# BBI - Babcock & Brown Infrastructure



## roland (26 October 2007)

New thread, I believe. Have noticed BBI starting to get higher broker recommendations. Anyone have thoughts on BBI? They have been buying up port facilities all through Europe. Anyone want to have a go at picking the bottom?


----------



## Julia (26 October 2007)

Roland, BBI gets fairly consistent Buy recommendations from analysts.
It doesn't ever seem to mean much.  I don't expect much growth from it and keep it in the p/f for its yield and general stability.


----------



## roland (26 October 2007)

The chart doesn't look so good. I was trading them in July, but took a big hit in August and dropped them for BBP, which has faired much better.

This an excert from the Aegis review:
We continue to expect BBI to pursue and to deliver further growth, both organically and through future yield-accretive acquisitions. Walking away from its joint offer with APA for GAS is a clear signal of BBI's financial discipline in not overpaying for assets. We expect BBI to comfortably achieve its distribution growth of 7% for FY08 and FY09 and, importantly, fuel its distributions out of operating cash flows.

My feeling is that they may have some issues with Dalrymple and the poor performance of our coal handling facilities. I do think that their European growth is being somewhat over-looked.


----------



## Nicks (4 February 2008)

I hold TCL and believe a stock like this is essential stabiliser in your portfolio. For the reasons already mentioned, it is a solid cash earner - people will always drive. It shouldn't be too affected by the credit markets as they easily get finance due to the fact that they have very low risk steady income. 
Excellent stock to be in at the moment and at this price its very attractive and brings a very nice yield alone (plus scope for capital growth up to and above $8 not only because it has in the past but for these same very fundamental reasons).
*BBI* is another that I categoirise in this basket with more or less the same explanation at the moment..... though slightly more complex it is returning a very nice yield.
Plus, both have potential for 30-40% even 50% capital gains potential to previous prices if the market goes up.
These 2 for a balanced, steady and yield earning portfolio are a good position to hold imo.


----------



## JTLP (4 February 2008)

Nicks, would you be able to inform me as to why both TCL and BBI have both been in a downtrend forr the past year? Any reasoning behind why such low risk companies would be so down? Thanks


----------



## ROE (4 February 2008)

JTLP 

I dont know much about TCL but I know much about Babcock & MacBank model on these funds and I stay away as far as I can 

The ways MacBank and Babcock make money is spin off funds they buy at a premium much like Centro and offload the debt to the fund and package it all up and sell to investors as it's a nice package.. no worry, high dividend yield sort of stocks.  But the price for this pretty package is in the fine details
of incredible fees and performance bonus these funds then pay back to B&B and MacBank, which in turn leave very little left for investors who bought into it.

It works well in Bull market and cheap credit environment when everything go up.  Bull Market ends sometimes last year and Credit start to get real expensive. You can work out where is the next stop for these stocks and the people associated with it 

I can understand why most analyst is not very critical of these big company as they may end up paying them their salary 
but ask the tough question yourself... much like an Analyst who Ask Enron how do they actually make so much money and the CEO called this analyst an A**hole and ignore the question all together and later try to make a few phone call and try to get her sack.  (The smartest man in the room doco)

I'm not saying these company going bankrupt but you got to ask the hard questions of how they making their money. What is left for investors?


----------



## kengaikl (4 February 2008)

ROE said:


> JTLP
> 
> I dont know much about TCL but I know much about Babcock & MacBank model on these funds and I stay away as far as I can
> 
> ...




Yeah i'd stay away from these stocks too. Dont get fooled by the high yields they are just to suck you in. Even in last years bull market they didnt do well. Now with the credit markets freezing up it only going to make it harder for these companies to expand. They structure these companies just like a house of cards. Anything happens they'll just end up like Centro. Again dont get sucked in by these high yields!!!!!


----------



## JTLP (4 February 2008)

LOL im not getting sucked in.
After a tiny bit more research and a debt to equity ratio of 202% 

I think ill steer clear...ROE you summed it up nicely.


----------



## Nicks (5 March 2008)

JTLP said:


> Nicks, would you be able to inform me as to why both TCL and BBI have both been in a downtrend forr the past year? Any reasoning behind why such low risk companies would be so down? Thanks




Sure.

It's quite simple. Interest Rates, Macro Risk and Irrationality.

Short and basic version (finance 101):

Interest Rates
BBI and TCL (and a few others) are low risk, regulated, reliable steady dividend stream earners. They basically function like an Annuity (consider a Term Deposit if you like).

This strong correlation is perfectly illustrated by the downtrend in the last year that you pointed out. Over the same period, the RBA has been steadily increasing the cash rate.

What does this mean? this mean Investors expect more % return for their money. For example, you would therefore expect more % interest from your Term Deposit, and likewise for any other annuity or investment providing a steady income return on your capital.

Macro Risk
When there is increased macro risk, such as the global credit environment, investments when compared to Government Bonds (which are as safe as a guarantee that you will get) demand more return for the higher perceived or actual risk, otherwise you may as well just go and invest in Government Bonds - your moneys safe. So this 'risk premium' is what you expect and deserve for investing elsewhere. As everything is considered riskier than before when compared to Govt Bonds investors expect a higher % return. So these companies, BBI and TCL (and others) will experience one of two things:
1. Pay more dividends so the % return is equal to the risk premium expected for such stocks. 
2. The share price reduces until the % return is equal to the risk premium expected for such stocks. 

Irrationality
So if you have read this far you will understand that BBI and TCL (and others) needed to be slightly rerated for the above two reasons, and rightly so. 
Kick in some fear and panic and they will be excessively re-rated giving them an unrealistic and undeserved risk premium and a higher than deserved yield. This happens when the perceived risk is higher than the actual risk, or generall sharemarket panic occurs, or other factors such as a general sharemarket downturn forcing margin calls. 

All this is good if you want a bargain! (in the sense of it provides and excellent return for the actual risk which is lower than what is currently being reflected in current yields).


----------



## Nicks (6 March 2008)

JTLP said:


> LOL im not getting sucked in.
> After a tiny bit more research and a debt to equity ratio of 202%
> 
> I think ill steer clear...ROE you summed it up nicely.





Can you provide evidence of this research? Doesn't seem accurate, see below. It's more like 63% (see below). This is an appropriate level of debt and shows they are making use of it for EPS accredative projects and deals.

BBI SP could drop as far as it likes, it's cash flows are what counts - and these are steady, reliable and regulated. 

Provides a good time for those whom are calm to pick up this stock at a bargain price with a ridiculously good yield (imo) and a capital appreciation that more adequately reflects the yield when all the panickers have calmed down. IMO those that are getting 'sucked in' are those that are panicking at the moment with rational shares and missing out.


Taken from today's news:
........BBI's chief financial officer, Jonathon Sellar, expressed puzzlement at the market's punishment of his company's share price. Mr Sellar dismissed the debt concerns surrounding BBI, stressing its $9.5 billion of debt compared with its $15 billion of assets.

Mr Sellar said BBI also have no debts that were leveraged to its market capitalisation, like the flailing financial group Allco Finance.

The company's debt convenants are linked to its cash flows. Mr Sellar said BBI's heavy exposure to non-cyclical "regulated businesses" - particularly in the energy sector - meant the group's cash flows were secure.

"The rising cost of debt can be passed on," he told the Herald, noting BBI's ability to pass on higher interest costs to the customers of its assets.


----------



## dhukka (6 March 2008)

Nicks said:


> Can you provide evidence of this research? Doesn't seem accurate, see below. It's more like 63% (see below). This is an appropriate level of debt and shows they are making use of it for EPS accredative projects and deals.
> 
> BBI SP could drop as far as it likes, it's cash flows are what counts - and these are steady, reliable and regulated.
> 
> ...





Do you know what 'debt to equity' means Nicks? Just a 2 minute glance at the balance sheet shows; Long term debt of *$6.8* billion, Net Assets or Shareholders Equity *$3.1* billion. You've got more than twice as much debt as equity. In laymans terms that's called 'geared to the teeth'. 

Not to mention current assets don't even cover current liabilites so working capital is not exactly sound either. The leverage your way to prosperity binge is over, these type of companies are in for rough times.


----------



## Nicks (6 March 2008)

LOL no need for the insult Dhukka. Yes I realised that (basic) mistake, you just bet me to the edit while I was looking at the actual financial statement (which I hadn't done yet).

The point remains though why do you consider 2:1 geared to the teeth?

*Anyway - the main point I was trying to make is that they can cover rising cost of debt quite easily as they are a regulated infrastructure, and no debt is leveraged to its market cap.*



Thoughts?


----------



## Nicks (6 March 2008)

ok so BBI has Current Assets vs Current Liabilities 1 to 1.4.

So what do they do to make up the shortfall? clearly the market has hit them for this.

Also, I think the market has overpriced the gearing aspect. I guess eveyone thinks (like Dhukka) that BBI is overgeared and they have reinforced this with their info about offloading a minority of assets. 

What I think though, is that with a market cap of 2.4 billion and a reliable income stream is it looks like good value with net assets of 3 billion. Especially since it has little problems with repaying and securing debt!


----------



## dhukka (6 March 2008)

Nicks said:


> LOL no need for the insult Dhukka. Yes I realised that (basic) mistake, you just bet me to the edit while I was looking at the actual financial statement (which I hadn't done yet).
> 
> The point remains though why do you consider 2:1 geared to the teeth?
> 
> ...




Wasn't meant to be an insult, it was a genuine question. Anyway you can see debt is more than double equity. Historically a debt to equity ratio of over 50% would be enough to raise an eyebrow from the conservative minded. 

It's all relative, I'm sure in this low interest rate environment you can find companies that are more highly geared than BBI but by any historical measure a 200% gearing level is very high. 

Just look at another simple ratio, interest cover which is EBIT/ interest paid. A minimum acceptable interest cover ratio would be about 3:1. BBI's? 0.9:1. EBIT doesn't even cover interest costs. This is very alarming and for the chief financial officer to pretend otherwise is disengenuous in a climate of climbign interest costs.


----------



## dhukka (6 March 2008)

Nicks said:


> ok so BBI has Current Assets vs Current Liabilities 1 to 1.4.
> 
> So what do they do to make up the shortfall? clearly the market has hit them for this.
> 
> ...




There's only two things they really can do, sell assets or raise additional capital to retire some of their debt.


----------



## Nicks (6 March 2008)

Thanks for the comments as it has got me thinking more laterally. Im keen for some good discussion on this as I hold a few but think its a good opportunity to load up at a discount.

So my question is this..... so BBI has got themself into a bit of a short term financial mismanagement. We assume this can and will be corrected (seems like so despite what they say they are taking such actions to correct). Then is the significance of the fall in the SP justified? this is the 64 mil question!

Market Cap of 2.4B vs Net Assets of 3B. While their gearing is 2:1 (and this is not unrealistic for this type of business?) their working capital is not great (1<1.4) but could perhaps be attributable to all the issues going on at present. So is it a combination of some fundamentals causing a justified correction which have fuelled panic and fear in this market for an over correction? over correction = good buy?

Assuming they can manage their assets and business - and BBI are touted to be among the best, then the current discount relative to the net assets represent a buy opporunity imo?

Thoughts?


----------



## dhukka (6 March 2008)

Nicks said:


> Thanks for the comments as it has got me thinking more laterally. Im keen for some good discussion on this as I hold a few but think its a good opportunity to load up at a discount.
> 
> So my question is this..... so BBI has got themself into a bit of a short term financial mismanagement. We assume this can and will be corrected (seems like so despite what they say they are taking such actions to correct). Then is the significance of the fall in the SP justified? this is the 64 mil question!
> 
> ...




Return on Equity and Return on Capital of less than 5% = woeful. This year has a forecast profit decline, highly geared with inadequate interest cover, I wouldnt even consider this investment grade. 

As  you noted, the company has a $2.2 billion market cap and $3 billion in net assets. Thus the best option for maanagment would be to liquidate everything, pay off the debt and return the left over to sharholders. That's assuming of course that the company could realise the value of the assets as written down in the books.


----------



## Nicks (7 March 2008)

dhukka said:


> There's only two things they really can do, sell assets or raise additional capital to retire some of their debt.




