The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Some institutional investors are seeking extra time to make a “maximum investment” in the new mobile operator’s majority shareholder, with the process at the “put your money where your mouth is” stage.

Gowon Bowe, one of the Government’s advisers on the placement of HoldingCo’s shares, told Tribune Business that potential investors were now requesting if their cash flow needs could be “accommodated”.

While willing to take up their full allocation of HoldingCo equity, Mr Bowe explained that some investors did not currently have the financial resources to do so, and were requesting extra time to come up with the full payment.

“That process has been going well,” Mr Bowe said of the Government’s efforts to divest itself of the 100 per cent equity stake in HoldingCo.

“A number of investors have had Board meetings, or meetings with Boards, so we’re getting commitments back on where their investment appetite is in terms of a dollar amount. Boards have also been authorising entities to sign the necessary instruments for exchanging information.”

Mr Bowe said this would allow institutional investors access to previously-confidential documents, including the various agreements between HoldingCo and Cable Bahamas, the company that won the bidding for the second mobile licence.

This will enable potential investors to conduct in-depth due diligence, and assess the financial performance prospects for Aliv, the new mobile operator that has just launched commercial services in New Providence, Grand Bahama and Abaco.

“There’s information flow, and now we’re getting down to putting your money where your mouth is,” Mr Bowe told Tribune Business of the HoldingCo share placement process. “It’s still positive, and a number of scenarios are being discussed.”

HoldingCo is the 51.75 per cent majority shareholder in NewCo 2015, operating parent of Aliv, the new mobile operator for which BISX-listed Cable Bahamas has Board and management control, along with the remaining 48.25 per cent equity interest.

The Government, as was permitted by the second mobile bidding process, has temporarily taken up 100 per cent of HoldingCo’s equity as a means to ensure that the company could finance its share of Aliv’s network build-out/infrastructure costs.

The Christie administration used the $62.5 million spectrum fee paid by Cable Bahamas to do this, merely ploughing it back into NewCo2015 and Aliv through HoldingCo.

However, it is especially eager to reclaim that $62.5 million by selling all of HoldingCo’s share capital to private, institutional Bahamian investors, thereby exiting the company and gaining significant cash flow for the Public Treasury.

Mr Bowe, who is advising the Government’s Cellular Liberalisation Task Force, the ‘point agency’ on the HoldingCo sell-off, said investors were seeking to match their investment appetite with cash flow.

As a result, they were asking whether they could pay for their investment in two tranches, making one payment now and another at a later date.

“They’re questioning: What if we do ‘x’ amount in January, and ‘x’ amount in July,” Mr Bowe explained to Tribune Business. “Would the Government afford us the opportunity to do two tranches from a cash flow perspective?

“There’s a lot of work going in, with persons saying they want to do a larger stake in cash, but they can’t do it all at once.

“The good news is that persons want to take up the maximum offering. There’s going to be a limit [on how much one investor can subscribe for] so it’s not dominated by one shareholder,” he continued.

“There’s a lot of appetite to take up the maximum, but they’re asking: Do we have a period of time to do it, and what will that period be? Would there be a subscription process that allows participants to pay over time?

“This is a ‘put your money where your mouth is’; no IOUs. They’re saying: This is what we can take when we can afford it; can you accommodate us?”

Mr Bowe said the situation was akin to a share issue’s underwriter retaining a portion of the stock, then selling it into the market at a later date when demand has materialised.

“It’s up to the Government to decide what terms they will accept,” he added, pointing out that the Christie administration had been happy to let the Task Force and its advisers “take the lead” on the HoldingCo placement process.

“The Government has not interfered in the actual exercise,” Mr Bowe said. “It’s just a matter of coming to them with a final proposal, and keeping them abreast of the nature of the talks and saying this is the way we propose to do this.”

Mr Bowe also revealed that $70 million is the “ball park” figure that the Government and Task Force are seeking to raise by placing 100 per cent of HoldingCo’s share capital.

He did not, though, disclose when the private placement of HoldingCo shares is likely to be completed, given that previous timelines of August/September were missed, with Hurricane Matthew contributing to a further delay.

Given the ‘start-up’ nature of HoldingCo and Aliv, the Task Force and its advisers have focused on pitching to sophisticated, institutional investors such as pension funds, credit unions and mutual funds.

This is designed to maximise the ‘spread of wealth’ and Bahamian participation, given that these investors’ members and beneficiaries represent thousands of people.