The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FOCOL Holdings’ top executive last night said it is targeting growth “in every sector of our business”, including gas stations and electricity generation, and added: “We’re preparing for the next 50 years.”

Dexter Adderley, the BISX-listed petroleum products supplier’s president and chief executive, told Tribune Business that “every dollar of capital that we raise will generate a proportionate increase in value for shareholders” as the company extended its $25m rights offering by two weeks to this Friday, April 5.

Asserting that FOCOL’s Board was “thrilled” with the number of shareholders who have exercised their right to subscribe for a collective five million additional shares, worth $5 each, he said the directors had opted to extend the offering to “ensure all have a fair opportunity to buy shares”.

FOCOL has yet to identify how the rights offering proceeds will be used, although many observers believe the funds could help finance its participation in the Government’s proposed Bahamas Power & Light (BPL) public-private partnership (PPP) through the likely provision of liquefied natural gas (LNG) fuel. Other possibilities include the Government’s Family Island and New Providence renewable energy tenders.

Mr Adderley gave a little more insight last night, telling this newspaper: “As our chairman pronounced it a few weeks ago, FOCOL is pregnant with opportunities. These opportunities cover every sector of our business. It ranges from the expansion and upgrade of the retail network, it includes expansion of our fleet of generation equipment.

“That includes the 5 Mega Watt (MW) solar energy plant in Grand Bahama that we are preparing to break ground on in a few months.” He added that “probably for the first time in the industry’s recent history” FOCOL will introduce two new petroleum-transporting ships into service this summer, while also focusing on the “general expansion of our infrastructure that paves the way for cleaner fuels of the future”.

Asked whether he was referring to LNG specifically, Mr Adderley replied: “We’re preparing our infrastructure for whatever the customer demands and that includes all fuels. Essentially we’re preparing the organisation - the organisation is going through significant growth - and we’re preparing it for the next 50 years.

“This is coming on the heels of the fact that for our last fiscal year we reported our biggest net income in the history of the group. The opportunities continue to come. We’re looking to embrace the new opportunities... The new capital, new raises, go into new projects which fund new streams of income for the company.”

FOCOL Holdings, in its rights offering document, is forecasting that profits will grow by more than $8m over the next three years, increasing from last year’s $32.621m to $40.833m by 2026. Profit for the current 2024 year is forecast at $34.026m, and for 2025 at $37.226m.

“Net income for the year ended September 30, 2023, was $32.6m compared to $21.4m in the prior year, representing an increase of $11.2m or 52 percent,” the company said. “FOCOL’s 2023 performance represents a return to the company’s pre-pandemic level of earnings combined with early signs of growth across various business segments.

“The combination of a rebound in the local economy and early results from new investments initiatives contributed to the steady upward trend in the company’s overall performance... Investments in fixed assets were made to strengthen the company’s infrastructure in the wholesale and retail business segments. Additional investments were made in power generation assets during the year.”

Asked where renewable energy fits in FOCOL Holdings’ strategy, Mr Adderley said: “We see renewable energy as one of the key elements of the future of the industry, the clean energy landscape, and we are very proud to participate in that sector. Certainly we are looking to leverage our current infrastructure to support this new industry, and pivot towards cleaner fuels and a cleaner stream of energy.

“The exact number and what portion that is depends on how successful we are in pursuing opportunities out there. It’s a core focus for us. Just to put some additional context to that, we have 25 employees currently being trained in renewable energy systems to install, operate and maintain them. It’s the same technicians and engineers installing fuel pumps being trained to install inverters.”

FOCOL yesterday said the “majority” of shareholders have subscribed to the rights offering, and the two-week extension will now allow all its existing investors - including officers and directors - to seek to acquire the remaining shares.

“We are absolutely thrilled that the majority of our shareholders have exercised their rights to purchase these additional shares,” Mr Adderley said. “We do know some shareholders were unable to exercise their rights despite their desire to do so. In keeping with our commitment to maximise opportunities, our directors decided to extend the offering. They recognise there was only 30 days to respond to the offering.”

He added that this was the first time that FOCOL Holdings has issued new shares for 25 years, or a quarter-of-a-century, the last occasion being its initial public offering (IPO) in 1999. “A few additional days wouldn’t hurt,” Mr Adderley said. “The directors thought it appropriate to exercise their authority to extend it to Friday.”

Shareholders who do not take up their rights, or exercise their full allocation, will find their holdings in FOCOL diluted. The prospectus shows Sir Franklyn Wilson, the company’s chairman, as holding around 36-37 percent of its issued and ordinary shares. Total shares held by Board members and executives are equal to 49.643m, not far off half the outstanding and issued stock.

The rights issue, which involves a total five million new shares potentially being issued at $5 each, and could take outstanding stock to 105.2m if fully subscribed. “Management is cognisant of climate change initiatives focused on reducing worldwide carbon emissions,” the prospectus said.

“Locally, the Government of The Bahamas implemented mandates to increase the usage of renewable sources of energy to 30 per cent by year 2030. The company continues to expand into the renewable energy sector by integrating it into our current business model.

“We are encouraged by the record level of visitor arrivals during 2023. We are also encouraged by the announcement of several major resort development projects throughout The Bahamas and the Turks & Caicos Islands which are expected to further stimulate construction sector growth. Continued growth in the tourism and construction sectors will enhance the company’s future profitability.”