The Tribune

Cable Bahamas has removed one of the last obstacles to consummating its Florida expansion through the $135 million refinancing of its senior credit facility.

The refinancing, long flagged and announced last week, will pave the way for the BISX-listed communications provider to close the purchases of Summit Broadband and Marco Island Cable/NuVu.

Tribune Business understands that the acquisition closing for Marco Island/NuVu, the cable TV operator piece in Cable Bahamas’ Florida jigsaw, could be announced as early as today. If not, the formal announcement is almost certain to come this week.

And the deal for Orlando-based Summit Broadband, the Internet provider, is set to be completed within the next three weeks. It has taken the longest because it is the largest of Cable Bahamas’ acquisitions.

The BISX-listed provider was able to finance the $24.9 million purchase of US Metropolitan Telecom, the fibre optic infrastructure provider and glue that will hold all the other deals together, from its previous credit facility.

That has now been replaced, and paid out, by Cable Bahamas’ new $135 million senior secured facility. This features a $100 million term

loan, $15 million revolving credit facility and a $20 million incremental credit facility.

Interest payments are based on the London Inter-Bank Offering Rate (LIBOR), and have margin spreads ranging from 2.5-4 per cent on top of this. Apart from refinancing its current bank debt, Cable Bahamas will use the proceeds from the facilities to complete the Florida purchases and pay all fees and expenses related to the refinancing and acquisitions.

“The closing of this financing completes the next milestone in the long-term strategic plan that was adopted 19 months ago,” said Anthony Butler, Cable Bahamas’ chief executive.

“We are pleased to have completed the refinancing of Cable Bahamas’ Senior Credit Facility on attractive terms. The business is now appropriately capitalised for the next chapter of the company’s growth”.

Mr Butler added: “The refinancing will enable Cable Bahamas to continue with its growth strategy, complete the acquisition of the US target companies, and also facilitates the flexibility to execute its plans to continue providing, enhancing and expanding the suite of telecommunication services in the Bahamas.”

Cable Bahamas’ senior vice-president and chief financial officer, Barry Williams, said: “The refinancing we just completed is the largest in the company’s history, and is another milestone that will greatly contribute to the continued success, to our financial strength and operating performance.

“We are pleased with the ongoing support from our banking partners, and we believe the enhanced financial flexibility and our already-strong free cash flow will serve us well into the future.”

The syndicated term loan involved RBC Capital Markets, Scotiabank (Bahamas) and CoBank, headquartered in Denver, Colorado. RBC Capital Markets acted as sole lead arranger and bookrunner for the cross-border facilities in the transaction.

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 the 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 to acquire Summit Broadband, Marco Island Cable/Nu Vu and US Metropolitan Telecom, the Cable Bahamas’ proxy 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 – when 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.