The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FOCOL Holdings is predicting a profit increase of 25.2 percent over the next three years with proceeds from its newly-launched $25m rights offering set to fund unspecified acquisitions and expansions.

Dexter Adderley, the BISX-listed petroleum products supplier's president and chief executive, told Tribune Business it is just "a day or two away" from closing an acquisition in another Caribbean territory. He declined to name the target or country, but said transactions such as this - along with the planned purchase of another ship and renewable energy ambitions - are what the right offering monies will support.

"What I can say is that we have a wide range of opportunities that we are embracing at the moment," he told this newspaper. "Certainly, renewables is one of them. We're about to break ground in just a few months on the renewable project we have in Grand Bahama.

"Right now I'm in another Caribbean country closing on a new acquisition. I literally just left the lawyer's office. We're closing on a transaction here." Disclosing that FOCOL Holdings is also involved in a vessel purchase, he added: "That's just three transactions that we're working on.

"We're a couple of days shy of being able to announce the details, but it's another expansion of our business here. We're a day or two away from closing. That's just an example of the wide range of opportunities we are embracing at the moment. The proceeds of the rights offering are to support these acquisitions, and the capital to budget for various strategic initiatives we have."

Mr Adderley declined to comment on market suggestions that FOCOL Holdings is also mulling a $40m preference share issue, which is a form of debt, saying he wanted to focus on a rights offering which "we are very confident will be over-subscribed. We are very confident n the rights offering at the moment".

The renewable energy deal Mr Adderley referred to involves FOCOL subsidiary, Bahamas Solar and Renewables, and a 25-year power purchase agreement (PPA) with GB Power that will see the latter buy electricity at an average rate of nine cents per kilowatt hour (kWH) from the former's 5 Mega Watt (MW) solar facility.

FOCOL is also likely to be interested in the Government's recently launched bidding processes for the supply of up to 100 Mega Watts (MW) of solar energy in both New Providence and across the Family Islands. And it is also thought to have sought an opportunity to supply Bahamas Power & Light (BPL) with liquefied natural gas (LNG) at its New Providence Clifton Pier plant.

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, will close on March 22. The offering prospectus, though, which has been obtained by Tribune Business, gives few specifics on how existing shareholder monies will be used if they participate or why the equity capital is being made now.

"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."

FOCOL Holdings 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."

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.