The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FOCOL Holdings’ planned stock split is designed to “spread the wealth” from its increased profitability and growth prospects, its chairman said yesterday.

Sir Franklyn Wilson told Tribune Business that the ‘three-for-one’ split was intended to make the petroleum products provider’s stock more accessible to retail investors, and boost liquidity and trading activity.

He added that the stock price had enjoyed “a remarkable run” in reaching yesterday’s $9.79 close, and suggested there was pent-up demand for FOCOL Holdings’ shares given that there are more outstanding ‘Buy’ than ‘Sell’ orders.

“We’re bullish about the future, and want more and more people to benefit from it,” Sir Franklyn told this newspaper. “In terms of what we want to accomplish, we are hoping the three-for-one split will increase liquidity and trading in the stock.

“If you have nine of something, you may be more inclined to sell three rather than if you have three, and may only be inclined to sell one. What has happened is that FOCOL has evolved into a real ‘widows and orphans’ stock.

“What I mean by that is there appears to be real demand for it. We’re trying to do all we can just to increase it.”

The ‘three-for-one’ stock split will mean that every existing FOCOL Holdings shareholder, as at record date September 7, 2017, will be entitled to another two ordinary shares for each one they currently hold.

Confirmation of the extra shares’ issuance will be mailed to shareholders on September 14, which is when trading at the new, post-split price is expected to begin on BISX.

FOCOL has yet to provide any details on the post-split price, although it is likely to be around one-third of the present $9.76. Its authorised ordinary shares will increase from 160 million to 480 million, while those that are issued and in the hands of shareholders will rise from 33,893,153 to 101,679,459.

The company’s stock price has steadily increased to its current level, and Sir Franklyn added: “The company has enjoyed a pretty remarkable run in terms of increased profitability.

“We’ve gone from $6 to nearly $10 in a pretty remarkable period of time. FOCOL is in a position where the capital markets think sufficiently of the company to drive the stock up significantly, and more people beyond the capital markets realise its impact upon the country.

“We’re trying to spread the increase in the company’s profitability and growth prospects, and believe this is one way to do it.”

Stock splits are nothing new to the Bahamian capital markets, with Commonwealth Bank and Cable Bahamas two BISX-listed companies to previously implement this process - the latter two years ago with the same ‘three-for-one’ split.

They are typically done to make a stock in demand more affordable to investors, as well as broadening liquidity, boosting trading volumes and expanding the investor base.

Sir Franklyn yesterday said “companies that perform well” tended to carry out stock splits, unlike poorer performers. “The company has had a good run, and we believe that run is sustainable,” he told Tribune Business.

“More people have shown increasing interest in the stock. If you go on BISX’s website, there are more people who want to buy the stock than want to sell it. There are more ‘Buy’ orders than ‘Sell’ orders, and no one wants to sell at less than the market price.

“That is a sound indication there is pressure for the stock price to go even higher. If no one wants to sell at the trading price, that’s a reasonable basis to assume your stock price will go up rather than down.”

Sir Franklyn suggested that Bahamian interest in FOCOL Holdings as an investment had been raised by the company’s post-Hurricane Matthew performance, dealing with the short-lived panic over rumoured fuel shortages and the damage to Clifton Pier’s jetty.

“FOCOL played a very significant role in ending the pandemonium that reflected itself in the long lines at the gas stations. FOCOL’s performance did not go unnoticed,” he said.