Mar 2007 Financial News

MORE DEBT CAN BENEFIT BST

Mar 20, 2007

Barbados Shipping and Trading is in a position where it can incur more debt. This is according to CEO of the Barbadian conglomerate, Anthony King. Speaking to Business Monday during an exclusive interview, King said that BS&T's debt to equity ratio is low and the company could benefit existing shareholders by actually taking on more debt.

"BS&T's debt to equity ratio is pretty low, not very low, but certainly low enough that we, at this stage, would do better for existing shareholders where we can take our earnings and on a per share basis we can deliver better with more debt than more capital ... Every time you go to more capital you issue more shares and then the profits divide up less," said King.

He was responding to whether his company would be relying more on equity rather than debt when funding any new investments, given recent moves to integrate and further develop the regional capital markets. According to King there is a thin line between deciding when to borrow money and when to go to the capital markets to raise funds.

"If you can borrow money and produce a return on that investment at a higher rate than you can borrow money, your shareholders are always better off, once you have your cash flow and youre repaying it," King noted. The CEO gave no insight into whether the company would be de-listing from the Trinidadian stock exchange when the regional exchanges finally merged. However, he did concede that listing in various markets gave a company a certain degree of visibility.

Regarding the company's share performance in the various markets, King told Business Monday that share prices have indeed fallen back, but noted that the fall-off was evident in many companies across the various exchanges and in no way reflected on BS&T's performance. According to him, during the last financial year, his company was able to demonstrate its ability to deliver more from its core operations.

"The markets in the last couple of years really went very very high and probably outpaced themselves for many companies. A lot of companies'shares have fallen back and I think perhaps people are somewhat gun shy in chasing prices at this stage. There is a much more moderate approach to acquiring shares at higher and higher prices at this time," he stated.

Marita Greenidge
The Barbados Advocate
Monday, March 19, 2007.
http://www.barbadosadvocate.com/NewViewNewsleft.cfm?Record=30356