The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FOCOL Holdings is “pregnant with opportunities”, its chairman said yesterday, as it unveiled a $25m rights offering for existing shareholders to finance further expansion plans.

Sir Franklyn Wilson told Tribune Business the BISX-listed petroleum products supplier is firmly “in growth mode” and not securing extra equity fund- ing to merely “leave it in the bank” as it revealed an issue where investors will receive one new share for each 20 they currently hold.

While declining to specify how the proceeds will be used, he added that the $5 per share rights offering price represents a 9-10 percent discount to the $5.45-$5.50 that existing shareholders are seeking for their holdings via the Bahamas International Securities Exchange (BISX) market. As a result, Sir Franklyn suggested that investors will receive an immediate 10 percent return simply by participating.

“In the last chairman’s report, we referenced the fact that the company is in growth model, and we are as a company deeply committed to the idea of being conservatively financed,” Sir Franklyn said. “So, if we are expanding, we want to make sure we do so without moving away from that concept.

“We are very much in growth mode, so we just want to make sure that before we go making commitments and so on and so forth that we have money in the bank. With the rights offering, we have a large number of shareholders and it has been a long time since we have done some- thing like this. We want to give them an opportunity to grow with the company.”

Sir Franklyn hinted strongly that this will not be the last capital raise that FOCOL Holdings conducts and it may well approach its shareholders again in the future. “I can foreshadow this is not likely to be our last offering, and in that we anticipate it opening up to more investment more broadly.”

The rights issue, which involves a total five million new shares potentially being issued, and could take outstanding stock to 105.2m if fully subscribed, will launch next Thursday, February 22, and close a month later on March 22. Offering documents will be issued to all FOCOL Holdings shareholders on record as at February 21, 2024.

Asked by this newspaper how the BISX-listed petroleum products sup- plier plans to employ the rights offering proceeds, Sir Franklyn replied: “We’re pregnant with opportunities, put it that way. We’re pregnant with opportunities. The company is in an extremely strong position.

“Obviously there will be a time to get more specific, but the company is pregnant with opportunities. The company is in a very strong position. We feel confident in the management capacity we have.” Sir Franklyn praised both Dexter Adderley, FOCOL Holdings’ current chief executive, and his predecessor, Anthony Robinson, who remains on the firm’s Board as vice-chairman.

“We’ll have more to say on that in the not too distant future,” the FOCOL chairman reiterated over how the rights offering proceeds will be used, “but I can assure shareholders we’re not getting the money to leave at the bank. And I wish to emphasise that all existing FOCOL shareholders have an opportunity to participate in this offering. All.”

FOCOL Holdings, in its recently-unveiled results for the year to end-September 2023, revealed a 52.7 percent or more than $11m increase in net profits to $32.621m as opposed to $21.327m for the prior year. Earnings per share (EPS) jumped from 18 cents to 30 cents.

“It’s interesting to note that today, if you go into the market data, the lowest price at which [FOCOL] shares are offered for sale is $5.45 or $5.50,” Sir Franklyn said. “The current trading price is $5, but there are no sellers at $5.

“Any person wanting to sell will not accept less than $5.50, which means that for all practical purposes shareholders can make a 10 percent return on their money just by exercising their rights. We hope all the shareholders take note of that. We did this in part for them to get additional benefits from the confidence they have reposed in the Board and management.”

Asked how confident he is that the rights issue will be fully subscribed for the entire $25m, Sir Franklyn replied: “We’ll see but it’s compelling. The market is saying that if you buy today you have to buy at $5.50, and the rights offering is at $5 so you’ll make 50 cents and get a 10 percent return when you buy.

“We’ve done all this before the offering opens so that all shareholders are aware and can make arrangements to benefit. We want all shareholders to benefit and, by bringing it out at this time and giving them notice they have time to organise their affairs to take full advantage of this opportunity.”

Sir Franklyn said the significant pension fund holdings of FOCOL stock meant “thousands and thousands” of Bahamians ultimately stand to benefit from the rights issue. “FOCOL is the equivalent of a widow’s and orphan’s stock,” he added. “This is the stock people buy to plan for their children’s future and pay for their school fees.”