business@tribunemedia.net
TUESDAY, SEPTEMBER 22, 2020
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FRANKLYN BUTLER
Cable to repay $30m-plus debt By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net CABLE Bahamas yesterday confirmed it has moved into the second stage of its balance sheet restructuring by unveiling the early redemption of $30m-plus in preference shares. The BISX-listed communications provider confirmed in a statement that it plans to pay investors in its Series eight, ten and 12 series preference share classes their US dollar principal as at September 30, 2020. “Cable Bahamas confirms that it will waive the 90-day advanced written notice requirement, and will in lieu of same pay interest for the 90-day period through to December 30, 2020,” the company said. Sources familiar with the situation told Tribune Business the total repayment will be around $35m-$38m, with one adding: “They’re [Cable Bahamas] busy basically looking at optimising their balance sheet” using the proceeds from the $301.5m sale of Summit Broadband last year. Franklyn Butler, Cable Bahamas chief executive, could not be reached for comment but the preference share redemption is the second phase of the company’s balance sheet recalibration following the repayment of $99m in bank debt. Asked previously how Cable Bahamas planned to use the Summit proceeds, Mr Butler said: “We are going to be working with our bankers in the first instance to look at the best capital structure of the proceeds. As you appreciate, we have a fair amount of bank debt that we will address with the bankers as a matter of priority. “After that we will be addressing the preference shareholders and ordinary shareholders in the coming days and weeks once we get our hands around the balance of the proceeds. This is a huge transaction for Cable’s future. It deleverages our balance sheet and allows us a lot more flexibility to leverage our
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NAD seeks waiver over $370m debt By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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HE Nassau Airport Development Company (NAD) is asking its bondholders to waive critical debt servicing conditions following its downgrade to ‘default’ status, its chairman confirmed yesterday. Walter Wells told Tribune Business that the Lynden Pindling International Airport (LPIA) operator has been locked in negotiations since June 2020 with investors who hold the biggest share of its near-$370m US dollar debt once it became clear COVID-19 would prevent it from meeting key ratios. He revealed that NAD is seeking their agreement to waive the “1.3 to 1.0” debt service coverage ratio that it agreed to maintain in persuading investors to part with their money to finance LPIA’s $409.5m redevelopment, after the near-total tourism shutdown and plunge in aviation traffic saw the company’s revenues
• Airport wants debt service change deal • As COVID causes 70-80% revenue fall • And credit rating is slashed to ‘DD-’
LYNDEN PINDLING INTERNATIONAL AIRPORT drop 70-80 percent. Mr Wells also revealed that Fitch, the rating agency that assesses NAD’s creditworthiness and ability to repay its debt, has “recently downgraded” the company from an investment grade ‘BBB-’ to ‘DD-’ - effectively dropping its credit rating to the level of an entity that has either defaulted or is expected to default on its obligations to lenders. Asked how confident he was about NAD’s ability to avoid a debt default, given
the uncertainties surrounding the timing and strength of any tourism and associated aviation rebound, Mr Wells replied: “I don’t know if my crystal ball is better than yours.” He conceded that everything depends on COVID-19 and “how successful we are in getting tourism back into the country”, given that NAD’s revenue and debt servicing model is built on the various fees charged to passengers who pass through
its terminal and consume its services. The Central Bank highlighted the steep fall-off in LPIA passenger activity even when tourism briefly re-opened in July, with just 8,933 outbound departures that month compared to 171,320 the previous year a drop of 94.8 percent. For the first seven months of 2020, total departures fell by 63.7 percent. Still, Mr Wells voiced optimism that negotiations with NAD’s major debt holders on the waiver will successfully conclude within the next three to four weeks, arguing that “it’s in everyone’s interests to work together during this time” and that LPIA was no different from multiple other airports locked in similar COVID-19 related discussions with their financiers.