Yes but what about the third option of generating net positive income over the next 12 months to cover it? Financials are historical so it's not going to show us this whereas their forecasts can. They are paying their dividend out of cash after debt servicing and working capital - note page 9 of Analyst presentation:

Distributions paid substantially from operating cash flows after:

debt servicing
working capital
maintenance capital expenditure
cash tax paid
It does NOT include proceeds from regearing, refinancing or restructuring initiatives

So - they are implying that working capital is taken care of. Is it just that at the date of the financial reports that some income could not have been accounted for? (ie it hadn't met the revenue recognition standards at that time) otherwise how can they make such a statement in their Analyst Presentation, as the financials don't agree with this.


----------



## dhukka (7 March 2008)

Nicks said:


> Yes but what about the third option of generating net positive income over the next 12 months to cover it? Financials are historical so it's not going to show us this whereas their forecasts can. They are paying their dividend out of cash after debt servicing and working capital - note page 9 of Analyst presentation:
> 
> Distributions paid substantially from operating cash flows after:
> 
> ...





The company is paying out more in distributions than it makes. That is unsustainable unless they fund those distributions through raising more capital or selling assets. 

Since the company is paying out all profits and thus does not reinvest anything back in the business, the only way the company can grow is to leverage up, raise equity or sell assets.

Why do would want to invest in a company that is in such poor financial shape and which is reliant on ever more debt, equity or asset sales to fund returns to shareholders and for growth? It's a horribly floored business model for the current environment and the current environment is here to stay for some time.


----------



## LifeOfRiley (18 March 2008)

I just bought a bunch of these securities, hard to see anything but a total bargain at the current prices, with distribution guidance at 15 cents per security (tax deferred).

I have to disagree with Nicks, I don't see any short term financial mismanagement. Their reports and distribution guidance are consistent and the company line has barely changed. Their debt/equity ratio is 70:30 and that what the regulators allow for I'm sure. 

And dhukka, if you check the news on their website bbinfrastructure.com, it looks like at Dalrymple Bay they just completed Phase 1 of their 7X expansion with $1.3 billion invested there. When the Phase 2/3 is completed they will have full coverage of their distribution from operating cashflow.

I'm not claiming I understand their business model completely but it is not a traditional company with everything hingeing on profit & loss. Would be good to find a guide comparing traditional P&L business with an infrastructure fund. Sure, returns will never be spectacular but you will always get one I reckon.


----------



## Muschu (28 April 2008)

I'm wondering if this stock is worth another look?
FNArena cites 6 buys and 1 hold on the stock.  Average target price is $1.63, 42% above today's close.  12 month range is 82 cents to $2.03.  Dividends at about 9%.
Are the debt level or P/E too high?
I would appreciate comments.
Thanks 
R


----------



## roland (28 April 2008)

Definately worth a look in. I am already heavily into BBP and BBW, so I am not in a rush to grab BBI. Like the other BNB satellites, I wouldn't be looking for huge SP gains, more for the longer term deferred dividends. 

BBI and BBW are probably in a better financial position to BBP, but I believe that BBP probably has firmer and less volatile assets with the power stations.

Personally, I think one of these 3 would be a good addition to your portfolio. I'd want to see sub $1.10 for BBI before it excites me


----------



## Muschu (28 April 2008)

roland said:


> Definately worth a look in. I am already heavily into BBP and BBW, so I am not in a rush to grab BBI. Like the other BNB satellites, I wouldn't be looking for huge SP gains, more for the longer term deferred dividends.
> 
> BBI and BBW are probably in a better financial position to BBP, but I believe that BBP probably has firmer and less volatile assets with the power stations.
> 
> Personally, I think one of these 3 would be a good addition to your portfolio. I'd want to see sub $1.10 for BBI before it excites me




Thanks for that.  BBI seems to have been <$1.10 mid-April for 2 days.  Maybe there's a good chartist out there who can interpret the trend?


----------



## roland (28 April 2008)

Muschu said:


> Thanks for that.  BBI seems to have been <$1.10 mid-April for 2 days.  Maybe there's a good chartist out there who can interpret the trend?




yeah, they got re-rated by Comsec and Aegis about that time too. From memory it was actually below a dollar some time back - should have got (sic)  some then


----------



## Nicks (30 April 2008)

BBI has an awesome return at the moment. Like many say you dont buy this for SP gains (although at these prices you could well see SP gains to reflect a more realistic dividend return). 

In other words, it is returning exceptionally high dividend yield. They are fairly well geared but this is what to expect from an Infrastructure company with regulated and stable income.

With a dividend yield at > 10% it provides a high level of stable income stream and BBI have reaffirmed their dividend for FY08 at 15c, FY09 at 16c and expect it to keep increasing thereafter.


----------



## JackJackJack (22 June 2008)

What are people's thoughts on BBI currently?
Looks to me like its getting punished due to the BNB, BBP scenario?


----------



## ROE (22 June 2008)

JackJackJack said:


> What are people's thoughts on BBI currently?
> Looks to me like its getting punished due to the BNB, BBP scenario?




Stayed away 
Dividend is funded by debt, the model is flaw and unsustainable
it's not if, it when they blow up.


----------



## Tysonboss1 (23 June 2008)

ROE said:


> Stayed away
> Dividend is funded by debt, the model is flaw and unsustainable
> it's not if, it when they blow up.




I don't think it is,... I have been trying to clarify it but I think the distribution is paid from the trusts operating cashflow before the profits of the company are calculated. 

its like a company earning $100,000 paying $700,000 in distributions then declaring $300,000 in retained earnings. some people would look at it and say how can they pay $700,000 in distributions when they only earn $300,000 but its because the dividend comes from the operating cashflow before the eps is calculated, 

Westfeilds is the same, their DPS has been higher than there EPS ever since they became a stapled security, same will APA and most other stapled securities.


----------



## roland (23 June 2008)

This is from the Aegis Research:



> After an aggressive acquisition path, BBI has acquired around $8B of quality assets world wide. BBI's long-life, long concession, monopolistic underlying assets produce strong and stable cash flows, secured by regulated tariff regimes or contracted revenues. The company's distributions are underpinned by stable cash flow, without the need of refinancing, which we see as a positive long-term characteristic. We also see good potential for long-term earnings growth.
> 
> BBI has a portfolio of monopolistic and strong cash flow generating assets, which are diversified operationally and globally. The company has guided distributions of 15cps for FY08 and 16cps for FY09, which we consider to be strong returns on a risk/reward basis. We also see good share price upside as the stock price brings the yield to a more appropriate level given its risk profile. We are bullish on a 12-month investment horizon.




I don't believe that the distributions are from borrowings. The above indicates it's from cash flow.


----------



## LRG (27 June 2008)

i bought some recently at 1.11 then another batch at 79 cents to average down.  originally bought for the fantastic yield.  But if the model is flawed, buy paying dividends off borrowings then this is not good.
is there really a good income stream from the assests or not and how high is the ever increasing interest expense from borrowings.

what does one do keep buying more to get the avg entry price down?

look at virgin - VBA a few months ago $2.20s now just over 50cents - disaster due to fuel, borrowings profit heading south etc.  Or, is VBA now a good buy - contrarian investing, ditto ABS etc??


----------



## renim (27 June 2008)

they've got great assets
infrastructure is not like airlines, its like airports
just ask the ships offshore at hay point


----------



## roland (27 June 2008)

I picked up some more BBI today at 0.695 and pretty happy with that. My average is now $0.7975, once the return of capital gets paid it will bring my average down to around 0.73.

I personally will be taking profits as it rises and buying back in when it falls. All the while keeping a parcel to apply the return of capital to, to avoid CGT.

I got burnt badly with BBP, but have still kept both BBI and BBW - neither of which have any funding problems and are asset based with income streams, so I am pretty comfortable with these 2.


----------



## blaze87 (30 June 2008)

Tysonboss1 said:


> I don't think it is,... I have been trying to clarify it but I think the distribution is paid from the trusts operating cashflow before the profits of the company are calculated.
> 
> its like a company earning $100,000 paying $700,000 in distributions then declaring $300,000 in retained earnings. some people would look at it and say how can they pay $700,000 in distributions when they only earn $300,000 but its because the dividend comes from the operating cashflow before the eps is calculated,
> 
> Westfeilds is the same, their DPS has been higher than there EPS ever since they became a stapled security, same will APA and most other stapled securities.




the above part might not be correct, BBI earned net profit $112,951 for the year 2007. the reason they can distribute a total dividend amount of $203,998 is beacuse of the strucutre of the company. BBI acquires infrastructure and every year a certain amount is depreciated and amortisated, Depreciation and amortisation counts as an expenses and it impacts directly on net profit. 
A simplified example. company A earns 1 million of revenue, Depreciation and amortisation comes up as 0.1 million. Capital expenditure and changes in net working capital is 0. Net profit= (revenue - Depreciation and amortisation) * (1-tax rate)-(which we assume as 30%). the final net profit comes up as (1-0.1)*0.7= 0.63 million.

however on the cash flow statement, free cash flow will come up as 0.63 million plus 0.1 million which becomes 0.73 million.

hence Depreciation and amortisation has caused a higher cash flow than earnings and also why such companies are able to distribute dividends higher than their earnings. Westfield is able to charge huge amounts of Depreciation and amortisation every year bcos of the same reason mentioned above. 'Depreciation and amortisation'


----------



## blaze87 (30 June 2008)

1 worry with BBI is,
as stated in BBI Annual report 2007, page 133
it has a current(less than 1 year) expenditure commitments of $631,134.
it says that they have undrawn warehouse facilities of $1.3 million on pg 156 of BBI annual report. i'm not sure if we can offset the capex against the undrawn facilities but it would seem likely... Any accounting investor out there willing to clarify this?


----------



## Tysonboss1 (30 June 2008)

blaze87 said:


> the above part might not be correct, BBI earned net profit $112,951 for the year 2007. the reason they can distribute a total dividend amount of $203,998 is beacuse of the strucutre of the company. BBI acquires infrastructure and every year a certain amount is depreciated and amortisated, Depreciation and amortisation counts as an expenses and it impacts directly on net profit.
> A simplified example. company A earns 1 million of revenue, Depreciation and amortisation comes up as 0.1 million. Capital expenditure and changes in net working capital is 0. Net profit= (revenue - Depreciation and amortisation) * (1-tax rate)-(which we assume as 30%). the final net profit comes up as (1-0.1)*0.7= 0.63 million.
> 
> however on the cash flow statement, free cash flow will come up as 0.63 million plus 0.1 million which becomes 0.73 million.
> ...




Ok, I get what your saying. The depreation is paper loss for tax reasons they are able to right down the value of plant and equipment etc. but it doesn't actually affect the cashflow revenve stream.

I have been trying to nut out how so many trusts seem to pay out more in earnings than they report as profit, and they seem seem to do it year after year, I didn't think the likes of westfeild would be constantly taking on debt to fund distributions.


----------



## peter g (11 September 2008)

Has anyone got any thoughts on BBI now stock price between 40c and 45c cents.   with a revised dividend of 10c i dont think it can go much lower.  It look s like a bargain to me.  I got some at 41c yesterday....however if it break support below 39 im out.





PS i am a beginner


----------



## roland (16 September 2008)

Director's wife buying:

Nature of indirect interest - (including registered holder)
Note: Provide details of the circumstances giving rise to the relevant interest.
Margaret Helen Hall, wife of Leigh Loddington Hall, relevant interest by virtue of power to exercise voting rights or to dispose of securities

Date of Change 11 September 2008
No. of Securities held prior to change - 423,335

Number acquired
(a) 350,000
(b) 200,000
Number disposed - N/A
Value/Consideration
Note: If consideration is non-cash, provide details and estimated valuation
(a) $147,000.00 ($0.42 per Ordinary Fully Paid Stapled Security);
(b) $82,000.00 ($0.41 per Ordinary Fully Paid Stapled Security)
No. of securities held after change - 973,335



Got to be a good sign. I topped up at .33

The capital return today knocked back my average by a couple of cents.


----------



## white_crane (16 September 2008)

Down another 14%.  Still think it's a good sign?  I dumped mine, I should have done it earlier.  Oh well, it was an education.


----------



## DionM (17 September 2008)

Mixed messages here, for me.

I own BBP, BBI and BBW from > 12mths ago.

So I'm hurting on all 3.

With BBP I bought more when it dropped to 60c and then 30c, believing in the business and all that (I work in the power industry).  It is not pretty today, I can tell you.  It is not worth selling.

Now I see the same with BBI - a business I believe in, but one the market is flogging hard because of the BNB association.  I am tempted to buy more of BBI - I know it is not as geared as BBP and it has sorted out distribution guidance (and director's wife buying as above) ... but my recent experience with BBP has really left me very wary.  

