The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas finished “close to target” on its recent $50 million preference share offering, Tribune Business was told yesterday, even though its local placement agent raised just 25 per cent of its US dollar goal.

Michael Anderson, RoyalFidelity Merchant Bank & Trust’s president, conceded that he was “a bit disappointed” to raise just $2.5 million of the merchant bank’s $10 million US dollar target.

He added, though, that the US dollar shortfall was largely covered by oversubscription on the Bahamian dollar component, which saw investors exceed the $20 million target by $6 million.

With RoyalFidelity raising around $28 million of its total $30 million target, and Scotia Investments Jamaica hitting its goal of $20 million in US dollar financing, Cable Bahamas obtained around $48 million of its total $50 million target.

“We ended up at around $28 million in total,” Mr Anderson told Tribune Business of RoyalFidelity’s $30 million component. “It was $2.5 million in US dollars, and $26 million in Bahamian dollars. We were quite a bit over on the Bahamian side.”

Admitting that the Bahamian investment bank closed “way under on the US”, he added: “There were any number of reasons, but chiefly the market for it is not the Bahamian market. It’s countries outside of here.

“Getting it out to potential investors, we have to send it around the Caribbean, and those investors are knowledgeable about Cable Bahamas and stuff.”

Mr Anderson said RoyalFidelity also had to follow behind Scotia Investments Jamaica in pitching the Cable Bahamas preference share issue to US dollar holders in other Caribbean countries, meaning that any interested investors had already bought in.

“Generally, we’ve fallen a bit short of target,” Mr Anderson said of RoyalFidelity’s US dollar capital raising efforts. “We’re a bit disappointed not to get around $5 million on the US side this time.

“Some of the people who said ‘yes’ ended up backing out at the last minute. We hoped to get more on the US side, but that market is a bit more tricky.

“People there [in the Caribbean] are looking for rated securities, and are not used to going to other Caribbean countries. They’re used to investing in larger economies.”

Despite RoyalFidelity falling some way short of its US dollar target, Mr Anderson said Cable Bahamas was “reasonably happy with getting close to target”.

He acknowledged that both the BISX-listed communications provider and its advisers had been aware that the latest preference share issue was a tougher sell than normal, given that the company has issued more than $200 million worth of preference shares over the past two-three years.

“We didn’t see the same level of support we typically get from institutional investors, as they had already maximised their exposure to Cable from prior offerings,” Mr Anderson told Tribune Business.

“We all knew about it. Cable knew about it. We felt confident we would be able to raise $20 million.”

Capital markets observers, speaking on condition of anonymity, had previously suggested to Tribune Business that Cable Bahamas and its Royal Fidelity advisers may have difficulty in placing the $30 million local component.

They said many institutional investors were “operating at their limits”, both in terms of their exposure to Cable Bahamas and preference shares generally, given the company’s capital-raising activities in the past two years.

“A lot of the institutions won’t subscribe; they don’t have the capacity,” one source said. “Whether it’s 10 per cent or 15 per cent, they’re operating at their limits. Cable Bahamas has to stack on a lot of debt, and the revenues come at the back end.”

The $50 million preference share proceeds will be listed on the Bahamas International Securities Exchange (BISX) and used to finance Cable Bahamas’ capital expenditures, and expansion opportunities, in both the Bahamas and US.