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Bahamas urged: Remove bankruptcy burden now
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Bahamas must urgently modernise its centuries’ old personal bankruptcy laws to prevent hundreds of persons being marginalised post-COVID-19, a top accountant warned yesterday. Ed Rahming, pictured, Intelisys (Bahamas) founder and managing director, told Tribune Business the pandemic had made it “more important than ever before” to modernise laws dating from 1870 and give debt-shackled Bahamians the opportunity to free themselves from a burden that could last most of their working lives. Writing in a column on Page 2B in this newspaper today, Mr Rahming argued that the Act needed to be reformed such that debtors have “options” enabling
• Accountant: COVID makes reform urgent • Proposes alternatives to 1870 legislation • Warns too many losing prime earning years them to work out legally binding agreements with their creditors to repay some of what is owed under the supervision of the Bahamian court system. He suggests two options, the first being a “consumer proposal” where a debt-stricken person agrees to pay a percentage of their unsecured debts over a five-year period in exchange for the remainder being fully forgiven. This would avoid the stigma of being declared bankrupt while providing debt relief, with the newly-formed Credit Bureau monitoring to make sure no new debt is taken on. Mr Rahming also called for a “bankruptcy”
alternative where insolvency practitioners would liquidate the assets of persons unable to repay their debts, with the sums recovered used to pay-off the amount outstanding on a monthly basis. Once the debts are cleared - something he suggested could be achieved in 12 months - then the debtor is discharged. The Intelisys chief said this marked a sharp change from the current creditordriven process, where a court-appointed trustee takes over every asset and aspect of life for Bahamians who are declared bankrupt, with the impacts “severe” and long-lasting. And, with COVID-19’s fall-out of high unemployment and reduced incomes likely to be with The Bahamas for some time to come,
Mr Rahming argued that it was vital to act now given that increasing numbers of Bahamian individuals and households will be unable to service their debts once lenders end their payment deferral initiatives. He told this newspaper that unless the Bankruptcy Act 1870 was reformed, along with its accompanying rules that were brought into effect in 1958, numerous Bahamians will be “left behind” and condemned to a life on the margins unable to participate in the formal economy due to the debt burden they are carrying. Warning that the wider consequences involve “economic instability” and “social unrest”, Mr
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$3.95 Delayed hotel returns a ‘tremendous blow’ By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net TOURISM operators yesterday admitted that the sector’s proposed October 15 re-opening and value chain have been dealt a “tremendous blow” by major hotels deciding not to re-open. Marvin Gibson, owner/ operator of Marvellous Tours, told Tribune Business of the moves by Baha Mar, Sandals Royal Bahamian and the Hilton: “This has been a tremendous blow, and just like other companies I am sure we have lost thousands and thousands of dollars in revenue. “Our employees are furloughed now at this moment, and we were looking at ways of bringing them on as soon as possible. However, at the moment there is very little interest in bookings ,especially for The Bahamas needing a 14-day quarantine for visitations.” Mr Gibson added: “I have some guests interested in coming. However, when I explain to them the amount of time the quarantine is they say they are not coming. So we’re experiencing a loss. We are preparing for next year and we are doing a lot of marketing, so it will keep The Bahamas in mind and hopefully it will keep us in mind with them. “Right now we’re just doing some social media marketing and that’s about it. We’re keeping our business going. We are semi-open, and we are taking phone calls and those sorts of things. There is not much else we can do at this moment, except send out positive messages about The Bahamas and hope that they reach the right people.” Nicholas Pinder, general manager of Born Free Fishing Charters, said he “doesn’t really know” what impact the hotels’ moves will do for his business. He added: “It will impact the business but we will do what’s best in the eyes of the whole country. “I think if the government was able to do something to assist the small businesses in staying open then they are on the right path. However, I don’t know if they are able to do anything on behalf of the small businessman except talk about it and not do anything.” Mr Pinder added: “For example, we opened up on
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Financial services needs ‘swashbuckling’ reforms By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A BAHAMIAN financial services provider yesterday voiced doubts the government-appointed Economic Recovery Committee (ERC) will propose the “swashbuckling” reforms needed to revive the sector. Paul Moss, pictured, principal of Dominion Management Services, told Tribune Business that the need for a low-rate corporate income tax and other bold moves to place the financial services sector back at the industry’s forefront would likely be “too big” for both the government and committee members. Calling for the committee to back his call for a shift from a “no tax” to “low tax” platform, in a bid to end the scrutiny by the European Union (EU) and others, Mr
• Provider says ‘too big’ for Recovery Committee • Urges corporate tax as he challenges: ‘Be bold’ • Says firm’s revenues down 75% due to COVID
Moss said he held out little hope this would actually occur. “I doubt they would do it,” he told this newspaper. “I think it’s going to be big for them to think about. I don’t think it’s going to happen. Unless something like that happens we are going to see the further
shrinkage of the industry until it cannot shrink any more. “We really have to shore up that industry and do something swashbuckling to show the world we’re serious about being in this industry, that we’re serious about taxation and we’re bring forthright in our tax outlook for the world to see that The Bahamas is on the right stage with doing business in a transparent way. “Until that happens we will continue to be blacklisted and people will shy away from the jurisdiction. Until we open our economy to the citizens of the world and show we have these double tax agreements, and operate in a tax transparent
manner, we won’t be attractive to investors, have people come to our country and get the growth we should.” Mr Moss has long called for The Bahamas to introduce a low-rate corporate income tax of seven percent or less as a means to reposition its financial services industry as a tax transparent sector, on the basis this would give it extra legitimacy and help attract companies to domicile and do business here. The Economic Recovery Committee has numerous members connected to the financial services industry, including John Rolle, the
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