I think I'll be sitting on the sidelines for quite a time longer.  But it is hard to fight the temptation to buy a company I like, at a discounted price, and average down.  Very hard, I can tell you.


----------



## Tysonboss1 (17 September 2008)

DionM said:


> Mixed messages here, for me.
> 
> I own BBP, BBI and BBW from > 12mths ago.
> 
> ...




I bought some more BBI today at 28c they finished the day at 26c, My average is 52c because I bought in at 73c... who knows if it will drop further with the dividend guidence they way it is BBI at 28c will bring in fantastic cashflow and hopefully the share price will recover as the smoke clears from BNB's current bad times,

With BBP at 10c at guidence for a dividend in 2010 of 5c I am thinking of buying in, for a longterm hold.


----------



## roland (18 September 2008)

The Central Bank of Norway now have a little over 5% of BBI. Nicely averaged (as per the chart). Their average is worse than mine 

BBW saw The Children's Fund of UK do the same thing with BBW stocks as announced yesterday.

Both pretty cheap, given the expected returns in my opinion.


----------



## DionM (18 September 2008)

I saw that.  

By god that's one helluva way to average down!

Dammit, I'm hovering over the buy button ...


----------



## DionM (18 September 2008)

Well I just doubled my holding in BBI.

Am I going to regret this just like BBP?  Hrm.  Time will tell.


----------



## roland (18 September 2008)

DionM said:


> I saw that.
> 
> By god that's one helluva way to average down!
> 
> Dammit, I'm hovering over the buy button ...




I picked up some at .23 - brings my average down to .477. It's also only a couple of months to ex div again.


----------



## roland (18 September 2008)

DionM said:


> Well I just doubled my holding in BBI.
> 
> Am I going to regret this just like BBP?  Hrm.  Time will tell.




hey DionM, notice how the depth has dramatically changed - nearly 2 to 1 more buyer depth .... good sign. Hopefully a little run up this afternoon.


----------



## DionM (18 September 2008)

roland said:


> hey DionM, notice how the depth has dramatically changed - nearly 2 to 1 more buyer depth .... good sign. Hopefully a little run up this afternoon.




Unless that little run-up gets it to a $1 (just above my new average, I bought my other lot at $1.54), I'm not getting my hopes up.


----------



## roland (18 September 2008)

DionM said:


> Unless that little run-up gets it to a $1 (just above my new average, I bought my other lot at $1.54), I'm not getting my hopes up.




Oh, OK - I spoke too soon anyway, some bugger just dumped 2 mil of stock. I'm in pretty lightly really - I've got 3,000 every 0.05 or so from .64 all the way down to .23 so I can sell off as they go up.


----------



## roland (19 September 2008)

Some more good news for BBI with the successful refinance of AlintaGas Networks.

Pre open depth is building - should be a good day



> *AlintaGas Networks / Alinta Network Holdings Successful Refinance and Increase in Facilities*
> 
> AlintaGas Networks, the largest distributor of natural gas in Western Australia, has reached contract close on the refinancing of Alinta Network Holdings' $165 million senior debt facility.
> 
> ...


----------



## roland (19 September 2008)

Hey Dion, are "we" having fun yet? BBI up a little over 21% today.

I sold off a little BBW, and will let the BBI parcel I got at .23 yesterday if I can get .33 for it.


25% now


----------



## roland (9 October 2008)

Thought I would spread my misery around with all my holdings. Maybe my losses will brighten up someone else.

BBI -42.76%


----------



## Tiles (27 October 2008)

Just joined, so thought I should post. I've read through this thread and wish I had seen dhukka's posts before buying BBI. The debt/equity position is not good and the drop in the promised distribution confirms the company was borrowing to distribute. The  attempts to sell assets (including 50% of Powerco) seems rational . The most recent news appears to be positive ie new agreement with BBN on governance. Is there any other good news?
Is there any news on asset sales?   I note that the Norwegian Central Bank  now owns 7.05% of the equity. Is that a good sign?


----------



## BarryH (28 October 2008)

This stock closed at 18 cents yesterday. It will be interesting to see what happens as we get closer to its forecasted 5 cent dividend in December


----------



## Nicks (28 October 2008)

BarryH said:


> This stock closed at 18 cents yesterday. It will be interesting to see what happens as we get closer to its forecasted 5 cent dividend in December




barry, dion and roland - do you think BBI is going to post a 5c (25%) dividend given its gearing problems? (this is a rhetorical question).

tiles - you should base your buy and sell on more than just what dhukka or anyone else says in an ASF post (although he is correct on this point).


----------



## roland (28 October 2008)

Nicks said:


> barry, dion and roland - do you think BBI is going to post a 5c (25%) dividend given its gearing problems? (this is a rhetorical question).
> 
> tiles - you should base your buy and sell on more than just what dhukka or anyone else says in an ASF post (although he is correct on this point).




I suppose that's anyone's guess. The BBI announcements and latest investor pack do not hint at any difficulty with funding or gearing. They are quick to promote the fact that they have 85% of their assets bring in Govt Regulated returns.

Ex Div is still a way off and a lot can happen in 2 months


----------



## roland (28 October 2008)

Aegis are suggesting a cut in distributions:

*Investment Opinion*
BBI's long-life, long concession, monopolistic type of underlying assets produce strong and stable cash flows, secured by regulated tariff regimes or contracted revenues. We see good potential for long-term earnings growth, but note the company has placed assets on the chopping block and we raise questions on the outlook for distributions. That said, BBI’s assets are quality and the security price does not represent its fundamental valuation.

BBI has a portfolio of monopolistic-like and strong cash flow generating assets, which are diversified operationally and globally. Despite the company's distribution guidance, we expect BBI to cut its distribution forecasts this year ahead of asset sales. The fundamentals of BBI’s assets remain and we retain our positive view on each of the company’s assets, noting specifically their growth potential, now contingent on external capital to achieve realisation.


----------



## Nicks (28 October 2008)

Roland check out their debt - I think its like $8 B or something. The company's market cap is only $400 mil.


----------



## Nicks (28 October 2008)

Ok, I have just spent the last hour going through BBIs financials as per the most recent annual report.

Heres what I gather:
- D/E ration of 3.6.
- Assets $14 B
- Liabilities $11 B
- Therefore Net Assets $3 B
- Most debt matures around 2011, some earlier, some later
- Assets are regulated and stable earners
- Assets are good quality infrastructure (unlike BNBs assets)

My Analysis:
In my opinion these are good assets to be in at this time. Their regulated return will be enticing as returns elsewhere re very low.

I like their selection of assets and the % diversification they have across their portfolio of assets. Their assets are of such that will always be used no matter what economic or global issues there are. That is they are relatively inelastic for the most part (of course there will be some reduction in demand given the macro environment but not so significant as other areas in the global economy). So one could say that their assets are reasonably defensive.

Their debt is obvioulsy too high. I hope that they funnel a larger % of their earnings into reducing this debt. I think shareholders should welcome a reduction in their dividend to accomplish this, as I believe this will then pay off in a big way by 2010+ when the annual dividends can probably be closer to about 50% of the current share price.

There is a risk that the over gearing they have done could bankrupt them, however this would require their assets to be revalued lower significantly AND their lenders to be reluctant to lend, or lend at a significantly higher rate. I see this as very unlikely given the stable regulated returns should provide sufficient security of repayment (and the loans for the most part are secured against the assets). The reduction of debt via lowering dividends and selling some non core assets should address this.

To conclude I think at current SP it now presents value and significant upside especially given the management and governance changes that are addressing the business model. 

I originally sold out of BBI at 90c. I have now purchased some at 17.5c based on my analysis above. If I get a 5c dividend great, however if I get a 2.5c dividend and debt is reduced then thats great too. Capital gains should return once the gearing is reduced and by the time much of their debt matures in 2011 I think the financial issues that are currently affecting the global economy will have for the most part been sorted out (and for the better).


----------



## drsmith (28 October 2008)

On the balance sheet there is,

1) Close to $3.5b of intangable assets which is more than the shareholder's equity. Net tangable asset backing is therefore negative.

2)  Between FYE 2007 and FYE 2008 assets have been increased by about $6b funded mostly by debt. One is left to wonder how realistic the prices paid for these additional assets are in the current environment. Over the same same period there is close to $1b of additional goodwill on the balance sheet.

The stock is 17.5c because it is now purely a speculative gamble.


----------



## Nicks (28 October 2008)

Dr Smith - the intangibles are Leasehold rights and Goodwill. These are assets that have value hence why they are on the balance sheet, albeit intangible. 

The leashold in Qld is fair valued at 300m based on the revenue, and the UK Statuatory Harbour Authority's value of 1B doesnt seem unreasonable. They would have used discounted cash flows to value these and I do not have a problem with these valuations based on the revenue.

The aquisitions were all in areas related to their core business, and with the largest aquisition, Alinta, it was funded with security placements at $1.02, not debt. So effectively they got the Alinta assets very cheap considering it was paid for with shares that are now worth 0.175c. Im sure the Alinta assets are now worth alot more than that. So effectively the Alinta aquisition (which is by far the largest) has proven very net asset positive at current SP values.


----------



## drsmith (28 October 2008)

Nicks,

I hope the share price does improve for both yourself and the other investors in this thread. That being said the balance sheet alone is enough to put me off in the present environment.


----------



## Nicks (29 October 2008)

yeah true, i bought a small parcel out but I guess it's not pure speculation as I went through the balance sheet fairly thoroughly, unlike most internet traders. The revenues are good, the assets are good, debt is covered, and the share price has been hammered factoring the gearing into account. Probably over hammered.

I think infrastructure is a better investment than many other areas at the moment, such as consuer discretionary and commodities. All of which can be strongly affected by a negative economic climate.


----------



## BarryH (29 October 2008)

Nicks,

Thanks for sharing your analysis on bbi. I think this stock is over sold and intend to hold it despite the negitive views that other investors have on it.    
Eventially the earnings should carry the sp back up.


----------



## roland (29 October 2008)

BarryH said:


> Nicks,
> 
> Thanks for sharing your analysis on bbi. I think this stock is over sold and intend to hold it despite the negitive views that other investors have on it.
> Eventially the earnings should carry the sp back up.




ditto nicks - I actually grabbed a few more at .17 yesterday, so I've done the evil cost averaging thingo.


----------



## Tiles (30 October 2008)

Thanks for your analysis, Nicks. I agree that infrastructure will be a better sector to be than some others. I'm holding on to my bbi but have resisted the buy temptation.

I'm still concerned that there has been no activity reported on the sale of assets - especially Powerco, which is a well run electricity and gas distributor with diversified networks.


----------



## nulla nulla (2 November 2008)

IMO - It is unlikely that BBI will sell any of it's assets atm, given lack of demand and retrace in asset values. Also as debt financing is locked in for the present there is no pressure to unload assets. If BBI maintains revised divvies then others will see present prices as a bargain and price will start to move up again.


----------



## roland (5 November 2008)

mmmm, Dividends suspended. I suppose that was on the cards, I was hoping for at least a cent or 2

SP will obviously suffer due to this


----------



## roland (5 November 2008)

oh well, back to trading BBI, not worth holding for div's - sold off my lowest parcel today for a profit


----------



## Tiles (5 November 2008)

Tiles said:


> Thanks for your analysis, Nicks. I agree that infrastructure will be a better sector to be than some others. I'm holding on to my bbi but have resisted the buy temptation.
> 
> I'm still concerned that there has been no activity reported on the sale of assets - especially Powerco, which is a well run electricity and gas distributor with diversified networks.




Well, at least the Powerco sale has gone through. Pity about the dividends. The board seem to be looking to long term viability, which is a plus. I'll continue to hold em.


----------



## mark_au (6 November 2008)

Hi Guys   

attempt 2 

Unfortunately for me i bought some just before the dividend announcement, 
Ive just read the meeting report... probably should pick up some more while there 16c....
any more surprise announcements i should be aware of LOL


----------



## dhukka (7 November 2008)

Nicks said:


> I have now purchased some at 17.5c based on my analysis above. If I get a 5c dividend great, however if I get a 2.5c dividend and debt is reduced then thats great too.




How about a 0.0c dividend? Well at least they are finally selling some assets off and reducing their ridiculous levels of debt.


----------



## gerg (7 November 2008)

Nice of the management and managers to get good payments whilst the owners (ala the shareholders) get zero.

Its tuff when you bought these at $1.46 (yeah I know I should have sold earlier!)

Its still likely there is some value in the assets and when things get better it might be best to sell things off.


