CTS Global parks IPO proceeds in government securities
CTS Global [CTS 1.01 2.02%] [link] disclosed yesterday that it had put P484 million of its P1,353 million in net IPO proceeds into “government securities”, but only “to the extent that the funds are not immediately applied to the purposes stated in the Prospectus”.
That’s nearly 36% of the net IPO proceeds, and nearly 40% of the funds that CTS had said that it would use in Q2 of this year to “scale” its global trading operations. CTS did not provide any guidance on the configuration of factors that would convince it to deploy the capital, nor did it provide a new time-frame for when this configuration of factors was expected to occur.
MB BOTTOM-LINE
This is the second major deviation from CTS’s prospectus in the three months since its IPO. The first was when CTS said that it was pivoting to the Indonesian stock market, when in its prospectus, CTS said that its international traders would be working the markets in the US, Japan, and Hong Kong.
Now, CTS is saying that it’s no longer going to push the money into the international markets according to the timeline that it stated in the prospectus, and it's just parking the money in some low-interest security in the meantime. I’m not privy to what CTS is seeing, nor do I have any context on the internal discussions that CTS might have had to come to this decision, but wasn’t the main benefit to IPO investors supposed to be CTS’s ability to use the money raised to “amplify” the international success that it presented in its historical returns in the US, Japan, and Hong Kong? Why the sudden pivot to Indonesia (for which there’s no track record of success), and the desire to hold back funds from the international markets for an indefinite amount of time? What is CTS waiting for? What has changed?
IPO investors gave it P1.35 billion to trade internationally, and now a huge chunk of that money is sitting in government securities, past the deadline for distribution, and all CTS has to say is that the money will now be distributed “in accordance with the Company’s disclosures”. What about distributing in accordance with the prospectus? I’m not trying to make a case for CTS doing something underhanded here, but I am a little surprised at how uncommunicative the company appears to be with its minority shareholders that it only just took money from three months ago. I guess shareholders are on a “need to know” basis, and CTS thinks they just don’t need to know?
--
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
- Latest
