3 months ago
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Tropical Battery Company Limited plans to raise up to $2 billion in a secondary public offer, the proceeds from which will be used to pay down debt.
“The capital raised will retire the debt related to the bridge financing, freeing up cash that would have otherwise been allocated to debt service,” said CEO Alexander Melville in the offer prospectus.
The offer runs from May 22 to June 6. Sygnus Capital Limited is the lead arranger, with Sagicor Investments Jamaica Limited and NCB Capital Markets Limited as co-brokers.
Tropical Battery will issue up to 954.5 million new ordinary shares at a price of $1.87 per share, with a potential upsize to 1.12 billion shares.
The funds going towards debt repayment include a US$9.5 million loan owed to CIBC Caribbean Bank for the acquisition of Rose Electronics Distributing Company LLC, a Silicon Valley-based battery solutions provider. Additionally, Tropical Battery will pay off approximately $300 million in bond liabilities while covering transaction-related costs. Any remaining funds will be allocated to working capital, supporting expansion initiatives.
Tropical Battery is principally owned by the Melville family-controlled Dai Diverze Limited, which holds 71 per cent.
After the allocation of new shares, Diverze’s stake will dip to 42 per cent, and key investors, inclusive of pension funds, will hold 11.5 per cent.
Tropical Battery intends to migrate from the JSE Junior Market to the JSE Main Market, assuming its additional public offering is successful.
Tropical has been in growth mode since it first went public in 2020.
For the December quarter 2024, the company doubled its revenues to $1.6 billion while net profit dipped by half to $35.5 million. Reducing debt will allow more gains to flow to the profit and loss, Melville said.
The company remains focused on growth and new products, including launching a new battery product branded as Mac Battery targeted at a different market segment than its core Tropical branded product.
“While the Mac Battery is not fundamentally different from our existing battery offerings in terms of technology, it is a strategic brand extension tailored for specific market needs. The introduction of Mac Battery will allow us to strengthen our brand position, expand our market coverage, and create differentiation in pricing and distribution,” Tropical said in its prospectus.
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