----------



## long$$ (7 November 2008)

gerg said:


> Nice of the management and managers to get good payments whilst the owners (ala the shareholders) get zero.
> 
> Its tuff when you bought these at $1.46 (yeah I know I should have sold earlier!)
> 
> Its still likely there is some value in the assets and when things get better it might be best to sell things off.




The Norwegians have been increasing their shareholding. On this basis it would appear that their is still value there, at least where you are able to take a long term view.


----------



## roland (7 November 2008)

Comsec's latest overview on BBI is positive in the long term but has some reservations regarding disclosure. The dividends being suspended will weaken the buying, but longer term looks reasonable if you are able to wait it out:



> *Babcock & Brown Infrastructure Group - Logic prevails on distributions, scepticism likely to remain though*
> 
> Last Traded: $0.14 Market Cap: $451 Sector: Utilities
> Summary of report dated 6/11/08
> ...


----------



## Tiles (10 November 2008)

BBI have gone down to 8.5c today with volume of 50,000,000. What don't we know? Who is selling at that price?


----------



## Tiles (10 November 2008)

Tiles said:


> BBI have gone down to 8.5c today with volume of 50,000,000. What don't we know? Who is selling at that price?




I was a bit premature. Last price at the moment looks like 8 c and volume over 58,000,000 but price has been below this level. The same questions apply.


----------



## cbrendan (10 November 2008)

Aren't their assets alone worth 2-3x the current SP?

From everything i can see its fear and fear alone. they are in no worse a position than they were friday when the canceled dividend announcement was priced in, yet they lose ~40%.

???


----------



## bellenuit (10 November 2008)

roland said:


> Comsec's latest overview on BBI is positive in the long term but has some reservations regarding disclosure. The dividends being suspended will weaken the buying, but longer term looks reasonable if you are able to wait it out:




Has anyone considered BEPPA rather than BBI?  If BBI survives, each BEPPA will convert to about 1.075 BBI in 2012. Today BBI closed at $0.077 and BEPPA at $0.11. However, though the dividend is suspended for both BBI and BEPPA, BEPPA dividends are cumulative and must be paid before BBI dividends are paid.  This means that should dividends be restored in 2010 as CommSec forecast, BEPPA shareholders will be entitled to all the missed dividends (Q4 2008, all 2009 and whatever missed quarters are in 2010). Their quarterly dividends so far in 2008 have each been slightly above 2 cents (about 8.4% p.a. on $1 face value) and are calculated using some fixed percentage over some bank rate (I don't have details to hand). So even allowing for an overall 2.5% fall in the underlying bank rate over the next 18 months compared to early 2008, that would imply missed quarterly dividends of about 1.5 cents each. If 7 quarters are missed, then the first new distribution in Q3 2010 will be 12 cents per share (8 X 1.5 cents). That is more than today's closing price. Additionally, BEPPA ranks ahead of BBI in the event of bankruptcy.

Any thoughts?


----------



## bellenuit (10 November 2008)

bellenuit said:


> If BBI survives, each BEPPA will convert to about 1.075 BBI in 2012.




Oops, sorry. That should read:

If BBI survives, each BEPPA will convert to about 1.08$ of BBI shares in 2012. A 20 day (prior to conversion) Volume Weighted Average Price of BBI is used in determining the value of BBI in the above formula. So, if the VWAP of BBI is 20 cents, you will get 5.4 BBI for each BEPPA. 

There are a few more things to consider (such as a cash option and treatment of unpaid dividends) so you should look at the Ts & Cs to get the full picture.


----------



## alphaman (10 November 2008)

bellenuit said:


> Has anyone considered BEPPA rather than BBI?



IF you really want to be stuck with the company, yes BEPPA is definitely the superior choice.

I presume you have looked at AFGHA recently?


----------



## Pigsy (10 November 2008)

My guess is the sp drop is due to the downgrading of the BNB credit rating to BB- by Standard & Poors. Not released to the market until 6pm but maybe insiders new the announcement before hand. If not expect another 20% drop tomorrow.


----------



## drsmith (10 November 2008)

bellenuit said:


> Has anyone considered BEPPA rather than BBI?  If BBI survives, each BEPPA will convert to about 1.075 BBI in 2012. Today BBI closed at $0.077 and BEPPA at $0.11. However, though the dividend is suspended for both BBI and BEPPA, BEPPA dividends are cumulative and must be paid before BBI dividends are paid.  This means that should dividends be restored in 2010 as CommSec forecast, BEPPA shareholders will be entitled to all the missed dividends (Q4 2008, all 2009 and whatever missed quarters are in 2010). Their quarterly dividends so far in 2008 have each been slightly above 2 cents (about 8.4% p.a. on $1 face value) and are calculated using some fixed percentage over some bank rate (I don't have details to hand). So even allowing for an overall 2.5% fall in the underlying bank rate over the next 18 months compared to early 2008, that would imply missed quarterly dividends of about 1.5 cents each. If 7 quarters are missed, then the first new distribution in Q3 2010 will be 12 cents per share (8 X 1.5 cents). That is more than today's closing price. Additionally, BEPPA ranks ahead of BBI in the event of bankruptcy.
> 
> Any thoughts?



The prospects of BBI and hence BEPPA restoring distributions has been priced by the market as being very low.


----------



## bellenuit (10 November 2008)

drsmith said:


> The prospects of BBI and hence BEPPA restoring distributions has been priced by the market as being very low.




Actually should BBI survive and no distributions are made prior to the conversion date in 2012, any non paid distributions to BEPPA holders get converted to BBI shares too. The full conversion formula is:

Each BEPPA gets converted to $1.08 + Value of Unpaid Distributions in BBI shares. So if by 2012, there are say $0.24 of unpaid distributions, then each BEPPA converts to $1.32 of BBI shares. If BBI at $0.20, then that is 6.6 shares.

It's certainly a gamble relying on BBI surviving until then, but CommSec is fairly positive in that respect.

My question was really trying to ascertain why one would buy BBI in preference to BEPPA. If one sees a future in BBI, then BEPPA seems a much better bet than BBI itself.


----------



## drsmith (11 November 2008)

bellenuit said:


> Each BEPPA gets converted to $1.08 + Value of Unpaid Distributions in BBI shares. So if by 2012, there are say $0.24 of unpaid distributions, then each BEPPA converts to $1.32 of BBI shares. If BBI at $0.20, then that is 6.6 shares.



The math obviously can't be argued against but the impact of such a conversion at a very low share price also needs to be considered.

With a share price as low as $0.20 at conversion the impact would obviously be much more dilutionary than it would be with a higher share price. What then would be the impact of this on the BBI share price post conversion ?

The above of course assumes BBI survives which in itself is a much more important question.


----------



## Tiles (11 November 2008)

Pigsy said:


> My guess is the sp drop is due to the downgrading of the BNB credit rating to BB- by Standard & Poors. Not released to the market until 6pm but maybe insiders new the announcement before hand. If not expect another 20% drop tomorrow.




You could be right. BBI is now at 6.8c but has been down to 5.7c. Why would the BNB credit rating impact on BBI? Isn't the latter independently financed or is there some tie up?


----------



## banska bystrica (13 November 2008)

Very strong finish up 20% and huge volume in a sea of red elsewhere. Something is brewing and someone is getting set.


----------



## mark_au (13 November 2008)

banska bystrica said:


> Very strong finish up 20% and huge volume in a sea of red elsewhere. Something is brewing and someone is getting set.





Interesting, i was wondering at around 8c whether it was worth picking up some more.. Im holding off as others are suggesting that BBI may not survive, thought with the assets they hold this would be unlikely IMHO


----------



## banska bystrica (13 November 2008)

I've looked at the balance sheet. The corporate debt is not too big. It looks as though they will need to sell one more asset and they will survive. They got a very good price for 50% of Powerco the other day. Apparantly 25% higher than book value. Their net asset backing is over $1.20 based on book values. If book value are realistic and that seems to be the case with the Powerco sale being above, at 9c they look very interesting. They have been sold off savagely by investors who are looking for dividends and BBI cut their dividend to zero to reduce debt. Could easily bounce back above 12c in the short term.


----------



## BarryH (18 November 2008)

Under 6c today. Who is selling at that price? The market could do with some reassurance from management. BNB 's problems and the lack of a dividend are obviously scaring investors away. Hopefully the sellers don't know something else that I don't. This share has been effectively valued as worthless by the market, despite the management and analysts saying that it is positioned to survive this downturn with an NAV currently well above $1. Bring on some good news.


----------



## drsmith (18 November 2008)

BarryH said:


> Who is selling at that price?



Perhaps those who have come to the conclusion that the only thing that can be salvaged from this is a capital loss that can be offset against current or future capital gains.

As for reassurance from management, their credibility is shot. That's all to obvious from the share prices of BBI and the parent.


----------



## DionM (18 November 2008)

drsmith said:


> Perhaps those who have come to the conclusion that the only thing that can be salvaged from this is a capital loss that can be offset against current or future capital gains.
> 
> As for reassurance from management, their credibility is shot. That's all to obvious from the share prices of BBI and the parent.




Personally I think it is a huge amount of guilt by association.

Yes BBI has debt - but not drowning-in-it type stuff.  Their assets are not overinflated in value like CNP, for example.  Their assets are not subject to highly discretionary activities. 

But I do wonder who is selling at these levels.  At least the last directory activity was a buy, and Norway Central Bank was buying recently too.

I am certainly not selling for what is essentially lunch money.


----------



## eMark (18 November 2008)

DionM said:


> Personally I think it is a huge amount of guilt by association.
> 
> Yes BBI has debt - but not drowning-in-it type stuff.  Their assets are not overinflated in value like CNP, for example.  Their assets are not subject to highly discretionary activities.
> 
> ...





Re - the last directory activity was a buy

What do you mean? Last activity directory...

Do you mean the last BUY for the day on the market?


----------



## DionM (18 November 2008)

eMark said:


> Re - the last directory activity was a buy
> 
> What do you mean? Last activity directory...
> 
> Do you mean the last BUY for the day on the market?




Sorry - I was typing one-handed while entertaining my 2yo son 

What I meant to say, was that the most recent director activity (buy/sell) was a buy on market.  
http://www.asx.com.au/asxpdf/20080918/pdf/31ccxk5rrwyydn.pdf

No selling since then.


----------



## roland (19 November 2008)

Tue Nov 18, 2008 4:00pm EST


SYDNEY, Nov 19 (Reuters) - Babcock & Brown Infrastructure Ltd (BBI.AX: Quote, Profile, Research, Stock Buzz) plans to sell a stake in one of Australia's largest coal ports, Dalrymple Bay, the Australian Financial Review said on Wednesday.

BBI, which is managed by troubled Australian investment bank Babcock & Brown Ltd (BNB.AX: Quote, Profile, Research, Stock Buzz), was planning to sell between 30-49 percent stake of the port in northern Queensland state to raise funds to pay down its debt, the report said. The sale could fetch A$500 million ($325 million), the report added.

"Where we know there is strong interest, it's appropriate that we test out appetite and pricing for co-investing, as that means we make decisions on which options to pursue with the best information at hand," BBI managing director Jeff Kendrew was quoted saying in the report.

The port has a capacity of 68 million tonnes per annum (mtpa) and is being expanded to 85 mtpa to meet increased demand from miners.
BBI owns 100 percent of the port, under a 49-year lease from the Queensland state government. ($1=A$1.54) 

(Reporting by Denny Thomas; Editing by James Thornhill)


----------



## BarryH (19 November 2008)

The potential sale of Dairymple for $500 mil of much needed capital would be more good news following the powerco sale. No updates on Westnet or Euroports but it is obvious that they are serious about reducing debt which is really the only outstanding problem left. On this news the market is selling bbi below 5 cents today Go figure!


----------



## mark_au (19 November 2008)

Looking very cheap at 5 cents. but whether to bet the mortgage on it or not LOL. To take the plunge or not.... ., My conservative side says to wait a bit, but the Gordon gecko side tells me this could be a great opportunity to actually make some money in the future Sigh what to do ,, what  to do ;-)


----------



## Tiles (19 November 2008)

BarryH said:


> The potential sale of Dairymple for $500 mil of much needed capital would be more good news following the powerco sale. No updates on Westnet or Euroports but it is obvious that they are serious about reducing debt which is really the only outstanding problem left. On this news the market is selling bbi below 5 cents today Go figure!




It might indicate that they are having problems selling the other assets they have put on the block. Having broken the 5c barrier, they might attract some buyers but the question is, who is selling at these prices?


