The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas is warily eyeing the need to repay more than $300m in preference share debt over a five-year period from 2023 to 2027, its top executive said yesterday.

Franklyn Butler, the BISX-listed communications provider’s president and chief executive, told Tribune Business that the ongoing COVID-19 uncertainty could impact its plans to repay investors as it mulls how to best use the $301.5m proceeds from Summit Broadband’s sale.

With Cable Bahamas’ decision to yesterday terminate 87 staff likely to attract scrutiny given perceptions it is cash-rich, having received these funds prior to the pandemic taking hold, Mr Butler pointed to its substantial preference share debt as one medium and long-term factor in play.

Reiterating that “prudence is the name of the game”, he said Cable Bahamas’ management and board were waiting for signs of an economic turnaround - and to determine where the country and its economy “land” before deciding how the balance of the Summit Broadband proceeds will be employed.

Pledging that Cable Bahamas and its Aliv mobile affiliate will seek to exploit “all and any upside” opportunities created by the COVID-19 pandemic, Mr Butler also revealed that it is aiming to “launch a couple of solutions” for the Bahamian communications market within the next few months.

While declining to go into detail, he disclosed that these will be cloud-based products and services targeted at the increasing number of Bahamians now working from home as a result of the COVID-19 crisis.

This, the Cable chief said, would help to somewhat “offset” - but not replace - the revenues lost as a result of major corporate clients in the hotel and tourism industry either discontinuing or reducing their demand for communications services due to the pandemic-related shutdown.

Cable Bahamas’ balance sheet as at March 31, 2020, indicates that some of the $301.5m Summit Broadband proceeds may have already been used. For the BISX-listed communications provider’s total bank debt, owed to Royal Bank of Canada and Scotiabank, has been slashed by more than half compared to nine months’ prior.

Total bank debt fell from $163.522m at end-June 2019 to $71.348m, indicating that Cable Bahamas’ had begun to deleverage its previously $464.5m debt-laden balance sheet just prior to COVID-19’s arrival.

The company’s cash and cash equivalents, though, had also jumped by just over $100m in nine months to $140.548m, with its retained earnings boosted by $94m despite a $22.755m net loss for the nine months to end-March 2020.

This backs Mr Butler’s assertion that “no determination has been made” on how to use much of the Summit Broadband sales proceeds. Cable Bahamas’ disposal of its former Florida affiliate now looks especially well-timed due to both the COVID-19 pandemic and, in particular, its effects on that state.

“We think we are are ready to manage the risk and the fall-out, and the COVID reality, and will be prudent at this time in what we have to do to protect the interests of shareholders and the employee base,” Mr Butler told Tribune Business.

“The Board is continuing to manage our organisation and where we are with the fall-off in revenue and the impact of COVID-19. The Board wants to make sure we are prudent. We want to protect as many of our associates [employees] and the company before we make any decision on the balance sheet.

“Prudence is the name of the game. Until we see where the country lands, and until there’s positive indications of a turnaround, it’s very much wait and see.”

While some observers will likely question Cable Bahamas’ need to terminate 60 workers given its substantial cash resources, Mr Butler said the two were not connected and other factors were in play as to how the company employes its Summit Broadband windfall.

“There’s a lot of preference share debt that matures in the not-too-distant future,” he said. “I think most of it is in 2023 and 2024; I think around that time. I’m sure we may be able to refinance it, but in uncertain times no one wants to be refinancing that for sure.”

Cable Bahamas’ annual report shows that $114.5m worth of preference share principal is due for repayment to investors in 2024, with a further $75m maturing the following year. Before that, some $15m is due for repayment in 2023, and just over $28m in 2026.

And repayments of almost $69m in preference share debt taken on by Aliv, the mobile affiliate in which Cable Bahamas has a 47.25 percent equity stake, complete with Board and management control, must start being repaid in October 2023.

Mr Butler, meanwhile, said Cable Bahamas had not lost sight of the need to exploit new COVID-19 related opportunities and help compensate for revenue losses on its traditional business lines.

“We do have a couple of solutions we will be launching in the next couple of months,” he told Tribune Business. “We see an opportunity to reposition our business in the sense that we have a couple of products that are going to be cloud-based.

“People need more solutions and connectivity, those people that are moving to work from home. We’re going to keep our eyes and ears open for new products that serve people working from home.

“Will that offset the loss of hotel revenue? I doubt it. But at least we’re going to try and do what we can to be well-positioned. I am hopeful that we will be able to be creative and innovative in finding ways to offset some of the revenues that we get from the hotel and hospitality sector.”

Mr Butler continued: “We do have a track record of being creative and finding solutions in a crisis. I always remind people that Aliv effectively launched two to three days before Hurricane Matthew, so we have learned a lot about how to be resilient in difficult moments.

“What I say to you and all our shareholders is that we are committed to managing through this crisis, and finding all and any upside that exists in this unprecedented economic time in the world.”