The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas is seeking shareholder approval to “pave the way” for the issuance of two new preference share classes, as part of the financing for its $100 million Florida expansion.

The proxy form issued to investors for the upcoming December 5, 2013, annual general meeting (AGM), seeks their backing to create two new preference share classes - Series 6 and Series 7 - subject to regulatory approval.

The proxy form notes that offering memorandums for both share classes have already been drawn up, on September 30, 2013, and October 29, 2013, respectively in preparation for selling the securities to investors via private offerings.

However, Barry Williams, Cable Bahamas’ senior vice-president of finance, told Tribune Business that neither Series had gone to market yet.

The timing, he explained, hinged on when Cable Bahamas closed the largest of its four Florida acquisitions, namely that of Summit Broadband, something that was expected to happen imminently.

Noting that the dates contained in the proxy form referred to when the offering documents had been drawn up, Mr Williams said: “Those [dates] were specifically relating to the closing of some of the Florida acquisitions. Those are the times when certain agreements were reached with the sellers.

“The only one pending right now is Summit Broadband. In terms of when [those preference share classes] will be issued, I couldn’t say. It depends on the financing of that transaction.”

Mr Williams said Cable Bahamas had always intended to finance its Florida expansion from a combination of its new $135 million credit facility, plus the issuance of preference shares.

The latter will replace some of the bank debt, and Mr Williams told Tribune Business of the approvals being sought at the AGM: “Essentially, we’re paving the way, and once that transaction will have closed we’ll obviously be able to be more definitive in terms of what the issuance is going to be.

“It’s all subject to the closing, which we’re in the process of completing right now. The offering documents are pretty much completed.”

The Bahamian capital markets had been anticipating that Cable Bahamas would come to them for about $40 million worth of preference share financing, but Mr Williams did not confirm the sums involved.

Given that the calendar is now so close to Christmas, it appears likely that Cable Bahamas and its advisers will seek to get the offering away in either the 2014 first or second quarter.

Both Series will carry a 6 per cent interest coupon, with one set to mature (return investor principal) in 2023, and the other in 2016 within 30 months of issuance.

Shareholder approval is required for a change in Cable Bahamas’ Memorandum and Articles of Association, given the expansion of the company’s capital base.

Apart from Summit Broadband, Cable Bahamas’ US acquisitions also include Marco Island Cable, NuVu and US Metropolitan Telecom.

Tribune Business previously revealed that Cable Bahamas is predicting its US acquisitions will triple annual revenue and operating income growth rates beyond what it would achieve if its activities remain confined to this nation.

The BISX-listed communications provider, in an earlier proxy form issued to shareholders, forecasts that the acquisitions will see it achieve compound annual growth rates for revenue and EBITDA (operating income) of 9.6 per cent and 11.8 per cent, respectively, for the five years to end-2017.

This compared to revenue and earnings before interest, taxation, depreciation and amortisation (EBITDA) growth forecasts of 2.3 per cent and 4 per cent, respectively, if Cable Bahamas’ remained a Bahamian-centric company as it is now.

Outlining the rationale for its bid, the Cable Bahamas’ projected that by 2017, its Florida interests would account for 31.7 per cent of total EBITDA.

This would equate to $20.5 million, out of Cable Bahamas; total operating income of $64.6 million - a major leap from the $44.1 million the company is projected to earn if it remains 100 per cent concentrated in the Bahamas.

In similar fashion, Cable Bahamas is projecting that its US purchases - if finally consummated - will generate 40.8 per cent of company-wide revenue in 2017.

At that point, the BISX-listed communications provider is forecasting that $86.7 million in revenues will come from Florida, taking the total to $212.6 million - as opposed to the $125.9 million that would be generated if it remained focused solely on the Bahamas.