Beximco Ltd, a subsidiary of local business conglomerate Beximco Group, has decided to acquire half of the stake in the country's oldest private carrier GMG Airlines, which is now facing financial difficulties.
The board of directors of Beximco Ltd (Bangladesh Export Import Company) decided yesterday to purchase 50 percent shares in GMG Airlines for Tk 70 crore.
Of the total investment, Tk 30 crore will be in equities and the remaining in loan refinancing. The acquisition will be through a new issuance of shares by GMG Airlines to Beximco. The existing paid-up capital of GMG Airlines is Tk 30 crore.
“We have approved the plan at a board meeting,” Salman F Rahman, deputy-chairman of Beximco Group, told The Daily Star.
Rahman said Beximco is acquiring a stake in the airline, as it wants to diversify business and also because the carrier is in financial difficulty.
“GMG Airlines will be able to strengthen its balance sheet with the acquisition and perform better in the coming days,” Rahman hoped.
The final agreement between the two sides will be completed "very soon", he said. “After the acquisition, the airline will have a combined team, with an equal number of managerial positions from both sides."
Beximco, responding to a Dhaka Stock Exchange (DSE) query, told premier bourse officials yesterday: “We are considering various investment opportunities, including GMG Airlines Limited, as part of our investment strategy. Once the investment is finalised, it will be made known to all concerned.”
Rahman said the board of directors of GMG Airlines had also approved the issuance of new shares.
Abdus Sattar, chairman of GMG Airlines, said: “We are in discussions with them (Beximco). This step will meet the strategic demands of both the companies. If and when the move is finalised, a joint announcement will be made.”
According to the Beximco Group website, it is one of the largest private sector industrial conglomerates in Bangladesh, engaged in diverse business areas. The group comprises six publicly listed companies and sixteen private companies. The group turnover in 2007 was Tk 16.5 billion. Beximco employs 35,000 people and has 1,70,000 shareholders. Beximco's shares constitute 5.93 percent of the market capitalisation of DSE.
GMG started its operations in April 1998. According to the private carrier's website, it now operates from Dhaka to Barisal, Chittagong, Cox's Bazar, Jessore and Sylhet, on domestic routes and to Kolkata on international routes.
However, according to media reports last year, GMG restarted operations on two other international routes to Kuala Lumpur and Kathmandu.