----------



## benhua (19 November 2008)

I read it could be Fund Managers who might sell a these prices, because clients want cash now. Lot of fear at this time, they want to get out. It might be the same thing for many stocks.

That's just an hypothesis...


----------



## dougit (19 November 2008)

well. watching this stock fall. Worried about debt etc and general failure of investment bank model. Today I couldn't resist doubling my commitment to 22000 shares for 500 dollars as opposed to the 8500 for the previous investment. am i a fool for averaging down. Only time will tell. Seems cheap. If this stock fails I think there should be some criminal charges laid against the directors of bnb and bbi


----------



## banska bystrica (19 November 2008)

I stumbled across this this evening from the Business Spectator:

NOTE the bold and underlined section I have highlighted.

"BBI to sell stake in Dalrymple Bay


Babcock & Brown Infrastructure (BBI) has put its $2.3 billion Dalrymple Bay coal port up for sale, to cover debt and find a partner to fund long-term expansion, reported The Australian Financial Review.

The infrastructure arm of troubled investment bank Babcock & Brown, BBI wants to sell 30 to 49 per cent of the Queensland port.

The paper reported it understands BBI was approached by a consortium of miners interested in buying Dalrymple Bay and has issued confidentiality agreements to interested parties.

"Where we know there is strong interest, it's appropriate that we test out appetite and pricing for co-investing, as that means we make decisions on which options to pursue with the best information at hand," BBI managing director Jeff Kendrew told the paper.

Sources said the sale will only go ahead if BBI negotiates a good price for the port asset.

While sources close to several of the customers that use Dalrymple Port, including BHP Billiton, Rio Tinto, Xstrata, and Anglo Coal Australia, said they wanted to grab an ownership stake in the port to further align their interests with BBI's and gain more influence over future upgrades and work, the paper reported.

These customers currently own DBCT, which operates and maintains the port through an outsourcing agreement with BBI. BBI owns Dalrymple under a lease with the Queensland government.

In May BBI warned that the Dalrymple Bay Coal Terminal upgrade would take longer than previously expected, with the ramp-up to 85 million tonnes per annum (Mtpa) capacity now expected by the end of the first quarter of 2009.

While the original schedule would have seen DBCT producing 85Mtpa by the end of the 2008 calendar year, heavy rains and flooding in the Mackay area in January and February led to the final stage of the project being split into two parts.

*Separately, ratings agency Standard and Poor's (S&P) lowered BBI's rating to 'CCC+', from 'BB-', to reflect financial challenges faced by the company.
*
The alteration follows news that BBI's parent would embark on a comprehensive restructure program, which is expected to cost 1,000 jobs.

"The 'CCC+' rating reflects our view of an increased risk that BBI will fail to meet its $3.1 billion corporate facilities' financial covenants, which was also highlighted in the company's announcement today," S&P credit analyst Sharad Jain said.

The rating would likely to be lowered to 'D' if the lenders accelerate the payment of a facility, or restructure a facility in such a way that is deemed by S&P as a distressed exchange, the ratings service add"




Unfortunately the author has mistaken BBIS (a subsidiary of BNB) for BBI. Poor journalism like this does not help at all. The journalists are really very poor.


----------



## drsmith (20 November 2008)

DionM said:


> Personally I think it is a huge amount of guilt by association.
> 
> Yes BBI has debt - but not drowning-in-it type stuff.  Their assets are not overinflated in value like CNP, for example.  Their assets are not subject to highly discretionary activities.
> 
> ...



Before looking at asset quality the problem to me is the level of debt relative to assets. This may have been fine while credit was easy but that has now changed and changed for some time to come.

BBI is now a foreced seller of assets to reduce debt and that puts it at a huge disadvantage in terms of negotiations with potential buyers. Whether or not thier assets as a whole are overinflated in the present market remains to be seen.


----------



## Tiles (20 November 2008)

drsmith said:


> Before looking at asset quality the problem to me is the level of debt relative to assets. This may have been fine while credit was easy but that has now changed and changed for some time to come.
> 
> BBI is now a foreced seller of assets to reduce debt and that puts it at a huge disadvantage in terms of negotiations with potential buyers. Whether or not thier assets as a whole are overinflated in the present market remains to be seen.




The market appears to have decided on BBI's potential to reduce its debt burden with sellers down to 3c. Moody's have also taken a dim view, reducing its rating. BBI probably stands for "bye bye investment" some might feel it means "buy buy it'scheap". I'm waving it away.


----------



## KFC soup (20 November 2008)

Tiles said:


> The market appears to have decided on BBI's potential to reduce its debt burden with sellers down to 3c. Moody's have also taken a dim view, reducing its rating. BBI probably stands for "bye bye investment" some might feel it means "buy buy it'scheap". I'm waving it away.




well yeah, it does not help when babcock and brown is in a trading halt. hopefully it gets an extention and realignment of debt.


----------



## Tiles (21 November 2008)

KFC soup said:


> well yeah, it does not help when babcock and brown is in a trading halt. hopefully it gets an extention and realignment of debt.




I wonder why I'm still bothering. It's now below 3c  - what did you mean by a "trading halt" and who would give it an extension?


----------



## banska bystrica (21 November 2008)

What's BNB going under got to do with BBI. BBI own quality monopolistic infrastructure assets, do not have any debt relationship with BNB, and are not under a forced selling program. They have decided to sell assets only at book value or above to reduce corporate debt.
I cannot see what the panic is all about. Stepped in and bought 800,000 at 2.5c today. Put in the drawer and wait for the credit markets to thaw.


----------



## banska bystrica (21 November 2008)

drsmith said:


> BBI is now a foreced seller of assets to reduce debt and that puts it at a huge disadvantage in terms of negotiations with potential buyers.




Actually, BBI is *NOT* a forced seller of any assets. They will only sell assets where they can get book value or better. The assets are in the books at cost less depreciation. Very conservative and proved so with the sale of 50% of Powerco at 25% ABOVE book value.

Dalrymple Bay Coal Terminal looks to be attracting various serious buyers at around enterprise value of 2.5 billion or more. Xstrata, Macarthur Coal,  just to name a few.


----------



## drsmith (21 November 2008)

Time will tell.

My bet is that BBI's assets will ultimately be sold under administration with the proceeds being used to cover it's debts and nothing left over for the shareholders.

I hope I am wrong but in the present environment where credit is tight and asset prices are under pressure I see no other alternative. This too is the market's view judging by the share price.

In my view the only question remaining here is the level of writedowns that BBI's creditors will have to wear on their loans.


----------



## BarryH (22 November 2008)

Banska I hope you end up selling these shares for $800k.  A much better posting than the prophecy from Drdoom


----------



## psychic (22 November 2008)

*Might be worth looking at BBI now, since we finally have a media report that paints a positive picture on the survival of the satellites.*


http://www.theaustralian.news.com.au/business/story/0,28124,24687340-5001641,00.html

Extract:

Given there is no cross-collatoralisation with Babcock & Brown, there is a quite reasonable case which says the soundest of the satellites can sustain commercial life even after the collapse of the Babcock death star. 

Indeed, BBW and BBI might well benefit from Babcock's demise as it would speed the migration of the headstock management into the companies which own the assets, and permanently staunch the outflow of fees. 

This is not to diminish the nature of the life-threatening complexities ahead for BBW and, more particularly, BBI. It is only to suggest that those challenges might just as easily be faced on their own as under the banner of Larkin's tainted enterprise. 

Based on share price performance, the market seems to have decided BBW has some chance of survival while BBI is little more than a liquidation prospect. 

BBI closed at 2.8 cents a share last night, which means it is carrying debts of $9 billion or so on a market capitalisation of just $60 million. On Wednesday, Moody's downgraded the BBI family to Ba2 and signalled further cuts to come. 

And yet, the company recently sold half of just the New Zealand assets of Powerco for $1 billion, a price the equivalent of 25 times free cash flow. 

Now if you valued the whole of BBI's portfolio on that basis, its equity would be worth maybe $5billion. And the thing is, there is no particular reason not to use that sort of metric as most of BBI's assets are monopolies with EBITDA-to-interest cover ranging between 2.3 and 2.5 times. 

Those ratios would have to halve for BBI to be in breach of covenants, and that is an unlikely outcome given the individual price regulators would have to breach agreements to effect lower pricing.


----------



## banska bystrica (23 November 2008)

Just looking closer at the fundamentals it appears to me that things are perhaps not as critical as the market would have us believe.
Their interest cover looks more than comfortable. If they sell another asset at book price or over, they really appear to be a tremendous chance of surviving, even with BNB falling over.
Regulated incomes from quality assets and most of the debt is actually non-recourse to BBI so another plus.
They look to be a bit tight until Powerco proceeds come through in February.
Once the 320 million comes in for that, I see a bright future for BBI.
I understand an EGM will be called soon to change the name, assuming BNB is history. That will help too.


----------



## roland (25 November 2008)

Macarthur eyes BBI's coal port

BusinessSpectator
Macarthur Coal says it is interested in buying a stake in Babcock & Brown Infrastructure's (BBI) Dalrymple Bay coal terminal, if BBI wants to sell it, reported The Australian. 

Macarthur's chief executive Nicole Hollows said "we have a robust balance sheet and will consider opportunities," adding that "if the [Dalrymple Bay] terminal became available we will consider that an opportunity." 

It was reported that BBI had put its $2.3 billion Dalrymple Bay coal port up for sale this week, to cover debt and find a partner to fund long-term expansion. 
It was thought that BBI had been approached by a consortium of miners interested in buying Dalrymple Bay, and has issued confidentiality agreements to interested parties. 

A BBI spokeswoman confirmed that the group was testing the market after port users approached it. 

She said selling a stake could help fund the port's expansion, but that this did not mean a sale would happen. 

She did not confirm whether BBI would want to limit a potential sale to a 49 per cent stake. 

But Ms Hollows indicated that interested parties could be eyeing a bigger slice.


----------



## Flyer (25 November 2008)

I recommend you read Robert Gottliebson's article "The Big Owe"

http://www.eurekareport.com.au/iis/iis.nsf/pages/C1BC0964167542C1CA25750B001F5700?OpenDocument

In it it claims BBI owes more then 8.4 billion dollars


----------



## banska bystrica (25 November 2008)

BBI actually owe about 10 billion so they are wrong on that count.
What they do not point out is that 90% of the total debt is non-recourse debt. It makes a huge difference. If an asset's cash flow fails to pay it's interest bill to the lending bank, the lending bank only has recourse to that particular asset. BBI cannot fall over if a particular asset goes broke.
At the moment, cash flows from assets are covering interest payments on a 1.83 times basis. Another asset sale and this goes above 2.0 times. 
Their corporate debt interest, which is the critical debt in terms of survival, is covered by free cash flow a staggering 7 times. The lock up level is 2 times so now we can understand why the banks have not forced BBI to sell assets, rather the BBI Board has taken the prudent step in the current environment to reduce overall debt, specifically corporate debt.
I am more than comfortable with my 800,000 shares at 2.5c. They are there for the long term. This stock is a steal at current prices although there are obviously risks. They do need to sell one more asset at book value and they are out of the woods until at least 2010.
They sold 50% of Powerco at 25% above book value, which goes well for the sale of Dalrymple Bay Coal Terminal. It's a hard stock to understand for the average investor, that's why it's 3c.


----------



## random (25 November 2008)

BBI is a good bet!
It may still go down the toilet.
But it is a good bet! (at these prices).
I bought a decent size parcel yesterday. 
Even if it does go into liquidation I wont regret my gamble. I don't think it will though (obviously).

This share is so oversold imho because it has the name Babcock in it and it has debt.
The debt is high sure, but then look at the assets and look at the cash flow. Blood ie good I think.
What major infrastructure business doesn't have debt?

BBI in recent times has been guilty by association with Babcock and Brown and with BBP but it is not the same animal. It is and rightly so standing its ground and seperating itself from the mother ship that was frankly nothing but a drain. Good move!
Management were given a good shake up at the AGM i believe and know what they have to do.
As stated earlier by others we just need to dispose of one more asset and obtain fair dollars for it or part thereof and we can all breath a sigh of relief.
I'm happy.  

My heart does go out to all those who bought in earlier and lost value and those large dividends. Such is life.


----------



## Flyer (25 November 2008)

Thanks Banska.
Why are they not more accurate in their reporting?

Maybe you can explain to why the BBI and BBP share prices seem to move in unison. It is really weird and going on for some time.


