The Bangladesh Securities and Exchange Commission (BSEC) has asked the Dhaka Stock Exchange (DSE) to investigate the unusual increases in the price of Paper Processing and Packaging Limited shares, sources told the commission.

The Magura Group-owned company returned to the over-the-counter (OTC) market motherboard in June last year when the price of each share was Tk 17.6.

Although its core business has been affected by Covid-19, the share price has continued to climb uncharacteristically since then.

On September 8, 2021, three months after its return to the main market, the price of each share soared to Tk 253 and on February 20 this year, the price rose to Tk 313.

Then the stock price fell and settled at 175 Tk each on August 10th.

On August 25, the price rose again to 272 Tk, before falling back to 222 Tk on Thursday last week.

In response to a question from the DSE, the company said on Aug. 23 that there was no undisclosed price-sensitive information regarding the stock price increase.

Share sponsor-director sales to avoid loan complications

Paper Processing and Packaging Limited has had problems with bank loans due to business losses caused by the pandemic.

As business did not go well, it plunged into the risk of bank default. In such a situation, the commission authorized the sale of shares by the director-sponsors only to repay its bank loans.

Following the approval, corporate administrators Bangladesh Development Group and Magura Group sold 4.36 lakh shares and 4 lakh shares respectively, while managing sponsor Mustafa Kamal Mohiuddin sold 100,980 shares, according to company data.

The company said the proceeds from the sale were used to adjust the liabilities of the bank loan with the main branch of Social Islami Bank Ltd.

Paper Processing and Packaging Limited was listed on the capital market in 1990.

Later, the company failed to pay dividends to its shareholders due to deteriorating trading conditions. As a result, it was moved from the motherboard to the OTC market.

Its paid-up capital is Tk 10.45 crore, with a total number of shares over 1.4 crore.

In June 2022, sponsor-directors held 35%, institutional investors 0.54% and general investors 64.46% of the company’s shares.