Tropical Battery to close bond, acquisition deal this month
Energy storage company Tropical Battery should close its $250 million bond in January, around the same time it is expected to sign off on 50 per cent acquisition of a company it has been after for over two years.
Managing Director Alexander Melville, who on Thursday updated the Financial Gleaner on the status of the initiatives, did not disclose the nature of the company or details around whether the company being acquired was local or international. Melville has been in talks with two prospective companies for merger or acquisition, one in Jamaica and the other elsewhere in the Caribbean.
Tropical Battery Company’s plans for acquisition date back to 2020 when the company said it wanted to acquire a vertically or horizontally aligned business. It was then interested in businesses dealing in solar, energy storage or electric vehicle-charging as well as those involved in traditional battery, tyre and accessories trading.
“We expect to close the bond in January, and we also should be signing off on the acquisition of 50 per cent of a company that same month,” Melville said.
Its push to finalise the deal follows a strong year for the company, which doubled earnings in its fiscal period ended September 2022, marking the second consecutive year of growth despite supply-chain disruptions caused by the Ukraine-Russia war.
Tropical Battery made a profit of $197 million, up 123 per cent from $88.3 million a year earlier, while revenue rose 31 per cent year on year to $2.6 billion.
A year earlier, in 2021, the company’s earnings swelled 201 per cent over the COVID-troubled year of 2020.
The year 2021 came with no significant business interruptions, Tropical Battery said at the time, but was encumbered by shipping delays from major suppliers in the United States, South Korea and Colombia. This year, again, brought along with it more supply-chain disruptions from the war, but the company said lessons learnt from the impact of the coronavirus pandemic minimised the impact on the business.
“Tropical Battery wasn’t exposed to any real impact due to the war in Ukraine-Russia. As a result of our resilience and years of experience in the automotive industry, we were able to adapt and secure an alternative supply of Caribrake brake fluid from Mexico, Tropical Battery oils from Puerto Rico, and windshield wash from the United States of America,” the company said in its message to shareholders.
Inventories rose 31 per cent, but the goods it had to write off nearly tripled this year to $13 million. Overall, the company’s assets increased by 15 per cent to $2 billion, while its borrowings totalled $492 million.
Aside from its M&A ambitions, Tropical Battery has other capital-expenditure projects under way, one of which is the expansion of its operation at 10 Grove Road in Kingston. Affiliated company Diverze Properties has acquired the neighbouring properties on which Tropical Battery is planning to build a larger retail store with more warehouse and parking spaces.