The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas was yesterday said to have raised “about 70 per cent” of its $30.817 million rights issue target, amid concerns from several large shareholders that they did not receive all offering documents.

Michael Anderson, RoyalFidelity Merchant Bank & Trust’s president, told Tribune Business that the rights issue had performed to its expectations, having predicted there would be a 70-75 per cent ‘take up’ rate among existing investors.

He added, though, that Cable Bahamas’ inability to divulge detailed financial forecasts on the likely benefits shareholders will derive from its mobile license had impacted the outcome.

Mr Anderson also said the Bahamian capital markets’ lack of familiarity with rights offerings may also have deterred some shareholders from participating, given that there had been no such issue for 10-15 years.

He and RoyalFidelity, as Cable Bahamas’ financial advisers and placement agents, are now engaged in a ‘tidying up’ exercise following the rights offering’s official close on Friday, March 4.

Mr Anderson said it had been “informally” extended to allow some institutional shareholders, and smaller retail investors, a chance to participate following complaints that they had not received the rights offering prospectus and other documents.

“There are a number of large shareholders who said they did not get all the documents. It was mailed out many weeks ago, so I don’t know what happened to it,” Mr Anderson told Tribune Business.

“We’re now using this as kind of an informal period to allow people who did not get that document in time a chance to participate. It’s making sure people who were not afforded the opportunity are given the chance to do so.”

The RoyalFidelity chief said large institutional investors, who previously indicated they would subscribe for their full allocation of shares, but had failed to do so, were being contacted to determine whether they were still interested.

The Cable Bahamas rights offering prospectus was mailed out at the beginning of February 2016, in a bid to ensure all shareholders had access to the same rights documents prior to its launch, and that no one gained an unfair advantage from possessing information not held by others.

“It’s impossible to reliably get information out. The postal service in this country is not that reliable, but I don’t know any other way of doing it. And it doesn’t always mean people see it,” Mr Anderson said.

He pointing out that the rights offering documents were also posted on the Cable Bahamas and Royal Fidelity websites, and e-mailed to investors who had provided addresses to the Bahamas Central Securities Depository(BCSD).

Expressing hope that RoyalFidelity’s efforts might yield another “$1 million or so, or maybe more”, Mr Anderson added: “It was always who comes.

“I don’t know why some guys did not participate. CFAL has a bunch of accounts that did not participate, and I don’t know whether they’re going to come in for it or not. Those large accounts are the ones that make the difference.”

The RoyalFidelity chief said the Cable Bahamas rights offering had shown that the BCSD, which maintains the shareholder registers for all BISX-listed companies in its capacity as their registrar and transfer agent, needed to update investor contact details.

“We don’t even know if the address at the BCSD are up to date,” Mr Anderson said. “It’s less than perfect. It’s[the Cable Bahamas offering] shown the inadequacies of the current communications process.

“If we’re going to have another rights offering, the contact details have to be far more thorough than what the BCSD has. It’s an exercise the BCSD is going to have to do to get its e-mail addresses up to date. The mail is not reliable.”

Proceeds from the rights offering will be used to finance Cable Bahamas’ share of the licence fee, and infrastructure build-out costs, for this nation’s second mobile operator.

However, Mr Anderson said the BISX-listed communications operator’s hands were effectively ‘tied’ because it was unable to disclose any financial projections as to the likely profits/returns that its shareholders will receive from the new operator.

Cable Bahamas will have a 48.25 per cent equity stake in the new operator, ‘NewCo’, but the latter has yet to be formally structured and set up. And nor has the Government confirmed the formal issuance of the second mobile license to Cable Bahamas and NewCo.

Suggesting that this might have affected shareholder appetite for the rights offering, which launched on February 22, Mr Anderson told Tribune Business: “The company has been unable to talk about the mobile opportunity and the investment they’re making in that space, and the timing of this transaction relative to when they would have been able to finalise arrangements with the Government is unfortunate.

“People are uncertain what the impacts will be. Everyone expects it will be positive and enhance shareholder value, but no one knows.”

Mr Anderson added that some institutional shareholders elected not to participate, and take up one extra share for every eight they currently hold, because their investment portfolios already have a large position in Cable Bahamas.

The RoyalFidelity chief, though, said that neither he nor Cable Bahamas were unhappy with the rights offering’s outcome, and that it had performed in line with their expectations.

“We’ve raised about 70 per cent, $21 million-odd,” Mr Anderson told Tribune Business. “I expected, and was always reasonably confident, we’d get somewhere around 70-75 per cent, or $20-$25 million.

“You always hope for more, but I don’t think it’s the end of the world. The company is not unhappy with it, and I think it’s still where we’re going to end up. Maybe some large players will come in over the next couple of days or so.”

The offering allowed all existing Cable Bahamas shareholders as at January 26, 2016, to purchase one extra share for every eight they already held.

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