Aliv to 'kick on' via latest $15m raise

photo

Damian Blackburn

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Aliv’s top executive last night said it was “very confident” of hitting its latest $15m capital raising target as it bids “to kick on to the next level” of its growth strategy.

Damian Blackburn told Tribune Business that the latest financing will provide the mobile operator with sufficient capital to enable it to “hit the next milestone” beyond the positive EBITDA (earnings before interest, taxation, depreciation and amortisation) position it is targeting for the 2019 calendar year.

Disclosing that Aliv was now “very close” to generating enough cash flow to cover all its operating expenses, including the “acquisition” of new customers and market share, Mr Blackburn said the next goal is for the business to be able to cover its network investment and financing costs from internal resources.

The $15m, which has been raised from the issuance of preference shares via a private placement to select institutions and high net worth investors, will thus give Aliv the funding base to meet its capital and financing costs until it achieves the latter objective.

Mr Blackburn also moved to ease capital markets concerns that Aliv is taking on too much debt financing, telling this newspaper that the mobile operator’s capital structure is “appropriate” for the business and constantly reviewed to ensure it is “optimal” for each growth phase it passes through.

He added that the $15m raising, which closed at the end of last week, completes the issuance of Aliv’s $70m in authorised preference share capital. The $55m balance was previously placed with Bahamas-based investors in 2018.

“We’re in the process of finalising it, and we’re very confident that we’ll get the $15m done,” Mr Blackburn confirmed to Tribune Business of the latest capital raise. “We raised $55m from the last preference share issue, and were authorised to raise $70m.

“We’ve been keeping our ear close to the market, and decided it was time to go back to it... We’ve obviously moved on. We’re getting closer to EBITDA positive and operating cash flow break even, still investing in the network and customer acquisition, and then there’s our financing obligation. Until we hit the next milestone, the business still needs financing.”

Aliv is set to achieve a positive EBITDA position within three years of its November 2016 launch, a timeline well within industry norms as most mobile start-ups take between two to five years to achieve this.

Mr Blackburn last night explained that “the next milestone” referred to Aliv being able to pay its capital and financing costs from its own operating cash flows, with the latest capital raise ensuring it has the financial wherewithal to cover these expenses until that goal is hit.

“We’ve said we will hit EBITDA positive this calendar year, which we are confident of doing and very close to,” he told Tribune Business. “That means we will have sufficient cash flow to cover our operating needs including customer acquisition costs.

“We still have to finance a little bit more network investment, and generate sufficient cash that services our financing obligations. The financial milestone we are focused on is EBITDA positive, we are making great progress, will definitely get there in 2019, and the next milestone will be growing further to finance capital investment and the cost of financing.”

Aliv is 48.25 percent owned by Cable Bahamas, which has Board and management control at the mobile operator. A significant number of the BISX-listed communications provider’s shareholders have become uncomfortable about the near-$400m debt currently sitting on its balance sheet as a result of the need to finance its mobile and US expansions.

Aliv’s own capital needs are now inching close to $300m, inclusive of the $136m in start-up financing provided by Cable Bahamas and its other shareholder, the Government, but Mr Blackburn yesterday reassured that there was no cause for market alarm.

Revealing that Aliv’s subscriber base has now hit 150,000 customers based on a 60-day subscriber ‘churn’ cycle, he said: “We have a very clear handle on our plan and what we need to do. We’ve taken a debt level for the business that we think is appropriate given its needs and where we will grow to in the future.

“We’re keeping a very close eye on making sure we get that structure right. We constantly review with our shareholders what is the appropriate capital structure for the business, and it will be optimised as we go through different phases.”

Mr Blackburn emphasised: “We’re in that step of finishing this preference share raise and are looking at the optimal balance sheet structure. As we’re going through the different phases we need different structures to the business.

“Getting $15m raised from the preference shares is the right step now, and we will look at the balance sheet structure over the next 12 months to assess the right position for secured debt and unsecured debt.”

Mr Blackburn said Aliv had enjoyed “a great year”, adding: “In the last 12 months we’ve been generating market share in a lot of new segments of the market, and the results showing that return are coming through now as we’ve added all these customers.

“We’re very happy with where we are right now in terms of customer growth, but need to kick on now and have the right financing structure to take us to the next level.”