By NEIL HARTNELL
Tribune Business Editor
Cable Bahamas' top executive yesterday said itself and the Government will "remedy any challenges" caused by non-compliance with covenants related to $60m in bonds issued on Aliv's behalf.
Franklyn Butler, the BISX-listed communications provider's chief executive, told Tribune Business that itself and the Government - as the mobile operator's two shareholders - will "do all we can to support" it and realise its earnings and growth potential.
He spoke out after Cable Bahamas' financial statements for the year-ended on June 2020 revealed that there was non-compliance with the terms and conditions attached to the unsecured Series A and B bonds issued in March 2017 to help provide capital to fund Aliv's network expansion.
"The proceeds of the notes were used for various capital projects and to fund working capital requirements," the financial statements said. "The terms of the notes are governed by a trustee agreement, and all payments associated with the notes are required to be paid through a payment agent.
"During the year, and as at June 30, 2020, the group was not in compliance with the financial covenants of the notes as set out in the trustee agreement. As a result, the notes have been reclassified this year to current liabilities in the consolidated statement of financial position.
"Subsequent to year-end the breach remained unresolved, and while no waiver had been received, the notes have not been called by the trustee." According to Cable Bahamas' financial statements, some $58.455m in bond payables remain outstanding to the investors who bought them.
There is no suggestion that Cable Bahamas/Aliv has defaulted on due interest and principal payments to-date, as more than $5m in interest was paid to the bondholders during the 12 months to end-June 2020.
When contacted about the non-compliance, Mr Butler indicated further refinancing and restructuring of Aliv's debts was in the works although he declined to reveal details because talks are continuing.
"Those are bonds specifically related to Aliv," he told Tribune Business. "My answer is we are working to address that, and we'll have something a bit more formal on that in the coming days. I don't want to say any more on that. That's active.
"But we are going to do all we can to to support Aliv and make sure their growth continues, and they grow further their subscribers. market share and net income. As shareholders, we'll do all we can to support that.
"My position is that [non-compliance] is not a concern. The shareholders have made a commitment to remedy any challenges with the bonds." Cable Bahamas holds a 47.25 percent equity stake in Aliv, and has Board and management control, with the Government owning the 51.75 percent majority interest.
Cable Bahamas returned to profitability, with $58.654m in net income for the financial year to end-June 2020, thanks solely to the $109.13m net gain on the sale of its former Florida subsidiary, Summit Broadband.
"The negotiated base price for the sale of Summit was $301.5m," Cable Bahamas' financial statements said. "This amount was adjusted [for] deductions as set out in the sale agreement for closing net working capital adjustments; the closing indebtedness of the subsidiary; and other transaction costs.
"The consideration following the adjustments totaled $253.135m, of which $251.648m was received in cash. A gain on disposal of discontinued operations was recognized in the amount of $112.166m in the consolidated statement of profit or loss and other comprehensive income."