The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas yesterday said its proposed ‘three-for-one’ share split was “a great opportunity” for individual Bahamian investors to “get in on the ground floor”, and benefit from potential upside prospects such as this nation’s second mobile licence.

The BISX-listed communications provider said the proposed stock split, which has to be approved by its existing 2,400 shareholders at next month’s annual general meeting (AGM), was designed to broaden its ownership base.

This will be achieved by the three-fold reduction in Cable Bahamas’ existing share price once the stock split is completed.

The current $14.51 price will be reduced to $4.84 per share, immediately making them more affordable to small Bahamian retail investors and, in theory, boosting liquidity (the frequency and willingness to buy and sell shares) in Cable Bahamas’ stock.

Existing shareholders will receive three shares for every existing one they hold, thus ensuring their holdings are not diluted.

David Burrows, Cable Bahamas’ vice-president of marketing, told Tribune Business of the planned stock split: “We believe it’s a great opportunity for Bahamians to be involved in the company.

“We started out at $1 a share in 1994, and it’s now up to $14.51. We have 2,400 shareholders and we’d like to broaden that. We’d like everyone to be able to get into some success with Cable Bahamas at the ground floor, and having stock at $5 per share will help that along.”

Cable Bahamas’ stock split decision coincides with its efforts to win the second mobile licence, a competition where it now only faces one rival - Virgin Mobile (Bahamas).

The BISX-listed provider, as a 100 per cent Bahamian-owned company, will already have scored well on the Government’s requirement that the winning bidder offer a 51 per cent equity stake to Bahamian investors.

Cable Bahamas more than meets that requirement, and the stock split’s goal of further broadening its ownership/shareholder base to include more small Bahamian investors will likely enjoy further favour with the Government when it comes to deciding the second mobile licence winner - something Mr Burrows did not dispute yesterday.

“I think the big story is expanding ownership in Cable Bahamas to a much broader base of the Bahamian public; people that are just trying to get into the stock market, people looking to invest,” Mr Burrows told Tribune Business.

“The reality is any Bahamian can be an owner and own shares in Cable Bahamas, especially if we are able to effect this proposed change and do the three-for-one split.

“It makes it more affordable for you to come in, and what a tremendous investment this will be. It will be almost like back in at the ground floor all over again,” he added.

“If we were to get the second mobile licence, this will only benefit those able to purchase the shares at a low price.

“Right now, it’s making sure it’s affordable to as many people as would wish to come in on this type of investment. It just makes good sense at this time to make sure more people get into the market without doing anything to negate the value of the shares.”

Cable Bahamas is not the first Bahamian public company to propose a stock split, Commonwealth Bank having undertaken this step several years ago.

It is normally done to make a stock in demand more affordable to investors, as well as broadening liquidity, boosting trading volumes and expanding the investor base.

In Cable Bahamas’ case, assuming the ‘share split’ is approved, investors able to buy at the new, lower side, could enjoy significant dividend and share price appreciation returns, especially if the company can add the second mobile licence to the growth potential created by its $100 million worth of Florida acquisitions.

Mr Burrows said the BISX-listed provider was always expanding and investing in its bid to create shareholder value.

“We have a strong track record. We’ve returned shareholder value to such an extent that we’re a pretty safe bet,” he told Tribune Business. “We’ve proven it over and over again with dividends and the share price. It’s all there in black and white.”

One investment analyst, speaking on condition of anonymity, said the key issue for Bahamian investors was one of “value” when it came to Cable Bahamas’ new entry point, and whether it would be able to deliver on its growth opportunities and related returns.

“I think a lot of institutional guys might have had their fill of Cable,” the source said. “In reality, the retail guy does not have the capacity to buy en masse.”

Cable Bahamas yesterday said the proposed stock split would give “greater marketability and liquidity”, making its stock more affordable for retail investors.

But if approved, it gave not timeline for any stock split, adding that the directors will decide this.

“For some time now, the market has demonstrated confidence in Cable Bahamas’ current and future performance demonstrated, among other things, in the gradual increase in the price of the shares on BISX,” said Gary Kain, its chairman.

“By splitting the shares at this time and effectively reducing the price per share, Cable Bahamas is making it possible for current and prospective shareholders to realise in a very tangible way the benefits of Cable Bahamas’ success.

“This initiative is a part of our mandate to create and support shareholder value while supporting the liquidity in the market. This is a fantastic opportunity for all stakeholders.”

This will be the first time Cable Bahamas has split its shares since its 1994 initial public offering (IPO). It will likely have to increase its existing 30 million ordinary shares, of which 13,608,769 have been issued.