The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Despite missing its combined target by $7 million, Cable Bahamas’ preference share issue was yesterday described as the “largest amount” of new Bahamian dollars ever raised from this nation’s capital markets by a private sector entity.

Michael Anderson, RoyalFidelity Merchant Bank & Trust’s president, confirmed to Tribune Business that the BISX-listed communications provider had raised $73 million of its $80 million target due to falling short on the US dollar side.

While the Bahamian dollar component had been oversubscribed by $5 million to come in at $65 million, Mr Anderson disclosed that just $8 million in US dollars was received from institutional and high net worth investors.

Cable Bahamas and RoyalFidelity, as its financial adviser, had targeted $20 million in US dollars, but an upbeat Mr Anderson still described the preference share issue as a success.

He told Tribune Business that, based on previous efforts to raise US dollars in the Bahamian market, he had expected Cable Bahamas to receive between $5-$10 million - exactly where it came in at.

“We went out to market for $60 million on the Series 9 [preference shares] in Bahamian dollars, and $20 million on the Series 10, which was US,” Mr Anderson said.

“I think we ended up with $65 million in the Bahamian dollar offering, which was oversubscribed by $5 million, and we ended up with about $8 million on the US dollar side. That was short of what the target was by $12 million.”

The RoyalFidelity chief emphasised that raising US dollars in the Bahamian capital markets was “a difficult ask”, given that investors possessing this currency were typically looking for returns outside this nation.

“We kind of never really expected, based on what happened in the past, to get more than $10 million,” Mr Anderson conceded to Tribune Business.

“We expected to get between $5-$10 million, and got that same amount. Institutional investors are looking for rated securities, which Cable is not yet, and there are not enough individual investors locally to get the numbers up.”

Cable Bahamas sought to raise the same $20 million sum in US dollars when it came to market with last year’s preference share issue, yet secured just $11 million, thus giving the company and its advisers a good indication of what to expect this year.

“I think everybody is happy with the result. It’s good to be successful,” Mr Anderson said of the latest outcome. “Taking into account the money already out there with the Government, and the amount of liquidity in the market, we were pleasantly surprised we were oversubscribed.

“This largest amount we ever raised before in the market was $65 million. This round, with $65 million, was the largest ever raised on the Bahamian dollar side.”

While Cable Bahamas last year raised $114.5 million from the private placement of preference shares, close to $60 million of this sum involved the ‘rollover’ of investor capital tied up in the company’s existing debt instruments, which were about to mature.

And with $11 million of that figure US dollars, around $43.5 million in ‘new’ Bahamian dollars was raised in 2014.

“Cable is obviously in a growth mode both here and overseas,” Mr Anderson told Tribune Business, “and is capital hungry.

“It’s hopefully a precursor of other companies coming to market, but Cable is a growth company and there are not a lot of growth companies in this market. For good credits, the low interest rate environment out there is still driving people to look for good returns.”

Cable Bahamas’ preference share issue closed last Friday, April 10. The US dollar component carried a higher interest coupon at 6.75 per cent compared to the 6.25 per cent for its Bahamian equivalent.

Both preference share tranches carry a 10-year maturity, meaning investors will only recover their principal on April 10, 2025, while receiving semi-annual dividend payments every six months over that period.

Cable Bahamas intends to use the proceeds to “support additional expansion opportunities”, a reference to financing infrastructure and network build-out if its bid to win this nation’s second mobile communications licence is successful.

Otherwise, the preference share funds will be used to restructure its existing bank debt, replacing higher interest rate debt with cheaper capital to reduce the BISX-listed operator’s debt servicing costs.

The monies will also be deployed as working capital in Cable Bahamas’ operations in the Bahamas and Florida.