City Group plans to sell assets, go public to reduce debt

City Group, one of the country’s most prominent consumer goods production and distribution conglomerate, has been planning to sell some of its assets and float shares of some businesses to pay off its increasingly unsustainable debt.

The group has secured Tk3,000 crore in new loan from a syndicate of eight banks after the Bangladesh Bank relaxed a 1991 law. The group’s five businesses had already defaulted on previous loans, but thanks to the law exemption the conglomerate can borrow anew until the end of next year.

The group has total Tk26,000 crore in outstanding loans taken from 48 banks and other financial institutions, many of which have classified the sum borrowed from them as classified.

The new loan is aimed at making business activities profitable once again in a bid to pay off some of the debt. But more needs to be done.

To this end, the group is planning to earn Tk10,000-Tk12,000 crore by selling six-seven factories and projects in the Hosendi Economic Zone in Gazaria, Munshiganj. City Group established the 108-acre private economic zone in November 2022 at a cost of Tk10,000 crore, but has failed to generate any notable income from these due to gas shortage.

The six factories set up in the zone remain largely idle, burning cash in the name of maintenance cost.

City Group considers earning further Tk4,800 crore by selling lands and other assets elsewhere, including a tea garden in Chattogram, LPG business and a private television channel. The tea garden was bought from BRAC in 2015 at a cost of Tk120 crore.

The group wants to sell these non-major and non-profitable businesses to make some cash and pay off some loans. But the feat could prove harder than it sounds. Finding prospective customers, and a fair selling price could prove all the more daunting.