore in exchange for pledged shares worth Tk 400 crore.
Meanwhile, United Airways submitted another application to the capital market regulator to extend the deadline for raising capital as not a single aircraft was received by it within the stipulated timeframe in March.
‘The commission is yet to finalise its decision over expansion of timeframe for raising capital by United Airways,’ BSEC executive director Md Saifur Rahman told New Age on Monday.
United Airways chairman and managing director Tasbirul Ahmed Choudhury blamed delay in getting Civil Aviation Authority of Bangladesh’s approval for not receiving the aircraft and for subsequent delay in raising capital. United Airways owes around Tk 60 crore to the CAAB for long.
The ailing company, which was a Tk 100-crore company before enlistment with the capital market, turned into a Tk 200-crore entity in 2010 by raising Tk 100 crore from the capital market.
United Airways, which has now turned into a Tk 687-crore entity by pooling fund from the capital market investors in different ways including offering rights and bonus shares in last seven years, has become a failed project leaving thousands of investors at stake.
Tasbirul, however, told New Age last week that the organisation scrapped its earlier decision to issue bond with a view to taking loan from banks as the lending rate in banks would be more convenient for United Airways.
‘We will have to pay 12.50 per cent interest against bond while bank loans are available at comparatively lower rates,’ he said.
Tasbirul also said that his company was very much hopeful of getting loan from Agrani Bank.
The prices of shares of United Airways, which had declined to Tk 4.40 each in May last year after its operation suspension, have increased by around Tk 8 this year following the BSEC’s approval to United Airways for raising Tk 625 crore by issuing bond and pledged shares.
According to Dhaka Stock Exchange data, shareholding by two sponsor-directors of United Airways declined to 4.46 per cent in March this year from 7.04 per cent in June last year.
As the shares of the sponsor-directors declined significantly, so did their liability.
The BSEC had earlier rejected United Airways’ move to raise fund by issuing rights shares as the company failed to follow corporate governance guidelines.
Source: New Age
