Looking at the BISX website, Cable has a $6.55 bid/buy price, significantly down from its highs.
The current price reflects the share dilution the rights issue has caused. Rights issues are normally done when a company tries to incentivise current shareholders to buy more stock because they would be challenged to sell more shares at the current price as a secondary offering. The rights issue gives the appearance to unsophisticated investors that they are getting something at a discount or getting some sort of deal, which they are not. All it does is increase the number of shares and dilutes the earnings.
Unlike Commonwealth Bank which remains focused on its core businesses, Cable Bahamas has diverge into phone service (service reception is poor and inter-connectivity with BTC is problematic), US cable service (US services providers will eat them for lunch in the longer term), Bahamian cell service and now going into business with the Bahamian government (never a good idea for anyone). To finance this expansion Cable and the Bahamas government will issue and take on more debt (also not a good idea).
The cell phone service will be a spectacular failure as large amounts of debt is being accumulated to buy the licenses, fund the government's 51% ownership and build cell towers (looks like BTC short towers can't handle any more antenna...surprise, surprise). Unfortunately this is all happening at the same time that BTC cell services is seeing declines in revenue due to WhatsApp (which now has 1.1 billion users worldwide and growing at the rate of 100 million users per month). Who in their right minds will make a cell phone call when they can WhatsApp someone for free?
Also Cable's TV channel selection, quality and set top boxes are outdated and very expensive. Most people I know are cutting the cord and getting Apple TV, Amazon Prime or Roku and getting 1080i HD quality reception and TV shows you actually want to see!
Those who are able to get out at $6 will be the lucky ones.
Year to date their share price is down 7% due to the recent stock market turbulence but their dividend is intact. In fact if you read the attached press release you will see that they increased their dividend by 3%.
John you are confusing RBC with FINCO which is a tiny part of this well capitalized global bank. If something happened to finco, rbc will be able to back it with their global capital base. The Bahamas government is also backing the BoB with a "commitment letter" but it would surely need to borrow funds to recapitalized the bank if push came to shove.
The difference in parent and capital backing makes a comparison of rbc finco and BoB not appropriate and misleading. I am sorry if I have offended you. It is not my intention.
While FINCO may not be paying a dividend and its share price is down they are in compliance with Central Banks capital ratios and they are run with an independent board.
The problem with BoB is its linkages to the wider economy. Government is its largest depositor, its largest shareholder, its largest borrower, it appoints all of its Directors and its management maybe sympathetic to the current administration. Since the government runs its books on a cash basis and not GAAP it is in no hurry to realized possible losses they maybe lurking on the balance sheet of BoB due to its inability to make new loans and aggressively sell off poor performing loans.
In essence BoB is a "zombie" bank similar to BDB. Not exactly alive but far from dead. NIB is loathed to inject further capital as it has ever increasing obligations to the Bahamian public as the economy continues to have lack luster growth.
What the Government should to is to commence and orderly liquidation of the Bank due to its lack of capital, which inhibits it from growth. BoB cannot be turned around without fresh capital. Where will it get the money from to make new loans? The public would be horrified if the BoB said it was making new loans and growing its balance sheet when additional capital is need to meet minimum regulatory capital requirements.
John, your information is inaccurate. On a consolidated basis RBC is s well run, profitable and well capitalized Canadian bank with independent directors.
BoB is an undercapitalized, unprofitable, Bahamian government controlled entity. It's Board of Directors are all political appointees.
No independent director will join its board because the first thing they will need to do is close it down and launch a costly forensic audit.
The government, regulator and exchanges strategy is to monitor its operations and "kick the can down the road". This never ends well as banks are intrinsically linked to the broader economy and systemically important. They are treating it like Bamsi, Baha Mar or the Post Office Bank.
...by the time you pay VAT, customs duty, BEC, business license fees, pay for security, risk your life in a small business ya really needs ta tink twice
MonkeeDoo, you are right. Everyone I know is trying to get money out of this Country before a further credit downgrade, a blowup at BoB, the national debt going past $7 billion or the VAT money is used and the current account goes back to $200m per quarter losses. Remember we have an election next year...in election years the government usually spends about $1 billion to "renovate" the country.
observer2 says...
...if only he could fight this hard when dealing with the D average of our school system.
On ‘Activists seek to topple govt’
Posted 18 March 2016, 2:48 p.m. Suggest removal
observer2 says...
http://tribune242.com/users/photos/2016…
On Cable rights issue hits 70% of target
Posted 10 March 2016, 7:38 a.m. Suggest removal
observer2 says...
Looking at the BISX website, Cable has a $6.55 bid/buy price, significantly down from its highs.
The current price reflects the share dilution the rights issue has caused. Rights issues are normally done when a company tries to incentivise current shareholders to buy more stock because they would be challenged to sell more shares at the current price as a secondary offering. The rights issue gives the appearance to unsophisticated investors that they are getting something at a discount or getting some sort of deal, which they are not. All it does is increase the number of shares and dilutes the earnings.