----------



## banska bystrica (25 November 2008)

Flyer said:


> Thanks Banska.
> Why are they not more accurate in their reporting?




Good question. The media overall have been extremely innaccurate in their reporting of the BNB satellites. One newspaper said that BNB would have to sell Dalrymple Bay Coal Terminal urgently to pay down debt. BNB do not even own Dalrymple Bay Coal Terminal so how the heck would they sell it?

BBI own DBCT and they have put it up for sale but only at the right price. That means well in excess of book value.


----------



## skc (25 November 2008)

banska bystrica said:


> BBI actually owe about 10 billion so they are wrong on that count. What they do not point out is that 90% of the total debt is non-recourse debt. It makes a huge difference. If an asset's cash flow fails to pay it's interest bill to the lending bank, the lending bank only has recourse to that particular asset. BBI cannot fall over if a particular asset goes broke.
> At the moment, cash flows from assets are covering interest payments on a 1.83 times basis. Another asset sale and this goes above 2.0 times.
> Their corporate debt interest, which is the critical debt in terms of survival, is covered by free cash flow a staggering 7 times. The lock up level is 2 times so now we can understand why the banks have not forced BBI to sell assets, rather the BBI Board has taken the prudent step in the current environment to reduce overall debt, specifically corporate debt.




Hey Banska - very impressed with your understanding of BBI's debt position. Great to see posters backup their position with well researched facts. Can I ask you a few questions? 

- I assume the corporate level free cash flow comes from the residual cash flow from the assets, various fees like management, performance and other one-off acquisition / financing fees. Do you know what is the projected corporate free cash flow given that some of those fees will be greatly reduced? 

- Do you know where I can find their debt maturity profile at the corporate level? 

Thanks for sharing.


----------



## banska bystrica (26 November 2008)

skye,
All those are answered in the BBI Investor pack released in October. It's on the asx website under company announcements.
There's still risk in BBI and a fair bit of it but if they survive, 3c will prove to be a steal. I'm thinking a 20 bagger (60c) in two years. They need some things to go their way, like global credit to start to flow again and the equity markets to not keep plummeting to new lows almost weekly. Fundamentally though, whilst they have numerous hurdles to overcome, they look OK, certainly not on life support like a 3c price indicates.
I reckon the patient is a bit crook and needs hospital treatment but certainly not intensive care yet. 25% of net asset valuation would be appropriate now, not 2%. 
They will range trade between 2c and 5c until a significant announcement is made.


----------



## banska bystrica (27 November 2008)

_Miners interested in share of coal port
27 Nov 2008
Macarthur Coal may have expressed an interest in buying a stake in one of Australia's largest coal ports, say industry sources.

Macarthur Coal already ships via the Dalrymple Bay port 
It would be a logical move, since it has been the mining companies themselves who have become frustrated with the bottlenecks at the northern Queensland port of Dalrymple Bay, resulting in a push for expansion.
The port has a present capacity of 68 million tonnes per annum (mtpa) which has just got the go-ahead for a $639m expansion which should up capacity to 85 mtpa to meet increasing demand from the coal producers. 
Babcock & Brown Infrastructure (part of the troubled Babcock & Brown bank) was originally looking to sell a 30-49% stake, partly to help settle debts and partly to expand the ports capacity. However, Macarthur (who are possibly fronting a consortium of miners wishing to move into the port) may well be looking for a larger stake than originally on the table.
_

We now have numerous serious potential buyers for DBCT. 
Macarthur Coal, Xstrata, QIC, BHP and from all reports a few others are all looking to buy this quality infrastructure asset and it may their one and only chance. These assets typically do not come up for sale often. The competition to buy this will be fierce. The profit generated above book value for BBI will go a long way to wiping out BBI's corporate debt. Once corporate debt is nil or so small as to be insignificant, BBI will have gone a long way to securing it's future. The recovery is beginning.


----------



## random (27 November 2008)

Great posting banska bystrica.

I was very pleased when i heard of the demise of the takeover of Rio by BHP on Tuesday night.

To the best of my knowledge BHP have 5 coal mines utilizing the Dalrymple Coal terminal and Macarthur Coal 2 mines. 
Even with the economic downturn throughout the world the demand for our coal through this terminal will not be effected.

BHP would no doubt be weighing up the current situation having not just a look at the terminal but also at Macarthur Coal itself once again, as it has previously eyed it previous to Rio talks.

Share price of Macarthur was in the high twenties then and is now down to $3 something.

Opportunity doors have as you stated opened up not just for BHP but for a number of parties with a win win situation for many.

This is certainly a positive for BBI and can do us no harm.


----------



## banska bystrica (27 November 2008)

My feeling is that once Euroports or Dalrymple Bay sells, BBI will have a substantial rally. The market will realize their asset values are not impaired at all. These assets are not empty commercial properties or vacant shopping malls or "inflated" aircraft leases. They are essential infrastructure. Gas supply, electricity supply, ports, rail networks etc.
If BBI did not have an association with "Babcock and Brown" and their corporate debt was nearly zero, they would be trading at at least 50% of net asset valuation. In other words, around 60c.

The parent (BNB) has sucked the life out of the children (BBI, BBP, BBW, BBC and a few others) via excessive management fees. Once the parent is officially dead, the children will have much more nourishment. They will flourish on their own without the restraints of their parent.

Two assets sales and corporate debt is zero.
Once that happens, I see a real chance of distributions being restored in 2009/10.  That's when we will see a real re-rating of BBI, back at 50c+ where it should be.

A name change is also imminent once BNB is officially in receivership. That will help to show the uninformed this company can survive on its own and has no characteristics of the over-bearing parent.


----------



## shaunQ (27 November 2008)

Excuse my ignorance of the actual company structure of the BB group, but if the parent goes down - what is to say that the children go down automatically with it? Are they completely seperate entities? Could liquidators attack the children?


----------



## banska bystrica (27 November 2008)

shaunQ said:


> Are they completely seperate entities? Could liquidators attack the children?




Yes and then no. Your ignorance is excused. One of the children (BBP) owes the parent $400M. Other than that, all the children now run their own race.


----------



## random (28 November 2008)

My goodness - there appears to be a little interest in our baby today. 
Encouraging if nothing else!


----------



## RodH (28 November 2008)

go you good thing! wishing I bought some more stocks last week now, when they were at ~3c (but thats the way it always goes isn't it )

any particular reason for the skyrocketing? or people realizing that it is oversold and is still a pretty decent stock.


----------



## mark_au (28 November 2008)

Woo hoo they have just hit 8 cents..
gosh i hope this trend continues my portfolio is still around 50K in the red....


----------



## banska bystrica (28 November 2008)

Takeover rumours flying around and it makes sense. Even at 30c, these are cheap on a long term basis with net assets of $1.20 per share. 
Monday will be interesting after the weekend press. BNB might be a goner over the weekend which would pave the way for all the satellites to be a target.
Interesting weeks ahead. 2.5c seems a way off now.


----------



## banska bystrica (29 November 2008)

Kohlberg Kravis Roberts and Co could be building a stake in BBI according to a Qld stockbroker. If that's true, this stock will fly. They are a serious private equity group.


----------



## banska bystrica (30 November 2008)

Further speculation in the press today. At 7.5c it's a completely decimated share price and with the quality of assets, it would not surprise that someone has been more than having a look. If someone has been buying the last few days as a pre-cursor to an official bid, then we will see some volatility this week. The brokers are talking "takeover" and now the press are saying the same.
It's the sort of stock that could end up back at 4c by Friday or at 14c. 

It all depends on whether the rumours are close to the money or not.


----------



## Tiles (30 November 2008)

banska bystrica said:


> Further speculation in the press today. At 7.5c it's a completely decimated share price and with the quality of assets, it would not surprise that someone has been more than having a look. If someone has been buying the last few days as a pre-cursor to an official bid, then we will see some volatility this week. The brokers are talking "takeover" and now the press are saying the same.
> It's the sort of stock that could end up back at 4c by Friday or at 14c.
> 
> It all depends on whether the rumours are close to the money or not.




At least there is some positive news for investors. After the decline to 2.5c I had given up. Maybe a further punt is justified.


----------



## banska bystrica (30 November 2008)

Tiles said:


> After the decline to 2.5c I had given up.




Actually at 2.5c when I bought 800,000, I thought it was a dream it felt that good.
It's funny how emotions work. Tiles and I'm sure others felt guttered yet I viewed it as a huge opportunity.
I wonder why you didn't take the opportunity to really load up Tiles?


----------



## Tiles (1 December 2008)

banska bystrica said:


> Actually at 2.5c when I bought 800,000, I thought it was a dream it felt that good.
> It's funny how emotions work. Tiles and I'm sure others felt guttered yet I viewed it as a huge opportunity.
> I wonder why you didn't take the opportunity to really load up Tiles?




I think because I saw it as the end of the line rather than a possible new beginning. I must admit that I was really tempted, especially when I saw your commitment. But having seen two of my investments go down the gurgler when I had averaged down, I was a bit shell-shocked. A lost opportunity, but I will pick up some today and go on from here.

Having only recently joined this forum, I'm very impressed with the openness and sharing of the participants. I really hope that BBI goes to $1 and your vision gets the reward you deserve.

"Clever people deserve to get rich"


----------



## banska bystrica (1 December 2008)

Tiles said:


> I really hope that BBI goes to $1 and your vision gets the reward you deserve.




$1 inside 3 years would be tremendous, but I'll settle for 14c in the short term and hope that BBI can form a base from there.
However, I have a feeling BBI will not be around much longer. The rumours about a takeover are growing.


----------



## prawn_86 (1 December 2008)

Banksa do you have any reposrts/references to confirm the t/o rumours? Otherwise it seems a bit meaningless.


----------



## deano9801 (1 December 2008)

I'm only new to all this, but I would have thought these PDF documents posted by ASX means there is no takeover going on that BBI are aware of? Otherwise it's insider trading yer?

http://www.asx.com.au/asx/research/...s.jsp?searchBy=asxCode&allinfo=on&asxCode=bbi


----------



## Nicks (1 December 2008)

I think the fundamentals have changed somewhat for BBI. 

It seems that the fear of dilution as a result of BNB going under is no longer a problem and it is this that is driving this stock north ward. Personally I think this is a catalystic event and is the turnaround this stock needed. 

Apart from that if you read between the lines of the Moody rating..... ie if BBI sorts itself out liquidity wise, and I believe that based on the quality of their assets and revenues that they will have absolutely no problems in doing so, then this company is going to out perform significantly in the next 12 - 24 months (and yes some of that will be massive rebound but some will be a return to quality and conservative management). 

So I think this stock is now looking like a very good grab whilst it is still at low levels. Obviously only wise to commit a small % of the portfolio to but definately looking like a good grab now. The chances of either BBI getting back to business and good management (and dropping the two Bs in its name and code) and pulling through this liquidity issue (and I think they will not have any problems securing this given their quality assets and revenues) or someone sniffing around at their quiality assets and having a go, is looking all too likely now. I think themarket has now learnt to seperate it from BNB, which is what looks like will happen in itself anyway.


----------



## banska bystrica (1 December 2008)

prawn_86 said:


> Banksa do you have any reposrts/references to confirm the t/o rumours? Otherwise it seems a bit meaningless.




Prawn,
It was in black and white in the Brisbane Sunday Mail yesterday. Is that a good enough reference?


----------



## RodH (1 December 2008)

deano9801 said:


> I'm only new to all this, but I would have thought these PDF documents posted by ASX means there is no takeover going on that BBI are aware of? Otherwise it's insider trading yer?
> 
> http://www.asx.com.au/asx/research/...s.jsp?searchBy=asxCode&allinfo=on&asxCode=bbi




I'm only new to this too, but the way I saw it was there is no deal to be announced. They're still allowed to be in talks without having to make an official announcement aren't they?


----------



## justiceotp (1 December 2008)

Hey Banska, Im interested if its not rude to ask have you continued to hold the full 800k of shares you bought or sold of some to have a free ride and if not what your target price is for selling some or all?


----------



## banska bystrica (1 December 2008)

I am certainly not interested in selling at 10c. This stock was smashed beyond comprehension to levels completely unjustified. I would have thought a minimum price would be 30c before I would contemplate selling any. In June it traded at $1.00. A 70% discount to that would be my minimum sell point and not for all of them.
Savage bear markets do throw up some sparkling gems. BBI is one of them. Hold tight and it will be worth a lot more in 2009. It will have a breather for sure but too many investors and institutions now recognize the true value and so any weakness will be seen as an opportunity to accumulate.
It's NTA is well over $1 and the intangibles in the books are actually worth a lot of money. People scoffed at the intangibles and said they were worth nothing.
Tell me the lease on Dalrymple Bay Coal Terminal which is being eyed off by Xstrata, Macarthur Coal, BHP, QIC and others is worth nothing, yet it is an intangible.
A 99 year lease is "intangible" but you and I know it would be worth a couple of billion at least. 10c is still a trashed price. Not interested.


