The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ new mobile operator yesterday said it had received “a resounding vote of confidence” from local investors, after its $30 million bond offering was “100 per cent oversubscribed”.

Gravette Brown, Aliv’s chief business developer, told Tribune Business that the offering closed two days ahead of schedule, after institutional and high net worth investors subscribed for $60 million.

“We closed our books on Wednesday,” she said. “We are 100 per cent oversubscribed. We went out for $30 million and raised $60 million in the end.

“We had that in the bag by Tuesday afternoon, and had to turn away substantial investors who wanted to make substantial investments. We’re very happy with the response.”

Ms Brown said Aliv was especially gratified that it had provoked such a reaction from sophisticated investors, interpreting this as a sign that its business model, vision and services were understood and gaining rapid acceptance.

“We feel this result is really a statement of investor confidence in our brand and business model,” she told Tribune Business. “We think it’s resounding support for the business model, and gives us the ability to execute on the business plan we’ve had for the past five months.

“We’re a start-up company, and very early to go to the market, so for investors to support us in this way, it invigorates the brand.

“We’ve been working day and night to deliver this company and model, and this is just a resounding confidence vote in Aliv’s performance in a short period of time. It shows that we’ve done everything right from a network, business model and people perspective.”

Ms Brown said Aliv’s bond issue had effectively been oversubscribed in just four working days, as the private placement memorandum (PPM) disclosing all material details to investors was only released last Thursday.

The $30 million issue was scheduled to close today, but the investor response was such that it closed on Wednesday morning, some 48 hours ahead of schedule.

Ms Brown said that while Aliv was still effectively a ‘start-up’ company, the bond offering’s oversubscription showed Bahamian investors believed in its strategy and business plan.

“It really is a signal from the investor community that a 14-15 week start-up has a great future,” she added. “While we are a start-up, we behaved as a mature company that can deliver and execute on a business plan.

“It’s been recognised by the Bahamian investment community that we are a solid enterprise with a solid network and solid business plan.”

Ms Brown said the bond offering’s success also “sends a very clear signal” to Aliv’s detractors, some of whom have engaged in social media postings amounting to a smear campaign or vendetta against the operator.

“It sends a very clear signal to everyone else in the market that has an opposing view,” she told Tribune Business of the 100 per cent oversubscription. “It draws a line under the naysayers.”

Ms Brown said the extra capital raised would enable Alive to “proceed very comfortably” with its network infrastructure and services roll-out across the Bahamas.

She added that it would provide a further “buffer” against any unexpected challenges the new mobile operator may encounter, with Aliv remaining “conservatively leveraged”.

“It will just enable us to proceed very comfortably,” Ms Brown told Tribune Business of the $30 million oversubscription.

“We are very conscious of the responsibility we have. We remain a conservatively leveraged company, with $135 million in equity versus $60 million in debt. We are in a pretty comfortable position to start executing on the business and value proposition going forward.”

She continued: “We will be able to easily surmount challenges. We know there’s competition, and that there’s quite a pathway to go in terms finishing, but we’re very confident we will be able to surpass our targets and any hurdles thrown up in the way.

“It gives us a very nice cushion, and that additional funding will allow us to comfortably execute going forward for the next three to five years easily.

“The fact we’re able to still remain conservatively leveraged, and have a pretty good buffer for contingencies, means the financial strength and financial health of the company’s future is well assured.”

The $30 million bond issue is supposed to be followed by Aliv obtaining a $20 million line of bank credit, but Ms Brown declined to comment on whether this is still in the plans given the offering success.

Aliv’s $30 million bond issue was split into two equal $15 million tranches. One tranche, with a 10-year term, carried an interest coupon of 8 per cent. The second tranche, which had a 15-year maturity term, carried a dividend of 8.5 per cent to compensate investors for the longer term and extra risk.

Ms Brown did not detail how the $60 million was split between the two tranches, but she emphasised that Aliv spent much time at its ‘investor roadshow’ last Tuesday answering all questions from attendees.

Disclosing that the event attracted triple the audience expected, with 150 persons present, she added: “People came up to us at the end and said: ‘We understand so much more about the company. The vision you have, we get it’. That’s effectively what people were saying at the end of the day.”

Aliv, which has gained more than 50,000 subscribers to-date, reaffirmed it had a 28 per cent share of the market currently available to it - mainly pre-paid subscribers.

It is now starting to penetrate the corporate and post-paid segments, while the arrival of number portability on April 25 will enable it to target the estimated 100,000 mobile users who will not switch operator unless able to retain their existing number.

Ms Brown said Aliv’s performance to-date matched, and was even slightly ahead, of what had occurred in other Caribbean countries when a second entrant came into newly-liberalised mobile markets.

“There is an incredibly solid business plan, the funding has always been there,” she told Tribune Business, “but this offering is a very Bahamian vote of confidence for a 100 per cent Bahamian-owned company for what it has done in 14 weeks, and what it will do in the future.”

Aliv, which only launched services in late November 2016, is 48.25 per cent owned by BISX-listed Cable Bahamas, which has Board and management control.

The majority 51.75 per cent equity stake is held by HoldingCo, which is currently owned 100 per cent by the Government, prior to its own shares being sold to Bahamian institutional investors.