The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ new mobile operator yesterday confirmed to Tribune Business it was taking “market soundings” on a potential $30 million bond issue that could be placed by March.

However, Damian Blackburn, Aliv’s top executive, said nothing had been finalised in relation to the proposed placement, and the company was exploring “different options” to meet its capital-raising needs.

He added that the mobile operator might seek bank financing to raise the necessary monies, which will be used to meet operating expenses and fund the next phase of its Bahamas-wide infrastructure and network roll-out.

Capital markets sources confirmed to Tribune Business last week that they had been approached on Aliv’s behalf by RoyalFidelity Merchant Bank & Trust, which was seeking to determine investor appetites for the potential bond placement.

This newspaper was informed that Aliv is targeting a $30 million capital raising via the private placement of corporate bonds, which will be split into two equal tranches with different principal maturity terms.

One tranche, with a 10-year term, will carry an interest coupon of between 7 per cent to 7.5 per cent. The second tranche, which will have a 15-year maturity term, will carry a dividend of between 7.5-8 per cent to compensate investors for the longer term and extra risk.

Michael Anderson, RoyalFidelity’s president, confirmed to Tribune Business that the investment bank had been conducting a ‘market read’ to determine whether there was sufficient institutional investor demand for the Aliv bonds at that price.

“That’s true. We were looking to get an assessment of what the market will take,” he replied, when contacted by this newspaper.

Tribune Business understands that should the bond issue proceed as planned, RoyalFidelity will act as lead issuer, adviser and placement agent to Aliv.

Mr Blackburn, too, confirmed the approaches being made on behalf of Aliv by RoyalFidelity when contacted by Tribune Business. He emphasised, though, that no decision had been taken on any capital-raising’s final details.

“There are soundings going on, but no official process,” Mr Blackburn said. “We haven’t given any mandates yet to anybody. We’ve got a few different options, and are considering them all.”

The Aliv chief executive also confirmed that the “likely timeframe” for any Aliv capital-raising would be end-February 2017 at the earliest, and more probably occur in March.

“We don’t necessarily need a bond issue,” Mr Blackburn added. “We’re looking at all possibilities. We’re not fixed on a bond solution. We might look at bank debt. We don’t know all the answers yet. Whatever we do, it will be comprehensive and it’ll be done.”

Aliv and its operating parent, NewCo, will remain capital-hungry for some months to come, given the network roll-out targets they have to hit over the next two-three years to meet their nationwide coverage obligations.

The company, which has broken the Bahamas Telecommunications Company’s (BTC) long-standing monopoly, started off life with around $125-$130 million in financing via a combination of the Government and its 48.25 per cent controlling shareholder, Cable Bahamas.

The Aliv placement may well occur before the Government secures its own exit from HoldingCo, the entity that holds the majority 51.75 per cent stake in NewCo.

The Government has temporarily taken 100 per cent ownership of HoldingCo to ensure NewCo/Aliv is not delayed in obtaining the necessary financing to meet its infrastructure roll-out objectives, with the intention that it quickly be bought out by private Bahamian institutional investors. Securing this ‘buy out’, though, has been harder - and taken longer - than the Government and its advisers thought.

Tribune Business was told that potential investors in the Alive bond issue are eager to see whether the new mobile operator is meeting performance and financial targets, as it bids to make major inroads into BTC’s 310,000-plus subscriber base.

“Everyone’s a bit wary of Aliv, as it’s a new entity to market, and want to know what’s going on,” one source, speaking on condition of anonymity, told Tribune Business.

They added that since Aliv had only begun operations in November, management accounts were unlikely to reveal much yet, suggesting that the key would be the size of the company’s subscriber base and its growth rate.