Balai Ni Fruitas reallocates P50-M in IPO proceeds to complete commissary build

Balai Ni Fruitas [BALAI 0.43, up 3.6%; 4% avgVol] [link] said that its board approved a reallocation of its IPO proceeds, from “Store network expansion and store improvement”, to “Commissary set up”. BALAI said that the reallocation “is to reduce the need for further loans” and to help BALAI “avoid interest expense” associated with the setup of its commissary. Part of the reallocated amount will also go toward building BALAI’s commissary in Cebu City, which it expects to complete “within the year”.

 

MB bottom-line: This is the second reallocation between the two accounts. The IPO prospectus called for P164 million to go toward “store network expansion” and P20 million to go toward “commissary set-up”, but a board vote in February 2023 moved P40 million from network expansion to commissary, and this most recent vote moved another P50 million between the same accounts. If BALAI were going to redraft the prospectus today, commissary set-up would actually be the primary use of the IPO proceeds (P110 million) with store expansion a distant second (P74 million). Does the avoidance of debt and interest expense outweigh the potential topline growth of the company through building new locations? That’s an issue that has gone unlitigated with BALAI’s shareholders. 

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