The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FOCOL Holdings could have raised "far more" than the $16m received in Monday's preference share offering, its chairman said yesterday, as it moves into an accelerated "growth mode".

Sir Franklyn Wilson told Tribune Business that the BISX-listed petroleum products supplier, which is now diversifying and expanding into utilities and renewable energy, decided to "cap" its Series E preference share raise at $16m and return to the Bahamian capital markets at a later date when further financing may be needed.

Acknowledging that the $16m was itself a 60 percent oversubscription, compared to the original $10m target, he added that FOCOL has "drastically expanded and strengthened" its management team to enable the group to take on more than one new project at the same time.

Sir Franklyn, confirming that a portion of the $16m will finance the five mega watt (MW) solar plant agreement that its subsidiary, Bahamas Solar and Renewables, signed with Grand Bahama Power Company earlier this week, indicated that further deals were in the pipeline and that FOCOL will likely "have more to say" before its financial year ends on September 30, 2023.

Describing the fuel supplier as a "widows and orphans stock", due to its consistent payment of quarterly dividends to shareholders, he added that it was seeking to balance its growth drive with a conservative capital structure that will not expose it to undue demands from banks and other secured creditors.

"FOCOL corporate group is very much in a growth cycle," Sir Franklyn said following Monday's preference share offering, which needed one day rather than the allocated two, to close. "We have drastically expanded the management team at FOCOL, and they have identified a lot of circumstances and opportunities. That's the first principle.

"The second principle is that FOCOL is deeply committed to the idea of being conservatively financed. We don't want to get into any situation where we're under pressure from any bank or anything of that type. We manage the company in such a way that it remains a widows and orphans stock. That is to say, from the time we went on the stock market, every quarter we have paid our dividend. That dividend separates FOCOL from most, if not all, other companies on BISX."

FOCOL's latest preference share issue offered investors a 6.25 percent interest coupon, just 0.25 percentage points higher than the recently-closed $145m Nassau Cruise Port bond offering. The ten-year securities will mature on April 30, 2033. Subscriptions were accepted on a first come, first-served basis, and the minimum investment required to participate was $50,000 with the option to acquire increments of $10,000 thereafter.

The first dividend payment will occur on October 31 this year, and dividends will be paid semi-annually every April and October until April 30, 2033. "We spoke to the capital markets people about $10m," Sir Franklyn said of discussions with CFAL. "They came back with a number that was drastically higher than $10m. They came back to us and said the market's appetite is there to go considerably in excess of that.

"They then told us when they reported back that they could have raised considerably in excess of $16m. We decided to cap it at $16m on the basis that we know there are some more growth things coming. We'll go back another time. We committed to the capital markets, and those that have that confidence, that we'll do all we possibly can to justify that confidence over time."

CFAL, the preference share issue's placement agent, said FOCOL will use the offering's proceeds to expand Bahamas Utilities Company, its wholly-owned subsidiary that was formed to facilitate expansion into the energy industry. Sir Franklyn, confirming that some of the raise will be used to finance the Freeport solar deal, reiterated: "FOCOL is in growth mode.

"We have deepened and strengthened the management and there's a lot of capacity to do a lot of things. For years and years, one of the reasons that the company has been successful in sustaining the dividend is we've been very careful about how many things we do at one time. We don't stretch ourselves too thin.

"The opportunities are before us, as much as we have deepened and built capacity, which gives us the confidence to do more than one thing at a time. That's where we are now. The point to say to the capital markets people is the level of expertise within FOCOL is very, very impressive."

With the BISX-listed petroleum products supplier expanding into utility-scale energy and renewables, Sir Franklyn pledged that there is more to come. "The announcement you heard this week is not the last you will hear from the company. There's a high probability that before the end of the financial year, which is September 30, we will have more to say.

"From where we sit, what we see, there's considerable room for investor confidence in the country. We believe there's light at the end of the tunnel, and we believe the economy is poised to grow strongly and we will do everything we can to help those prospects."