5 months ago
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Tropical Battery Company Limited acquired Silicon Valley, California-based Rose Rose Electronics for almost US$20 million.
The deal closed on January 30, but financial details of the transaction were previously undisclosed.
“Tropical Battery entered into a member interest agreement to purchase the shares in Rose Electronics Distributing Company for a consideration of US$19.7 million,” the Jamaican company said in new market filings. Rose Electronics trades as Rose Batteries.
The acquisition occurred in December through subsidiary Tropical Battery USA. Three managers were recently installed to raise productivity – Project Manager Wouter Potman, Procurement Manager Noelle Machado, and Customer Service Manager Katey Daniel.
Rose makes custom battery packs, chargers and power solutions for drones, robotics, walkie-talkies, tracking devices, medical and telecoms equipment, and other devices connected to the internet. The company started operations in 1963 and is based in San Jose, described as Silicon Valley’s largest city.
The Tropical Battery group operates in Jamaica, Dominican Republic, and the United States. The Melville family-controlled company supplies auto batteries and energy solutions via Tropical Battery, the EnRvate joint venture with CAC 2000 Limited, Kaya Energy, and Rose Batteries.
Tropical financed the Rose Batteries acquisition in part through borrowings, contributing to a climb in its debt-to-capital ratio from 40 per cent last September to 60 per cent in December and 350 per cent in March 2024.
Its debt load currently stands at around $4.4 billion of long-term and short-term borrowings, which is four times its capital of $1.1 billion. Its plan to raise funds on the market via an additional public offering of shares would serve to reduce some of the imbalance in its mix of debt to equity.
“Tropical Battery plans to deleverage its balance sheet through an additional public offering to enhance financial stability and reduce interest costs,” the company said in its filings. It added that Tropical’s overall health was “robust”.
As a junior market company, Tropical faces a limit on how much funds it can raise via the Jamaica Stock Exchange. At its current level of share capital, it has room to raise around $580 million more on the market before breaching the $750-million cap on the amount of share capital juniors can hold.
The energy company could otherwise transition to the JSE Main Market, where no fundraising limits apply, but doing so would see it giving up the remaining six years of a decade of tax breaks to which it is due as a JSE junior company that entered the market four years ago.
English (US) ·