The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The $60 million Bahamian dollar component of Cable Bahamas’ latest preference share issue will be the largest ‘new money’ placement by a private company if fully subscribed, its financial advisor saying there had been “a very positive response” by investors.

Michael Anderson, RoyalFidelity Merchant Bank Trust’s president, told Tribune Business that capital markets conditions remained favourable for the offering, which will launch today.

“We’ve had a very positive response from both the broker/dealers and the institutional investors,” he said. “The rates seem to be very attractive for most people.

“There’s still a lot of liquidity in the system, so I think it will be well-received in the market.”

Cable Bahamas is seeking to raise a total $80 million via the release of Series 9 and Series 10 preference share classes to targeted institutional and high net worth individuals, via private placement. This means members of the general public should not try to get involved.

The BISX-listed communications provider is breaking down the offering into two components, a $60 million Bahamian dollar tranche, with the remaining $20 million (Series 10) denominated in US dollars.

Mr Anderson told Tribune Business that the $60 million Series 9 preference share class “would be the biggest Bahamian dollar placement by a private company”, in terms of new money raised, in the history of this nation’s capital markets if fully subscribed.

While Cable Bahamas last year raised $114.5 million from the private placement of preference shares, close to $60 million of this sum involved the ‘rollover’ of investor capital tied up in the company’s existing debt instruments, which were about to mature.

And with $11 million of that figure US dollars, around $43.5 million in ‘new’ Bahamian dollars was raised.

While the Commonwealth Brewery initial public offering (IPO) raised $62.5 million in 2011, that was effectively underwritten by the National Insurance Board (NIB), which picked up $11-$12 million.

Cable Bahamas’ collective $80 million issue will close on April 10, effectively giving potential investors and their advisers eight days either side of Easter to make a decision.

The US dollar component is carrying a higher interest coupon this time, 6.75 per cent compared to the 6.25 per cent for its Bahamian equivalent.

Mr Anderson said the higher interest yield on the US dollar denominated preference shares allows for the possibility of increased US interest rates, something global markets are anticipating soon.

The higher returns are also likely an effort to entice more investors into the US dollar component, given that Cable Bahamas last year raised only $11 million or 55 per cent of its $20 million target.

Mr Anderson said that with $145 million recently raised via the new Bahamas Government Stock (BGS) debt instruments, Cable and RoyalFidelity wanted to ensure the offering was priced correctly to attract remaining surplus capital.

“There’s been a fair amount of money raised,” he explained to Tribune Business. “When you look at the depth of the capital markets, you want to make sure you get enough people to the table.

“It’s generated a very high level of interest. We’ll see what happens, but we expect it to go over and finish well.”

Both preference share tranches will carry a 10-year maturity, meaning investors will only recover their principal on April 10, 2025, while receiving semi-annual dividend payments every six months over that period.

Cable Bahamas’ directors “have indicated a willingness to consider accepting additional subscriptions” over and above the $60 million and $20 million sums, respectively, if the offering is oversubscribed.

The shares will be allocated on a ‘first come, first served’ basis, with Cable Bahamas able to redeem investor principal from the third anniversary of the issue’s closing.

Cable Bahamas intends to use the proceeds to “support additional expansion opportunities”, likely a reference to financing infrastructure and network build-out if its bid to win this nation’s second mobile communications licence is successful.

Otherwise, the preference share funds will be used to restructure its existing bank debt, replacing higher interest rate debt with cheaper capital to reduce the BISX-listed operator’s debt servicing costs.

The monies will also be deployed as working capital in Cable Bahamas’ operations in the Bahamas and Florida.