BISX Listing Q&A
We are: Forging Relationships
As the Company has matured, the focus of its operations has moved significantly towards The Bahamas with a clear commitment to a future embedded within the communities surrounding our resource base.
Why is Bahamas Petroleum Company seeking a Bahamas International Stock Exchange (BISX) Listing?
The Board of Bahamas Petroleum Company wishes for all Bahamians to be able to invest in the future anticipated capital growth of the Company and is therefore seeking a separate listing on BISX. Currently, the Bahamian Exchange Control Regulations essentially preclude Bahamian nationals from investing in and thus trading in securities of a company whose shares are listed overseas, denominated in a foreign currency and therefore attract significant regulatory fees. The listing will be completed in the form of a Bahamian Depository Receipt (BDR) in which Bahamian residents can invest without these charges.
Why did Bahamas Petroleum Company choose to list on the London Stock Exchange in the first place?
Energy exploration carries with it geological risk. Thus investment in exploration companies carries with it an additional technical risk over and above those risks already inherent in the investment of other Company shares. For energy exploration start-up companies, as Bahamas Petroleum Company used to be, this requires a further specific understanding of and appetite for these unique types of stocks. In addition, the volume of capital Bahamas Petroleum Company requires to undertake expensive and risky exploration activity is large and therefore requires the kind of deep, liquid pool of capital available from somewhere like the London Stock Exchange. To date, Bahamas Petroleum Company has raised in excess of $80 million to conduct its operations.
What is a BDR?
The Central Bank of The Bahamas and The Securities Commission of The Bahamas have approved the creation of a type of security called a Bahamian Depositary Receipt (BDR), denominated in Bahamian dollars. A BDR permits Bahamian investors to acquire interests in non-Bahamian securities without additional expenses. Bahamas Petroleum Company deposits a number of its securities (shares) with a Bahamian financial institution. That bank will then issue Depository Receipts which entitle the holder to all of the benefits of those shares deposited with the bank. The BDRs are priced based on the value of the underlying shares on their home exchange (i.e. for Bahamas Petroleum Company the London Stock Exchange AIM Registry), however, it is not necessary for the BDRs to have a one-to-one correspondence with their underlying security.
Why a BDR and how will it trade?
Given the anticipated size of the potential market and appetite for Bahamas Petroleum Company stock, rather than issue new shares it is cheaper, more flexible and faster to deal in BDRs, which cause no dilution to existing shareholders of Bahamas Petroleum Company, with the volume of securities created varied directly based upon demand. The offer and issuance of Bahamas Petroleum Company BDRs is dependent on permission from The securities Commission and BISX. Once listed, BDRs trade through local brokers just like the shares in other listed local companies. Authorised Bahamian brokers-dealers may decide to make a market for BDRs on BISX with the intention to enhance liquidity.
What are the rights of BDR holders?
Holders of BDRs have substantially the same rights and benefits as persons holding the underlying securities. For instance, if the underlying securities carry voting rights, the holders of the BDRs will retain the same voting rights.
Why now come to Bahamians to raise money and how much will be raised in the process?
The pursuit of this listing is simply to afford Bahamians the opportunity to invest in and financially benefit from any future value growth in Bahamas Petroleum Company securities whilst sharing in the ownership of the Company – there is no specific capital target associated with the plans for a Bahamian listing. All necessary capital to conduct planned operations is provided via the Company’s London listing. Any Bahamian investors who choose to buy into the Company BDR programme will benefit from all past use of this risk capital.
Senator Hon. JoBeth Coleby-Davis, In-House Legal Counsel
“The Company has resolved to seek a listing on the Bahamas International Stock Exchange in the form of Bahamian Depositary Receipts (BDR) to ensure options for Bahamians to share in the anticipated capital growth of the Company.
To further assure shareholders that the Company is forging appropriate relations across all aspects of business dealings with local contractors, regional authorities and Government and truly extending our licence-to-operate the Board will appoint new directors permanently residing in The Bahamas. The Company is also committing to complete a CSR Report anticipating benefits from increased transparency and more clearly demonstrating its interest in the environment, employees, communities and with wider stakeholders.”