If you bought shares in Tropical Battery’s APO then listen up.
So Tropical Battery has released the basis of allotment for their secondary offer which closed on July 4.
The company said investors across both the general and reserved pools will receive the full amount of shares they applied for.As a reminder, Tropical was offering 954 million shares at J$1.87 each. If the offer is fully subscribed, they’d raise about J$1.8 billion. That’s about US$11 million.
There was no indication that the offer was upsized, which would have brought in just over J$2 billion or about US$12 million.
Now, if you’ve been following what’s going on with Tropical, then you know the allotments being released is a positive sign. It means the company raised at least the minimum J$1 billion it needed for the offer to be successful.
Just before the offer closed, co-brokers NCB Capital Markets and Sagicor Investments both adjusted their recommendations for the offer.
Sagicor changed its recommendation from Participate to Market Weight. According to Investopedia, Market Weight is similar to a “hold” rating.
NCB on the other hand, said it would initiate refunds for its customers unless otherwise instructed.
And this all stemmed from the fact that Tropical restated their Q1 results citing accounting errors. And it wasn’t a small error.
The restated financials saw the company’s net profit of $35 million drop to a net loss of $96 million. That’s a $131 million difference.
The company said it had issues with foreign currency conversion and adjustments in revenue from its Dominican Republic operations. Depreciation and indirect costs associated with its recent acquisitions were also partially to blame for the adjusted numbers. Tropical acquired Kaya Engery, based in the DR, in 2023. It also acquired Rose Batteries in the US last year.
Despite the fall in the Q1 numbers, the company’s Q2 results show revenues up 5% from the same period last year to J$1.6 billion. That’s about US$10 million.
However, net profits are down 89% from $26 million to about $3 million. That was mostly attributed to an increase in finance costs from repaying the loans they used to fund the acquisitions. Which is what they plan to use the APO funds to pay down.
Tropical Battery is listed on the Jamaica Stock Exchange. It closed at $1.99 on July 16.
And that’s the bottom line.