----------



## random (1 December 2008)

As each day goes on i have more faith in this share.

Watched for a long time but waiting until the 25th of Nov to buy at 3c and post on this thread. (sometimes, just sometimes, my timing can be right).

Banska is absolutely correct. This _is still _an absolute bargain at 10c and I also will not be selling any at anywhere around these prices either. ,

The best thing to do is forget about them until probably half way through next year at least or until some mover and shaker comes in has sufficient funds for a takeover and recognizes BBI for the bargain it is.

There is no doubt that the price of BBI can drop again before it goes up but it matters little if you are able to hold on to what you have and are not forced to sell.
I recognise that there is alot of hurt out there with BBI but that does not diminish from its true value. yes yes yes the debt......I know. But the cash flow! This flow is the envy of many and the lifeblood of this beast. If the cash flow wasn't there it would be a totally different story regardless of the asset quality in this climate..... but it is there STILL.
Reducing costs and diminishing debt is still vital but it is looking pretty good me thinks.


----------



## eMark (2 December 2008)

Comments on the recent announcements today re change in substantial holdings? Cheers. Thanks. Any thoughts on the signifigance?



banska bystrica said:


> I am certainly not interested in selling at 10c. This stock was smashed beyond comprehension to levels completely unjustified. I would have thought a minimum price would be 30c before I would contemplate selling any. In June it traded at $1.00. A 70% discount to that would be my minimum sell point and not for all of them.
> Savage bear markets do throw up some sparkling gems. BBI is one of them. Hold tight and it will be worth a lot more in 2009. It will have a breather for sure but too many investors and institutions now recognize the true value and so any weakness will be seen as an opportunity to accumulate.
> It's NTA is well over $1 and the intangibles in the books are actually worth a lot of money. People scoffed at the intangibles and said they were worth nothing.
> Tell me the lease on Dalrymple Bay Coal Terminal which is being eyed off by Xstrata, Macarthur Coal, BHP, QIC and others is worth nothing, yet it is an intangible.
> A 99 year lease is "intangible" but you and I know it would be worth a couple of billion at least. 10c is still a trashed price. Not interested.


----------



## banska bystrica (2 December 2008)

It looks as though the parent has been selling. Looks very much like a situation where BBI and BNB are drifting apart. I hear a name change is imminent once the change of control is triggered. The clarification of BEPPA was nicely timed. Certainly no coincidence. This stock will be well north of 15c sooner rather than later. Someone has been buying this seriously. The volumes are not just retail buyers.


----------



## random (2 December 2008)

If a major shareholder such as BNB (as Banska suggests) or one of the other banks which hold a large holding sell a large parcel of shares in BBI, what time frame are they expected to inform the market of their sale? And is there a volume requirement attached to this as well if so.
What are ASX rules regarding this?
I wonder if anyone is able to enlighten me on this point i would appreciate them telling me.

Thanks.


----------



## Flex (3 December 2008)

Been keeping an eye on this stock for a while, and bought a decent amount when it hit about 4c... Definitely will be keeping it long term. A lot of people getting on the band wagon tho..

btw, good work banska, very informative postings


----------



## my03 (3 December 2008)

hey guys, just wondering, is it too late to jump on the bandwago? not asking for financial advice but have been interested in this one for a while, I'm thinking medium term maybe 1-2 years?


----------



## justiceotp (3 December 2008)

From the looks of it its still a decent buy. I bought some earlier on and then another lot today but its still fairly risky but with a very nice potential return. I'm only putting on what I'm prepared to loose.


----------



## Share_Bear (4 December 2008)

Volumes have dropped right off again from 174M to 35M today.
http://www.asx.com.au/asx/research/CompanyInfoSearchResults.jsp?searchBy=asxCode&allinfo=on&asxCode=BBI&companyName=&principalActivity=&industryGroup=NO#closing_prices

Also a concerning announcement about possible redemption of EPS not for cash but an equivalent??
01/12/2008	BBI EPS - Redemption on Change of Control

I am worried by the high levels of intangible assets allocated to goodwill along with the extreme levels of debt.
http://au.finance.yahoo.com/q/abs?s=BBI.AX


----------



## Nicks (4 December 2008)

my03 said:


> hey guys, just wondering, is it too late to jump on the bandwago? not asking for financial advice but have been interested in this one for a while, I'm thinking medium term maybe 1-2 years?




I think that is a good position to take. The aim being that by then they will have lowered their gearing and be left with a quality set of high yielding stable and often regulated infrastructure assets.


----------



## banska bystrica (4 December 2008)

Share_Bear said:


> Also a concerning announcement about possible redemption of EPS not for cash but an equivalent??
> 
> I am worried by the high levels of intangible assets allocated to goodwill along with the extreme levels of debt.




You either haven't done your homework properly or you haven't read my posts.
In fact, the BEPPA announcement was extremely positive and the intangibles are extremely valuable so I have no idea how you came to your conclusions.


----------



## banska bystrica (4 December 2008)

"It's NTA is well over $1 and the intangibles in the books are actually worth a lot of money. People scoffed at the intangibles and said they were worth nothing.
Tell me the lease on Dalrymple Bay Coal Terminal which is being eyed off by Xstrata, Macarthur Coal, BHP, QIC and others is worth nothing, yet it is an intangible.
A 99 year lease is "intangible" but you and I know it would be worth a couple of billion at least. 10c is still a trashed price. Not interested."

That's what I posted previously. I'm very happy people didn't do their homework and still aren't. It enabled this stock to be bought heavily under 3c.


----------



## random (4 December 2008)

Its funny.
It doesn't matter what share it is it is always a giant hurdle to go from 10c to a whopping 10.5c. People are used to the .005 increments but oh boy watch out for that massive move to a whole .05 movement.... thats scary!
Volumes on the buy and sell are both quite large today.
Which side will blink first?
Amusing to watch really.
Perception of value is very strange especially when dealing in shares.


----------



## random (4 December 2008)

Sorry I meant to say from 1/10th cent to half a cent. Apologies. Got my decimals mixed up. I was always better at fractions at school anyway.


----------



## roland (4 December 2008)

made it 0.11 

lot of resistance though - all those dudes that bought in 1/10th's (me included)

I'm holding though


----------



## banska bystrica (6 December 2008)

Another "intangible asset" that a few of you doubters might like to ponder is the property lease of 64 acres attached to the Port of Teesport in the UK.

_"PD Ports brings jobs and new projects to the Tees; MIDDLESBROUGH based PD Ports has enjoyed an exciting start to 2008 with approval of major expansion plans and an agreement with Tesco in what is potentially the biggest deal in over 30 years.(News)

Article from:
    Evening Gazette (Middlesbrough, England) 
Article date:
    May 22, 2008.
With the expected creation of more than 6,300 jobs when both projects are delivered, PD Ports has made its mark as one of the largest employers and key economic drivers in the North-east.

In February, the campaign to build a new deep sea container terminal at Teesport, known as The Northern Gateway (NGCT) was granted final approval by the Secretary of State for Transport, Ruth Kelly. This was less than 22 months after plans were initially submitted in April 2006. "_

Now if you still think the "intangibles" on BBI's balance sheet are worthless, then do some research and you may be enlightened.

Another link: https://www.businessspectator.com.a...n-new-import-centre-E9329!OpenDocument&Click=

Tesco paid 14.9M pounds (AUD$34M) as a land lease prepayment on the land adjoining Teesport.


----------



## Share_Bear (8 December 2008)

banska bystrica said:


> You either haven't done your homework properly or you haven't read my posts.
> In fact, the BEPPA announcement was extremely positive and the intangibles are extremely valuable so I have no idea how you came to your conclusions.




To accuse me of not doing research is obviously completely unrealistic as I am the one providing facts and references.  I came to these conclusions from the references I stated so I obviosly have done the research.

Let me elaborate on goodwill.  I am extremely concernecerned by the fact that goodwill was almost tripled 2007 to 2008.  It was 478.05M in 2006, 570,06M in 2007 then 1,369.78M in 2008.   I want you to think about how much of that "Book Value" is actually recoverable "Realisable Value" when goodwill usually based on reputation.
http://au.finance.yahoo.com/q/abs?s=BBI.AX

You stated an estimate NTA per share of $1, could you please provide your reference as you may be using old figures. NTA is actually negative -535M on the 2008 Balance Sheet.
http://au.finance.yahoo.com/q/abs?s=BBI.AX

Moodys Rating has dropped twice within 2 weeks with concerns over the extreme debt levels, one maturing in Feb.

Also volumes have dropped to 25 Mil.

There are some good posts at the start of this thread.  I feel for those who have made a loss.

Also bb you make some interesting posts but could you please start providing references.


----------



## Justthinkin (8 December 2008)

This is an interesting stock and from my take aside from bouncing around by day trades, longer term can only be positive.

The comments re tangibles and intangibles is interesting. But I think (as pointed out by other..BB possibly), BBI is an infrastructure play deriving predominantly (75%) regulated income. Therefore, if as generally accepted, an asset is worth it's discounted cash flows, historical book values are not necessarily good indicators of value. 

Personally, I'd not be using NTA as my acid test of valuation. Instead I'd look intensely at key drivers of regulatory returns aka DORC valuation methodolgy and ingredients to CAPM (viz debt/equity assumption, debt costs and equity costs).

(Much of my analysis based on what I'd consider a well constructed invesment pack, Oct 08)

It is difficult not to be impressed by the Dalrymple Bay Coal Terminal:
-revenues based on take or pay with counter parties representing the largest mining houses in the world. Variable operating costs on strict pass through arrangements;
- an insatiable appetite internationally for good wholesome coal. I understand there is still even today a queue of sea vessels awaiting to be loaded ex DBCT!
- the asset was acquired 2002 so its replacement cost (ingredient to regualtory return assessment) moved significantly upwards since acquisition;
- no immediate competitors ... Rome may well have been built in a day but competing coal terminals of DBCT capacity take a little longer;
- cost of debt pointing downwards;
- cost of equity underpinned by market insanity. In fact I think this is a no lose situation... either equity is priced by the market at rates lower than currently prevailing or if investors persist in demanding greater returns to underwrite mrkt volatility, the regulator must afford greater prices... either way it has to be good for share price.
- the debt position is interesting but I don't think hopeless. If I recall I was bothered by about $100M ... in the sceheme of things doesn't look overwhelming;

Like Share_Bear I am a little concerned by the growth in goodwill noting that most of the 07/08 increase attributable to Euro port acquisitions. However, I suspect the same analysis is relevant... to what extent is the acquisition price paid above tangible asset cost attributable to premiums available per regulated returns? (Rhetorical question... I will do my onw research!)

For the record, I have a BBI position. Didn't enjoy today too much but life's a long time!! My take is that if BBI can distance itself from the more hideous stock BNB, ignore the media beat up about having to sell the farm (aka DBCT) to stay afloat, manage its debt rollovers efficiently then I see a pretty good stock in BBI.

Welcome feedback but insist you do your own research. This is strictly my rantings


----------



## skc (8 December 2008)

Share_Bear said:


> Let me elaborate on goodwill.  I am extremely concernecerned by the fact that goodwill was almost tripled 2007 to 2008.  It was 478.05M in 2006, 570,06M in 2007 then 1,369.78M in 2008.   I want you to think about how much of that "Book Value" is actually recoverable "Realisable Value" when goodwill usually based on *reputation*.




From accounting pov goodwill is the acquisition price over and above book value of the acquired assets. So the fact that goodwill numbers increased has little bearing, apart from the fact that they acquired many assets. What is important is whether the acquisition price was a good one in light of the current environment. Reputation has nothing to do with anything.

Not really providing any views on BBI...but the meaning of goodwill seems a bit confused in your post. 

http://en.wikipedia.org/wiki/Goodwill_(accounting)


----------



## alphaman (9 December 2008)

Reputation (of the target) can be why the acquirer is willing to pay for the goodwill.

Anyway, BBI is an ASX200 stock that no doubt has been analysed inside out by many players, esp. the banks. It has been trading at trash prices not just for a day, but for weeks. I doubt an average outside investor can add much value by carrying out his own analysis and valuation. IMO the more sensible and efficient approach in a situation like this is to trade the price, not the fundamentals.


