Malek Spinning to issue bonds of Tk 290cr

Malek Spinning Mills, one of the largest listed companies of its kind in Bangladesh, has decided to issue a zero-coupon bond worth Tk 290 crore to finance its expansion, particularly for buying land.

A zero-coupon bond is a debt instrument that does not pay interest but instead trades at a deep discount, rendering profit at maturity, when the bond is redeemed for its full face value.

Malek Spinning also decided to settle an insurance claim of Salek Textile, a subsidiary of the company, by paying Tk 21.12 crore as the final settlement against a claim of Tk 30.47 crore for losses caused by fire at the fabric making facility.

The amount will be utilised against repayments of a term loan of the company, said Malek Spinning in a disclosure on the Dhaka Stock Exchange (DSE) website.

In a different disclosure, Malek Spinning said it decided to purchase 55 bighas, or 1,815 decimals, of land at a cost of approximately Tk 55 crore for a new plant in Bhaluka, Mymensingh.

However, the bond is subject to approval of the Bangladesh Securities and Exchange Commission.

It also approved the proposal of JM Fabrics Ltd, another subsidiary, to buy land in Gazipur measuring an area of 954.94 decimals for Tk 47.70 crore.

Malek Spinning is one of the largest spinning mills in Bangladesh with nearly 64,000 spindles.

It began commercial operations in 1991 and was one of the first Uster-certified spinning mills in the country.

Malek Spinning procures cotton from the finest farms in the US, which enables it to produce a consistently superior quality of yarn compared to its peers, the company said in its website.

The company supplies 100 per cent of its yarn to local knit garment makers, who then export their apparel products to world-renowned retailers.

Located in Shafipur (Kaliakoir) of Gazipur, Malek Spinning's daily production capacity ranges between 30,000 kilogrammes and 33,000 kilogrammes of yarn.

Stocks of Malek Spinning dropped 0.35 per cent to Tk 28.4 at the DSE yesterday.