Investors in the Beximco Green Sukuk al-Istisna are increasingly worried about recovering their principal amount after the conglomerate ran into a series of troubles following the political changeover in August last year.

With the latest layoffs across 15 apparel units of Beximco — one of the three assets where the sukuk proceeds were invested — investor concerns have intensified.

The other two assets are Korotoa Solar and Teesta Solar.

Of these, Teesta Solar is supplying electricity to the Bangladesh Power Development Board (BPDB), and the payments made by the board are now being used for investor interest payments.

With the latest layoffs across 15 apparel units of Beximco — one of the three assets where the sukuk proceeds were invested — investor concerns have intensified

Korotoa Solar is under construction and will take another 10 months to complete.

The Investment Corporation of Bangladesh (ICB) is the trustee of the country's largest private sukuk.

ICB Chairman Prof Abu Ahmed said he is well aware of investor concerns. He added that income streams to investors would continue and that general investors would not be affected.

However, the assurance seemed to have fallen short of restoring investor confidence, as Beximco Green Sukuk al-Istisna closed at Tk 46 per unit on the bourses yesterday — a 54 percent discount on the face value of Tk 100 each.

In 2021, Beximco Ltd issued asset-backed sukuk bonds worth Tk 3,000 crore to finance the solar power plants as well as the expansion of its textile division.

The ousting of Sheikh Hasina in a mass uprising in August last year led to the arrest of Salman F Rahman, an influential adviser to the deposed premier and vice-chairman of Beximco Group.

Rahman, accused of murder and corruption charges, is now behind bars. He is also accused of using his political influence for personal business gains.

After the fall of the Awami League, a series of financial irregularities involving Rahman and his business empire came to light.

Recent Bangladesh Bank data showed that Beximco Group owed nearly Tk 50,000 crore in bank loans as of November 2024, with more than half of the amount classified as non-performing.

Facing a persistent shortage of work orders in its export-oriented garment and textile factories in Gazipur, the cash-strapped group began laying off workers across 15 of its apparel units in February this year.

"As the issuer of the sukuk is in such distress that it is laying off workers, investor concerns about whether they will get back their principal amount are understandable," said a top official of a bank, who preferred to remain unnamed.

"If the completion of Korotoa Solar is delayed, it will impact the repayment of the sukuk principal," he commented.

From the sukuk proceeds, Tk 805.90 crore was used for the textile division expansion project.

The remaining funds were allocated to Teesta Solar Limited's 200 MW power plant in Sundarganj, Gaibandha, which began commercial operations on 8 January 2023.

Korotoa Solar Limited, with a capacity of 30 MW in Tetulia, Panchagarh, has yet to start production.

ICB Chairman Prof Ahmed said they are only disbursing funds necessary to maintain operations, while the rest of the revenue from power bills is being directed to the sinking fund to ensure investors receive their returns.

Ahmed also said that ICB is working to ensure the completion of Korotoa Solar.

According to an agreement, the BPDB will purchase electricity from Teesta Solar for 20 years at $0.15 per kilowatt-hour.

Prof Ahmed said that the mob attack on Beximco Textile did not result in the loss of assets acquired with sukuk proceeds. "Investor payments will continue," he said, adding that general investors would not be affected.

The debt-based securities will mature in December next year.

The sukuk allows the annual conversion of 20 percent of investors' holdings into shares of Beximco Ltd.

However, investors have shown little interest in conversion, as they do not see potential in the company's shares.

As a result, the issuer will have to repay the principal amount at maturity.

Several institutional investors have urged ICB to take the matter seriously to prevent the country's largest sukuk from defaulting.