NASSAU, BAHAMAS — Colina Financial Advisors Ltd. (CFAL) has announced that it is facilitating a bond offering for Bahamas Grid Company Ltd. The company, formed to work alongside Bahamas Power and Light (BPL), aims to upgrade and maintain the transmission and distribution system on New Providence (the T&D System).
The bond offering commenced on Monday, July 15, 2024, and will remain open until July 26, 2024, with a settlement date set for July 31, 2024. These Senior Unsecured Bonds will pay a semi-annual interest rate of 8 percent, with the first interest payment scheduled for January 31, 2026. They will reach final maturity on July 31, 2044.
Bahamas Grid Company seeks to carry out initial fundamental improvements to the T&D System amounting to $130 million, of which B$30 million was already raised during the second quarter of 2024. The company intends to partner with BPL to repair and manage poles, wires, and substations on New Providence to improve the reliability, resiliency, affordability, and sustainability of power for all Bahamian consumers.
According to the private placement memorandum, Bahamas Grid was formed in 2023 to work alongside BPL to undertake fundamental improvements to the electric transmission and distribution system on New Providence and to operate and maintain the T&D system thereafter.
The bond facility will have a 20-year final maturity (July 31, 2044). The minimum investment allowed in the bond is $50,000. The bond will pay investors a semi-annual interest rate of 8 percent. Bondholders will not have an equity interest in Bahamas Grid nor any voting rights. Interest payments will accrue and begin on January 31, 2026, and will be paid at the end of every July and January until maturity.
The memorandum notes: “While BPL will continue to be the core provider of energy in The Bahamas, BPL alone does not have the financial resources, buying power, nor the requisite expertise to execute a timely, on-budget, market-leading structural upgrade and operational structure envisioned by the government of The Bahamas.
“By partnering with BPL, [Bahamas Grid] believes we will be able to create such an upgrade and operational structure, maximizing the way power is purchased and the electric grid is maintained going forward.”
Energy Minister JoBeth Coleby-Davis previously indicated that under a joint venture partnership, the government will own 40 percent of Bahamas Grid Company, with Island Grid Solutions holding 60 percent. “BPL will contribute its New Providence transmission and distribution assets valued at $100 million for 40 percent of the shares in the SPV, while Island Grid, as the T&D manager, will raise $130 million from private investors for 60 percent of shares,” Coleby-Davis stated.
CFAL also issued a astatement late Monday evening indicating that the conclusion made in the business section of The Tribune newspaper indicating that the Bahamas Grid Company “appears to be valuing” Bahamas Power and Light’s (BPL) transmission and distribution (T&D) system at more than “double the Government’s price” in its $100 million bond offering memorandum is “patently incorrect and misleading.”
CFAL said in its statement: “The article, titled, “BPL grid value doubles in $100m bond document,” does not accurately reflect what is said in the offering memorandum. The Government of The Bahamas has estimated the value of BPL’s current transmission and distribution grid, which BGC has inherited, at $100 million. Bahamas Grid Company will invest at least $120 million into transforming and expanding the existing grid by the second quarter of next year.”
It continued: “The offering memorandum further details that $58 million will be spent on transmission, $55 million will be spent on substations, $7 million will be spent on distribution, with the remainder of the $130 million investment to be spent on engineering, training, and education. A simple calculation would reflect that the addition of BGC’s investment in the T&D system in the first year of operation to the value of BPL’s current T&D assets amounts to $220 million.”
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