Top Line is back on the IPO calendar!

Top Line Business Development [TOP] [link], the Cebu-based fuel trading and distribution company, has resumed the IPO process after deferring its scheduled Q4 listing last year. The updated terms, available here, show that the IPO will now be priced on March 17, with an offer period from March 24 through March 31, and an IPO listing on April 8. The price is listed at “up to P0.38 per share”, which is a significant change from the original P0.78/share from its previous prospectus, and the deal size is now at ~2.36 billion common shares between the firm offer and the oversubscription option, down from the ~4.04 billion total shares that were on offer in the previous iteration. Altogether, the reduction in maximum offer price and in maximum offer size have reduced the total maximum proceeds to P0.9 billion, down 71% from the P3.15 billion from the first prospectus.

  MB BOTTOM-LINE:  The “stance” of the offer is still largely the same in terms of the distribution between primary and secondary shares. The firm offer is still 100% primary, with the oversubscription portion 100% secondary.

The biggest change comes in the Use of Proceeds section of the updated prospectus, which has been updated to exclude the “construction of fuel depots” line. Another large change is the amount of proceeds going toward the construction of new service stations, which has increased from just ?5.5 million to ?300 million. With TOP’s expectation that each station will cost approximately ?15 million to build, this allocation would pay for 100% of the construction cost of 20 new service stations. I think this “remix” of the original prospectus directly addresses the most common criticism of the original, which was the price. The price drop is huge, but the changes to the use of proceeds might be worth a closer look.

I’ll admit that I knew TOP was planning to restart the IPO soon, but the announcement yesterday caught me by surprise so I haven’t had time to do my usual deep read of the prospectus. I’ll do that soon.

Maybe I’ll even do a special episode to walk readers through how I read a prospectus. They’re massive legal documents, and I understand how non-lawyers and non-finance types might be overwhelmed by the amount of dense boilerplate legalese, but they all have a common structure, and over time it gets quite easy to jump from important information island to important information island to quickly get the critical details. That will be my project for next week!