The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Aliv has gained “ownership” of its mobile network equipment by paying off a $24m loan with the proceeds from long-term debt advanced by its controlling shareholder, its top executive has revealed.

Damian Blackburn told Tribune Business that the $70m financing provided by Cable Bahamas, its 47.25 percent shareholder that has board and management control, completes the final stage in the mobile operator’s funding strategy.

Acknowledging that the 18 months required to put the Cable Bahamas funding in place had taken longer than anticipated, something he blamed on a combination of Hurricane Dorian and COVID-19, Mr Blackburn said Aliv was confident it now has the “right structure” in place.

Describing the funds advanced by the BISX-listed provider as “long-term patient capital”, the Aliv chief said one of the advantages was that no repayments of interest or principal are required until the mobile operator has repaid its combined $130m bond and preference share investors.

Having completed its national network build-out and initial subscriber acquisition/market penetration phases, Mr Blackburn said Aliv had been seeking long-term debt financing to complete its funding strategy but no other attractive options emerged.

“We explored that for 18 months, different options for secured financing,” he revealed to this newspaper. “It was a period of economic turbulence, first with Hurricane Dorian and then COVID-19. We did obtain some options, some commercial bank debt financing options, but after careful consideration the Board and shareholders decided to take the offer that was made of a $70m secured loan from Cable Bahamas.”

The government, as majority 52.75 percent owner, would have had to agree to the move. “The primary use of the funds is refinancing,” Mr Blackburn added. “The first use of the funds was to repay the $24m network lease financing we had taken from Bank of China and ING.

“That equipment lease financing financed the purchase of the network equipment. The advantage of refinancing is that we have already started to repay those lease financing loans, and we don’t have to repay them over time. We paid that $24m off with the proceeds, and as a result of paying that full ownership of the network equipment transfers to Aliv.”

The Aliv chief said a further portion of the $70m, some $27m, was used to cover payments that Cable Bahamas had previously deferred for allowing its mobile affiliate to use its infrastructure - namely its towers and fibre-optic cable network - to carry its data, voice and text messaging traffic.

“Cable Bahamas had agreed to defer payments for 18 months,” Mr Blackburn said, confirming that $51m of the $70m received from its controlling shareholder had gone to repaying existing debts. The remaining $19m will be used to execute Aliv’s growth plan.

“Our plan is now fully funded,” he added. “This provides us with sufficient cash on hand to meet the investment needs of the business. The main advantage of the Cable Bahamas $70m secured loan facility over other options examined is its long-term patient capital being provided.

“Because Cable Bahamas is a long-term strategic investor in Aliv they’ve agreed that the debt will not have to be repaid, or interest payments on it, until the bond and preference shareholders that we previously raised funding from have been repaid.

“The other thing to stress is that the process did take a bit longer than planned, 18 months, but this was against the backdrop of a rapidly changing world with Dorian and COVID-19. We believe we’ve arrived at the right structure with the right loan as a result of not rushing to complete the financing. We can obviously see where we are a lot clearer.”

The delayed repayments on the Cable Bahamas facility will ease Aliv’s debt burden and improve its cash flow, with the long-term outlook aligning with its target of achieving net profitability in between its seventh to tenth year in existence.

Repayment of the mobile operator’s bond principal is due to begin in 2022, Mr Blackburn added. Apart from the $60m in bonds, Aliv also has $70m in outstanding preference share debt.