The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas yesterday said its first-ever rights offering will raise an extra $30.6 million in capital to finance “the growth opportunities” that will further boost shareholder value.

Barry Williams, the BISX-listed communications provider’s senior vice-president of finance, told Tribune Business that the offering was an invitation for existing shareholders to enjoy even greater investment returns as the company “executes” on its expansion strategy.

The offering, which is due to launch on February 22, will allow all existing Cable Bahamas shareholders as at January 26, 2016, to purchase one extra share for every eight they already hold.

The new shares will be issued at a price of $6 per share, a 27 per cent discount to Cable Bahamas’ $8.22 stock price on the Bahamas International Securities Exchange (BISX) on Monday, January 18.

Investors who fail to exercise their rights will see their shareholdings, as a proportion of Cable Bahamas’ issued ordinary shares, diluted by 12.5 per cent.

Mr Williams said Cable Bahamas was “optimistic” that the rights offering would be fully subscribed, based on the company’s potential to deliver increased future returns from its $100 million Florida expansion and 49 per cent ownership in this nation’s second mobile operator.

“I think that once the shareholders understand the real benefits and value that can be gotten from a rights offering, they will take this opportunity up,” he told Tribune Business.

“There are only a few real investment opportunities in the country that investors can take advantage of, including our shareholders, and when you look at the future and potential future returns, this is what it is all about; you invest today for better returns in the future.”

Mr Williams said Cable Bahamas had established a solid track record in delivering investor returns, through a combination of dividends and capital (share price) appreciation, ever since it first issued shares to Bahamians at a $1 price in 1994.

Suggesting that the company’s share price would now be “$25-plus”, had it not been for last year’s ‘three-for-one’ stock split, Mr Williams added that existing investors would soon reap benefits from the “solid” Florida business and equity/management interest in the Bahamas’ second mobile operator.

Negotiations to conclude the latter opportunity with the Government and its Cellular Liberalisation Task Force are ongoing, but Mr Williams said: “If you look at these opportunities on top of the existing operations of Cable Bahamas, you’ll conclude this is a very good earnings opportunity flowing back to shareholders.

“Cable Bahamas is saying invest further in the future, and future returns that could come back to you based on our track record.”

Emphasising that the company was “not a fixed deposit” but a long-term investment, Mr Williams told Cable Bahamas shareholders: “Maximise the opportunity we’re giving for you, as shareholders, to maximise value by receiving the first right of refusal to be part of the returns we will get.

“We believe the opportunities we have are significant opportunities, and we are executing on them. The future looks really good, and these are not opportunities that come around every day. We’re fortunate to have a supportive shareholder and capital base that allows us to take advantage of them.

Mr Williams said Cable Bahamas had selected the $6 rights issue price, and one-for-eight existing shares mechanism, based on what it deemed to “fair” to shareholders given the existing BISX stock price.

The rights issue price has also been pitched at a relatively attractive level to existing shareholders, the largest of whom is the National Insurance Board (NIB) with 22.29 per cent.

Mr Williams, meanwhile, confirmed that the $30.6 million in new equity capital targeted by the offering will be used to finance Cable Bahamas’ expansion plans, especially the build-out of infrastructure for the new mobile operator.

“The first order of the company is to maximise shareholder value,” he added. “Here again is another opportunity for shareholders to increase their existing value, while the company seeks capital to take advantage of growth opportunities.

Mr Williams said the rights issue, the first in Cable Bahamas’ 22 years in existence, was a third initiative undertaken by the company to further its ‘shareholder value’ goal.

He explained that it followed a previous ‘share buy back’ programme, designed to boost the company’s stock price in the illiquid BISX market, and last year’s ‘three-for-one’ stock split, which brought Cable Bahamas’ share price back to a level that retail investors could more easily buy into.

Mr Williams said staging the stock split prior to the upcoming rights issue was “a huge advantage” for shareholders, as they would now pay a lower price for more Cable Bahamas shares.

Rights offerings are nothing new for the Bahamian capital markets, having been used in the past by companies such as AML Foods to raise extra finance.

The upcoming Cable Bahamas issue will last for 11 days, and close on March 4, 2016. Offering documents will be mailed to shareholders on February 1.

If fully subscribed, Cable Bahamas will issue another 5.1 million ordinary shares, taking the total number to around 46.2 million.