Alternergy reallocates IPO proceeds to Tanay and Alabat projects

Alternergy [ALTER 0.75, down 1.3%] [link], the renewable energy generation company founded by Vince Pérez (former DoE Secretary), announced that its board of directors reallocated P65 million of the IPO proceeds that were originally scheduled for the Solana Solar Project, Ibulao Mini Hydro Project, Cavite Offshore Wind Project, Tablas Strait Offshore Wind Project, and the operationalization of Green Energy Supply Solutions Inc. The funds will now be applied to the Tanay Wind Project and Alabat Wind Project, which are both scheduled to begin construction in Q2. These projects are scheduled to begin commercial operation by November 2025.

MB bottom-line: Long-time MB readers will know my dislike for the rules that allow a board of directors, based on its discretion and nothing more, to reallocate IPO funding. While the examples of “boards gone wild” are easy to mention, like CTS Global Equities [CTS 0.73, up 2.8%] taking cash to invest and then deciding to just park all the money in government bonds or SP New Energy [SPNEC 1.04, down 0.9%] immediately shredding its business plan, changing its name, and committing financial seppuku, this move by ALTER is perhaps one of the better counter-arguments against my position. An ALTER shareholder might want the board to have the freedom to pivot quickly and throw more eggs into a certain basket based on new or changing information, such as ALTER winning its bids for the Tanay and Alabat projects under the DoE’s Green Energy Auction 2 program. While I think this is one of the least objectionable uses of this reallocation power, I still think that the investing ecosystem is better served by a rule amendment that would require a board to obtain the majority approval of the public float (minority investors) before allowing significant deviations from the Use of Proceeds plan that was published in the prospectus. Again, ALTER’s board is doing nothing wrong here, and I’ll even go so far as to say that this is likely the right move; I just think that this positive example is outweighed by the actual and potential abuses by other companies to the point where a rules amendment should be considered.

—

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.