CBL Offers Preferred Shares

Categorized | National News

Posted on 22 July 2016. by Jones Bahamas

Following both the Utilities Regulation and Competition Authority (URCA) & Cable Bahamas Ltd (CBL) press releases issued on Friday July 8th announcing the award of the second cellular license to NewCo2015 Limited (NewCo) and further to its previously announced expansion plans in Florida, CBL announces today that it will be offering a private placement preferred share offering. CBL will issue a total of $50 million (US$30 million and B$20 million) and proceeds from this issue will be used to fund local and US$ operational and capital expenditures.

Barry Williams, CFO of CBL explained, “We expect the wireless services opportunities and growth of our Florida business to drive CAGR of nine per cent in revenues and 14 per cent in EBITDA over the next five years in CBL. In addition we expect further shareholder value growth from our 48.25 per cent equity stake in NewCo, which will enter the $215 million domestic and visitor roaming mobile revenue market, later this year.

“We are now uniquely placed right here in The Bahamas through CBL’s investment in NewCo, CBL’s provision of critical wireless infrastructure services to NewCo under a Managed Services Agreement and through growing our world class Florida Fiber-to-the-Premises business, to drive such revenue and EBITDA growth. Bahamians and non-residents are encouraged to take advantage of this unique and amazing opportunity provided by Cable Bahamas via this private placement to the investment market.”

These offerings will be subject to the usual regulatory approvals and in line with previous issues. The Company plans to list this new issuance on the Bahamas International Securities Exchange (BISX), further supporting the financial markets of the Bahamas and ensuring liquidity in the market.

Research from other markets in the region, where a second cellular license was issued, highlights the potential for growth. In the last 10 years, markets in the Latin American and Caribbean region which have seen a 2nd operator enter the market have achieved a market share within a 27 per cent to 51 per cent range within three years of service launch.

The level of EBITDA NewCo achieves in 3 to 5 years’ time will ultimately determine the value of CBL’s investment in NewCo.

Publicly available information from Digicel’s SEC filings in 2015 show that they have achieved typical EBITDA margins in the 32 per cent to 60 per cent range in markets where they entered as the second cellular operator.

In line with typical mobile network launches, NewCo will require substantial investment in the first three years of its growth phase to fund the $62.5 million it has paid to the Government for the license it won in the auction, to build the mobile network and acquire customers.

NewCo has secured from its shareholders and through its arrangement with its’ selected network vendor the funding required to pay for the license, build the network and launch new world class service.

Royal Fidelity Merchant Bank & Trust and Scotiabank Bahamas (Limited) and their affiliate, Scotia Investments Jamaica Limited, will act as separate placement agents to raise funds both locally and across the Caribbean region.
Anthony Butler, President and CEO of CBL said “CBL has continued to grow since it acquired four Florida based metro fiber and communications companies in 2013. Through securing the second cellular license we now have further opportunity here in the Bahamas to accelerate that growth and secure our position of being the communications provider of choice for the country. Across the World today there are only a handful of similar cellular licenses available and so our investment in Newco provides our investors with a unique and compelling opportunity, we believe not to be missed.”