Unlike Commonwealth Bank which remains focused on its core businesses, Cable Bahamas has diverge into phone service (service reception is poor and inter-connectivity with BTC is problematic), US cable service (US services providers will eat them for lunch in the longer term), Bahamian cell service and now going into business with the Bahamian government (never a good idea for anyone). To finance this expansion Cable and the Bahamas government will issue and take on more debt (also not a good idea).
The cell phone service will be a spectacular failure as large amounts of debt is being accumulated to buy the licenses, fund the government's 51% ownership and build cell towers (looks like BTC short towers can't handle any more antenna...surprise, surprise). Unfortunately this is all happening at the same time that BTC cell services is seeing declines in revenue due to WhatsApp (which now has 1.1 billion users worldwide and growing at the rate of 100 million users per month). Who in their right minds will make a cell phone call when they can WhatsApp someone for free?
Also Cable's TV channel selection, quality and set top boxes are outdated and very expensive. Most people I know are cutting the cord and getting Apple TV, Amazon Prime or Roku and getting 1080i HD quality reception and TV shows you actually want to see!
Those who are able to get out at $6 will be the lucky ones.
On Cable rights issue hits 70% of target
Posted 10 March 2016, 7:37 a.m. Suggest removal
observer2 says...
Good point Economist. The government is suing children while BoB lenders get a bail out.
On ‘DON’T MAKE SCAPEGOATS OF STUDENTS’
Posted 7 March 2016, 2:30 p.m. Suggest removal
observer2 says...
We have 2 cars, we are going to sell one and make do with one.
Cost of living is too highly.
I suggest all consumers look carefully at thier recurring expenses like cable, Internet, BTC etc and cut back wherever you can.
Even worser times are coming.
On 40% licence decline shows auto fall depth
Posted 25 February 2016, 4:34 p.m. Suggest removal
observer2 says...
Thanks banker!
On Bank of Bahamas still violating key capital indicators
Posted 16 February 2016, 11:33 a.m. Suggest removal
observer2 says...
Hi John, RBC made C$2.4 billion in its most resent quarterly report. An increase of 4% over last year. Please see the following link:
http://www.rbc.com/newsroom/news/2015/2…
Year to date their share price is down 7% due to the recent stock market turbulence but their dividend is intact. In fact if you read the attached press release you will see that they increased their dividend by 3%.
John you are confusing RBC with FINCO which is a tiny part of this well capitalized global bank. If something happened to finco, rbc will be able to back it with their global capital base. The Bahamas government is also backing the BoB with a "commitment letter" but it would surely need to borrow funds to recapitalized the bank if push came to shove.
The difference in parent and capital backing makes a comparison of rbc finco and BoB not appropriate and misleading. I am sorry if I have offended you. It is not my intention.
While FINCO may not be paying a dividend and its share price is down they are in compliance with Central Banks capital ratios and they are run with an independent board.
The problem with BoB is its linkages to the wider economy. Government is its largest depositor, its largest shareholder, its largest borrower, it appoints all of its Directors and its management maybe sympathetic to the current administration. Since the government runs its books on a cash basis and not GAAP it is in no hurry to realized possible losses they maybe lurking on the balance sheet of BoB due to its inability to make new loans and aggressively sell off poor performing loans.
In essence BoB is a "zombie" bank similar to BDB. Not exactly alive but far from dead. NIB is loathed to inject further capital as it has ever increasing obligations to the Bahamian public as the economy continues to have lack luster growth.
What the Government should to is to commence and orderly liquidation of the Bank due to its lack of capital, which inhibits it from growth. BoB cannot be turned around without fresh capital. Where will it get the money from to make new loans? The public would be horrified if the BoB said it was making new loans and growing its balance sheet when additional capital is need to meet minimum regulatory capital requirements.
On Bank of Bahamas still violating key capital indicators
Posted 16 February 2016, 11:28 a.m. Suggest removal
observer2 says...
John, your information is inaccurate. On a consolidated basis RBC is s well run, profitable and well capitalized Canadian bank with independent directors.
BoB is an undercapitalized, unprofitable, Bahamian government controlled entity. It's Board of Directors are all political appointees.
No independent director will join its board because the first thing they will need to do is close it down and launch a costly forensic audit.
The government, regulator and exchanges strategy is to monitor its operations and "kick the can down the road". This never ends well as banks are intrinsically linked to the broader economy and systemically important. They are treating it like Bamsi, Baha Mar or the Post Office Bank.
On Bank of Bahamas still violating key capital indicators
Posted 16 February 2016, 5:16 a.m. Suggest removal
observer2 says...
...by the time you pay VAT, customs duty, BEC, business license fees, pay for security, risk your life in a small business ya really needs ta tink twice
On BISX: We can help repatriate millions stashed overseas
Posted 15 February 2016, 4:52 p.m. Suggest removal
observer2 says...
MonkeeDoo, you are right. Everyone I know is trying to get money out of this Country before a further credit downgrade, a blowup at BoB, the national debt going past $7 billion or the VAT money is used and the current account goes back to $200m per quarter losses. Remember we have an election next year...in election years the government usually spends about $1 billion to "renovate" the country.
On BISX: We can help repatriate millions stashed overseas
Posted 15 February 2016, 4:50 p.m. Suggest removal