Co-broker NCB Capital Markets Limited (NCBCM) withdrew its recommendation for the recent $1.79-billion (US$11.09-million) additional public offering (APO) by Tropical Battery Company Limited, which closed on Friday.

The unprecedented move stemmed from recent restatements in Tropical Battery’s first quarter report for the period ending December 31, 2024. NCBCM’s research team initially recommended that investors participate in the offer, as it set a $2.75-target price — 47 per cent above the $1.87 APO price.

“NCB Capital Markets Limited’s previously issued recommendation, dated May 16, 2025, is no longer valid since it was issued before the recent material disclosures,” NCBCM stated in a July 3 e-mail to its clients.

NCBCM also added, “Accordingly, unless we receive written confirmation from you by Friday, July 4, 2025, at 4 pm 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.”

Tropical Battery’s stock price declined by 12.69 per cent on Monday, falling from $1.97 to $1.72, with trading halted for an hour after the price reached $1.55.

NCBCM was the lead broker and arranger for Tropical Battery’s September 2020 initial public offering (IPO), which had a $325-million consideration. Tropical Battery raised $162.5 million in that IPO and listed on the Junior Market.

Tropical Battery initially published its Q1 report on 28 February, two weeks after it was due. The company revised its numbers on 14 March to update its share capital by $164.07 million for the issuance of new shares.

Tropical published another set of revised Q1 numbers on June 25 after a detailed review by its management team and audit committee. The restatement saw Tropical’s revenue move from $1.61 billion to $1.54 billion, gross profit from $543 million to $474 million, EBITDA (earnings before interest, tax, depreciation and amortisation) fall from $201 million to $49.2 million, and operating profit decrease from $175.3 million to $46 million. Tropical’s net profit of $35.5 million was also restated to a net loss of $96.2 million, a $131.7-million change.

“Once our ongoing equity raise is completed and the related bridge facility is repaid, we expect a material reduction in finance costs. On a normalised basis, excluding these elevated interest charges, Q1 would have shown a profit. In the future, adjusted earnings are expected to improve significantly as we strengthen our balance sheet, reduce interest expense, and realise operational efficiencies from our recent investments,” Tropical explained in its restatement update.

Tropical’s assets were restated from $7.92 billion to $7.67 billion. The company’s net current assets (current assets minus current liabilities) moved from a positive $82.21 million to a negative $184.23 million. Tropical’s liabilities changed from $6.80 billion to $6.75 billion, and its equity moved from $1.12 billion to $921.90 million.

Tropical indicated in its JSE update that the restatement was done to reflect timing and classification issues in cost of sales and operating expenses; foreign currency conversion and adjustments in revenue from its Dominican Republic operations; and depreciation and indirect cost adjustments associated with recent acquisitions.

“We have engaged a group financial consultant who will provide additional rigour to the finance function. She played a pivotal role in completing the Q2 close and continues to lead the implementation of controls, reviews, and reporting improvements across the organisation. With these measures in place, we are confident that our reporting processes are more robust and reliable,” Tropical added on the Q1 restatement.

Tropical’s second quarter report for the period ending March 31 was also published on June 25, more than 40 days after it was due on May 15. The report revealed that, whilst the company was able to grow its revenue by five per cent to $1.63 billion and operating profit by 30 per cent to $138.60 million, the company’s profit before tax fell by 89 per cent from $26.70 million to $2.92 million due to high-debt financing costs. Its net profit also declined by 90 per cent from $26.58 million to $2.78 million.

Co-broker Sagicor Investments Jamaica Limited updated investors on Friday to indicate that its recommendation for the Tropical APO had been adjusted from ‘participate’ at $2.24 to ‘market weight’ at $1.90.

“After release of the company’s management accounts and ongoing market analysis, our recommendation regarding this investment opportunity has been updated. We believe the APO still presents an investment case, with strong fundamentals and growth potential,” Sagicor stated.

Sagicor also added, “The company’s strong position and potential for growth remain unchanged, and we continue to view the investment as attractive. The revised recommendation aims to help you optimise your investment portfolio. Please be advised that the offer closes today, 4 July.”

Tropical Battery formally updated the market on Monday that the offer officially closed on Friday and that the basis of allotment will be announced in due course. The prospectus stated that the basis of allotment would be published within six business days after the extended closing date.

The offer was originally set to close on June 6 but was extended to June 20 to allow prospective and institutional investors more time to complete their internal investment processes. It was further extended to July 4 on the same basis. Tropical was aiming to raise $1.79 billion, with the option to upsize to $2.10 billion. The company needs to raise a minimum of $1 billion for the offer to succeed. Proceeds will be used to repay a US$9.5 million ($1.53 billion) bridge loan from CIBC Caribbean Bank, settle a maturing $300 million bond, and provide working capital. Sygnus Capital Limited was the lead arranger for the offer, and JMMB Investments Limited was a selling agent.

“Following the recent close [on July 4, 2025] of the invitation by Tropical Battery Company Limited for investors to subscribe for ordinary shares in the capital of the company, the company wishes to extend its appreciation to all investors—individual, institutional, and regional—who participated in this important capital-raising exercise. Tropical Battery remains committed to delivering long-term shareholder value, strong environmental stewardship, and regional innovation,” Tropical stated on Monday.