Tropical Battery needs urgent funding for its plans top expand its operations in other Caribbean territories, more notably the Dominican Republic. It also has to repay a US$9.5 million loan from CIBC, meet bond payments and acquire working capital.

A lot is riding on its recent additional public offering (APO). Tropical Battery was looking to raise J$1.79 billion. The offer was extended twice with the sales agents being NCB Capital Markets and Sagicor Investments. JMMB Securities came on board subsequently. Institutional investors said they needed more time to complete their internal investment processes, which perhaps led to Tropical Battery having its heart in its mouth.

The APO closed on July 4, with shares sold at J$1.87 at a minimum purchase of 1,000 shares. There were  954,545,455 ordinary shares issued. 

It is unclear whether subscriptions made the target, and Tropical Battery did not upsize the offer.

Tropical Battery has been tardy on its financial reporting to the Jamaica Stock Exchange (JSE). NCB Capital Markets had initially recommended the APO but then U-turned on discovering Tropical Battery had restated its financial reporting for the quarter ended December 2024.

On June 25, less than two weeks before the July 4 close date, Tropical Battery reported a reduced revenue figure, falling from J$1.61 billion to J$1.54 billion, with the gross profit dropping to J$474 million from J$543 million. Of particular concern was net profit doing an about turn from a positive of J$35.5 million to a net loss of $96.2 million. Keeping eyebrows raised was news that current assets went into a negative of J$184.23 million from being in the black at J$82.21 million.

Right there, Tropical Battery became a dog with different fleas.

This made NCB Capital Markets reticent, and it couldn’t in good conscience recommend it given Tropical Battery’s restated financial position.

NCB Financial’s subsidiary put out a notice which read: “NCB Capital Markets Limited’s previously issued recommendation, dated May 16, is no longer valid since it was issued before the recent material disclosures.

“Accordingly, unless we receive written confirmation from you by July 4 [at end-of-business], indicating that you wish to proceed with your application, notwithstanding the foregoing, we shall arrange for processing of a refund to you in due course.”

This may have set the APO off kilter, a body blow just before kick-off. 

Compounding matters further, Sagicor Investments adjusted its call to clients from “participate” to “ market weight”, thus favouring caution here. 

Our Today now understands that Tropical Battery was only able to raise just under J$800 million from the APO, half of what it was looking for. It is hoped that this doesn’t seriously derail its expansion plans. It is becoming a tough time raising capital, with interest rates not falling, the local currency depreciating, political uncertainty with the general election set to be called and geopolitical tensions.

The restatement of its financial reporting was also deemed to make the Tropical Battery APO a less attractive proposition.