The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Waste yesterday became the latest BISX-listed company to unveil a share buyback programme, its managing director suggesting that its stock was undervalued by around 30 per cent.

Francisco de Cardenas told Tribune Business that with the company undertaking no new capital expansion projects within the last 18 months, it felt the share buyback - and recent $0.09 per share dividend - were the best use for its surplus cash.

And, in common with the likes of Cable Bahamas and, more recently, AML Foods, Bahamas Waste believes the illiquid Bahamian capital markets have depressed its stock price below what its true value should be.

“Because we haven’t done any capital projects over the last year-and-a-half, we have a bit of a cash surplus and feel it’s the right thing to do,” Mr de Cardenas told Tribune Business of the share buyback programme.

Bahamas Waste’s share price is currently trading at its 12-month low of $2.10, its high during that period coming when it hit $2.70 in March this year.

When asked by Tribune Business how much he felt Bahamas Waste’s stock was undervalued, Mr de Cardenas replied: “You’re probably talking about 30 per cent or more. I think we should be at the $3 mark or more. We’re at $2.10 or something at the moment.”

In common with most BISX-listed companies, Bahamas Waste and its 1,500 shareholders have seen its stock price decline over the past five years, as many small retail investors headed for the exit in search of instant cash for their holdings.

As a result, many stocks failed to trade on fundamentals, with retail investors prepared to sell at a discount to the existing market price.

This pushed share prices down still further, and with buyers few and far between, many publicly-listed companies saw a massive ‘overhang’ or supply of sellers build up.

That overhang is starting to dissipate for many stocks, but BISX’s website shows that all six existing Bahamas Waste ‘open orders’ are from sellers.

They are looking to sell for prices ranging from $2.31 to $2.10 per share, and in two cases relatively large blocks are being offered for sale - one 24,000 shares in size, and the other 26,500.

Indicating that Bahamas Waste intended to eliminate the seller ‘overhang’, Mr de Cardenas said yesterday: “It would be good for those wanting to get out, my shareholders that want to stick with us, and generally good all around.”

Notice of Bahamas Waste’s plans has already been given to BISX and the Securities Commission.

The share buyback will allow Bahamas Waste to purchase up to 10 per cent of its ordinary shares, some 420,000 in total, over a 36-month period that ends on October 31, 2015.

Peter Andrews, Bahamas Waste’s chairman, said in a statement that the initiative was designed to increase shareholder value by buying back some outstanding ordinary shares, and thus improving earnings and dividends per share.

“We believe that our existing share price has been deflated by an illiquid market and sellers in need of cash, selling their shares well below the ‘real market value’,” Mr Andrews said.

Bahamas Waste is merely the latest in a long line of BISX-listed companies to undertake a share buyback programme.

Cable Bahamas was the first, and AML Foods joined the club in January 2011, just prior to a ‘hostile’ takeover bid by then-City Markets principal, Mark Finlayson.

AML Foods repurchased another 40,511 of its ordinary shares, at an average cost of $1.18 per share, during the three months to end-April 2012.

“As at April 30, 2012, the company had repurchased a total of 265,679 shares at an average cost of $1.17 per share,” the BISX-listed food retail and franchise group said.