----------



## RodH (10 December 2008)

up nearly 17% today. Making back ground lost in the last few days  

Only news i can see is a change in the compliance committee


----------



## random (13 December 2008)

Whilst it would be prudent if not necessary from the point of view of the banks and BBI to sell one or two more assets i sincerley hope that the DBCT is not the asset or included with others. 
I was pleased that justthinkin also mentions this.
This is such a premium asset. It was yesterday, it is today and tomorrow it will be even more so. Selling this is just silly talk imho.

Even if we are unable to pay back principle owed in the short term, the cash flow from this outstanding business is to be envied by others and goes a long way to servicing interest obligations.
Surely the banks must acknowledge this.
If we were to sell this i for one would be suspicious of the true motives of the sale and would be more than interested in the circumstances as to how and who the ultimate purchaser would be.
Just my thoughts.
Still holding and maybe not finished adding considerably more BBI.


----------



## jrrider (14 December 2008)

http://money.cnn.com/news/newsfeeds/articles/djhighlights/200812090141DOWJONESDJONLINE000063.htm

Found this article and thought I'd share it in case you are interested in reading about BBI's asset.  I wonder if this will have an impact on the valuation of the Port itself.


----------



## banska bystrica (14 December 2008)

BBI's revenue from Dalrymple Bay is "take or pay" so no effect on revenue. It's all good for BBI. Research pays.


----------



## my03 (15 December 2008)

Been keeping my eye on this one with interest, it hasnt moved for ages, is it still a good time to get in or do you guys think there might be room to fall?


----------



## Justthinkin (17 December 2008)

Banska ... are you awake?

Your call re BBI was a good one... it is an infrastructure play with good regulated revenues. 

It was so good I thought about spending my BBI dividend and buying you a Cristmas present. But they have announced divs on hold... bugger!!!!

Do you have a view on todays trades and price action? I suspect it was more about no announcement rounding out Westnet debt and acquisitions. Trading was more spooky I think rather than logical accumulation and/or position unwinding.

Cheers


----------



## eMark (17 December 2008)

That announcement was due today. The extension was up today. Why no announcement? I know it's only for a minor aspect (rollover until PowerCo funds come through), but no announcemnet is a little un-nerving...


----------



## muzzza (17 December 2008)

eMark said:


> That announcement was due today. The extension was up today. Why no announcement? I know it's only for a minor aspect (rollover until PowerCo funds come through), but no announcemnet is a little un-nerving...





You hold Mark? Seems as though quite a bit of potential in this one.. What effect do you think the announcement will have, if any?


----------



## mark_au (18 December 2008)

There was an announcement today , looks like they got the extension utill the sale, 
Im trying to decide whether to go into (more) debt and get a bunch of these guys or not... it would be nice to know when the dividend was coming back

regards

Mark W


----------



## muzzza (18 December 2008)

Thanks for the reply Mark.. They dropped down early to 7.2 cents now coming up to 7.6 cents.. I suppose if they announce the dividends it will boost the price up so its one of those gambles.. I hold and IMO is worth it in the long term.. You held for a while?


----------



## mark_au (18 December 2008)

gday

No i haven't had them for long at all,  i bought them in three parcels one of them was when they were around 4 c.. during the recent hammering . I wish i had enough free cash to get a shipload more..... Though my previous experiences where i take the plunge on what seems to be a good idea usually go sour LOL



muzzza said:


> Thanks for the reply Mark.. They dropped down early to 7.2 cents now coming up to 7.6 cents.. I suppose if they announce the dividends it will boost the price up so its one of those gambles.. I hold and IMO is worth it in the long term.. You held for a while?


----------



## random (18 December 2008)

Any talk of a dividend return to BBI shareholders at this point is (to put it politely) "ridiculous".

As has been stated repeatedly by members - there is value here and they have been very oversold.
I fear however that many will lose a lot due to day trading and pure speculation from day to day. 
Thats our own individual call.
Buy and sit. Value will return. Just don't expect it to jump soon. 
Be patient. Buy your lot and forget about them and if you have some spare cash buy a bit more. Wait for the value to be recognized.
Dividends in the forseable future?
Ya dream'n.


----------



## Justthinkin (18 December 2008)

Random

Whilst I agree entrirely with your day trader comments and that this stock is best acquired and left alone in a dark drawer to mature, I'm not sure I'd be so matter of fact re dividends. 

IMHO BBI has been pounded because:
(a) it's association with 'Dead Coy Trading', BNB;
(b) financial markets malaise and in particular absurd environment whereby banks won't lend to banks;
(c) sell first assess later approach... I'm sure many sellers still don't realise the significance of DBCT revenues surety; and
(c) perceived (and maybe real) acquisitions at more than full prices.

Despite all of the above, and I think todays announcement affirms the approach, BBI have maintained a steady as she goes approach, basically getting on with business. 

They recently sold 50% in Powerco (and I'm reasonably confident that it will be settled) which will alter significantly short term funding issues and quite frakly remidn the market that there is in fact value in the portfolio. DBCT is gotta be worth more than the market is attributing to it under any commodity cycle circumstances and unless there is some hideous sin in a BBI cupboard, it's tough to find any enduring issues.

Having prattled on, my point is that in the not too distant future in my IMHO, the intrinsic value of BBI will be recognised in the first instance by the share market and the second, financiers. Once the latter have their act together and find a cosy comfort zone, dividends will be a must...

Today's price movements... I suspect a little bit of unease going into a christmas period...in the abscence of a sale announcement early next week it's difficult to see any bounce at this stage... drifting is the order of the day.

Good luck

My thoughts representing basically the rantings of the little yellow man in my head wearing a tasteful green dress and mathing handbag. DYOR


----------



## banska bystrica (18 December 2008)

There is no reason for BBI to jump in price. Some investors are very  impatient.
Until we get confirmation of an asset sale, the price is not going up. It's still up 300% from the lows of November.  Nothing goes up in a straight line.

You may be surprised at how soon dividends are re-instated. Remember, BBI has the cash flow from solid businesses to pay a dividend any time they want to. The only reason they withheld the last distribution was because they have no idea when this world financial crisis/credit freeze will end. Once it is confirmed that credit is again flowing, I see absolutely no reason why BBI will not be paying dividends in 2009/10. Once an asset sale is finalised, whether it be Euroports or DBCT, corporate debt can be trimmed and the excess cash can be used to develop PD Ports. 

BBI is not just a recovery story. It's a growth story and I fully expect to see dividends equal to today's share price in 2009/10. Perhaps an interim 5c in March 2010 and then a final 5c in Sept 2010. Today's share price of 7.5c is not a reflection of the true value of BBI.

One needs to understand why they did not pay a dividend last time to fully appreciate why a dividend in 2009/10 is definitely on the cards. It's not rocket science but it does take a fair bit of research.


----------



## muzzza (18 December 2008)

banska bystrica said:


> There is no reason for BBI to jump in price. Some investors are very  impatient.
> Until we get confirmation of an asset sale, the price is not going up. It's still up 300% from the lows of November.  Nothing goes up in a straight line.
> 
> You may be surprised at how soon dividends are re-instated. Remember, BBI has the cash flow from solid businesses to pay a dividend any time they want to. The only reason they withheld the last distribution was because they have no idea when this world financial crisis/credit freeze will end. Once it is confirmed that credit is again flowing, I see absolutely no reason why BBI will not be paying dividends in 2009/10. Once an asset sale is finalised, whether it be Euroports or DBCT, corporate debt can be trimmed and the excess cash can be used to develop PD Ports.
> ...




Nice write up Banska.. Do you feel that BBI is under or over priced at the current share price of 7.5c?


----------



## random (18 December 2008)

Oh, how i hope that you are correct and i am mistaken Justhinkin. It would make me very happy indeed.
We still are required to pay back some of the principle as well as interest before we are (using your accurate word) "perceived" to be back on track by the analysts ,banks and punters.
Until we have done this our share prices is restricted.
That our cashflow is healthy and sustained is our kiss of life but market perception is everything and we are perceived to be close to a cot case by the market at large.
Suspension of dividends and payment of this money towards principle with the Powerco sale and cash generated from our business of doing business is essential. 
This should push the SP back up and give the likelyhood of a dividend payment more strength, but in time.
In saying this i acknowledge that if a dividend was reinstated it would attract more buyers and boost the SP but this is more of a gamble and is a little more shall i say like pollen to attract the bee rather than honey itself.
It is a question as to which route the directors pick.  
Both have merit but i prefer the later scenario. 
Either way I'm happy. Its a question of timing.
Like you i just pray there is no " sin hidden in BBI cupboard" which we do not know about.

I know my little story is very simplistic but i have become more simplistic.

PS 
after writing this is i see that banska bystrica also writes about SP remaining static until some debt is paid. I did not copy but we both had same thoughts he just put it down a bit earlier and i wasn't going to delete mine from my rant. Cheers.


----------



## option158 (18 December 2008)

hi 

i have been following this thread for a long time and am enjoying the commentary on this BBI

now I have my big yellow learner plates strapped firmly to my forehead and my **** but if some one could please explain how something like this happens:

Course of sales for 18 December 2008

<< most recent| < previous| page of 16  go| next > |start of day >>
Time 	Price 	Quantity

4:26:08 pm 	0.077 	1,018,395
4:19:24 pm 	0.055 	1,018,395
4:10:54 pm 	0.074 	7,577
4:10:54 pm 	0.074 	7,577
4:10:54 pm 	0.074 	7,577
4:10:54 pm 	0.074 	7,577
4:10:54 pm 	0.074 	7,577
4:10:54 pm 	0.074 	7,577
4:10:54 pm 	0.074 	28,349 

now tell me if im wrong but did someone after the market had shut

buy 1,018,395 @ 0.055 
then approx 6 mins later sell them for .077

does that mean that someone just made $22,434.64 in 6mins?

if someone could please explain..

cheers option158


----------



## justiceotp (23 December 2008)

Anyone got any thoughts on BBI on the short term price as in how low they may go, I'm currently a holder but wouldn't mind grabbing another lot of them over the next few days to hold long term.


----------



## mark_au (23 December 2008)

justiceotp said:


> Anyone got any thoughts on BBI on the short term price as in how low they may go, I'm currently a holder but wouldn't mind grabbing another lot of them over the next few days to hold long term.





I rounded up my holding of BBI to 100,000. hoping to see some recovery and growth by 2nd quarter  2009


----------



## RodH (24 December 2008)

BBI sells 30% of stake in Euroports


 Share price is up 20% so far today, was hoping for a higher jump than that though...


----------



## benhua (30 December 2008)

I'm not following the intraday trading of this stock, but is there still a lot of day traders on this one, or any bots just pulling down the share price again?


----------



## my03 (3 January 2009)

some nice gains in the last week, is this trend going to continue or do you think it's just a slight rally? worth getting into now or wait till it drops back?


----------



## RodH (3 January 2009)

it broke through the 0.11 resistance barrier, which is a goood sign, though it was up to 0.125 during the day but came back down to 0.115 so not sure what to take out of that.


----------



## STYLSH (6 January 2009)

hmmm well after a while at 10.5-11c today, its managed to hit 14c and then closed at 13c.  Is this a good sign for things to come?  Lets hope so


----------



## Julia (6 January 2009)

I've just read the last few pages of this thread.
Could any of you who are holding BBI say why you have bought the stock?

Just curious.


----------



## marcelchilli (7 January 2009)

BBI is still way under its real value. Hopefully the trend will keep going up Iam glad that i picktup  a 100.000 of BBI


----------



## Julia (7 January 2009)

marcelchilli said:


> BBI is still way under its real value. Hopefully the trend will keep going up Iam glad that i picktup  a 100.000 of BBI




Thanks, marcelchilli, for your response.   What do you think is its real value?
How have you determined this 'real value'?


----------



## roland (7 January 2009)

Comsec have dropped BBI from their balanced shared portfolio on the 23rd of October.

They still have it rated in the top 10 of price/earnings.


----------



## YELNATS (7 January 2009)

Julia said:


> I've just read the last few pages of this thread.
> Could any of you who are holding BBI say why you have bought the stock?
> 
> Just curious.




Hi Julia, I been a holder of BBI since November 2005 when I purchased at $1.55 and shortly after topped up at even higher prices.

Although they have paid some good distributions, naturally I have been aghast at the demise of their share price.

However I have used the sp weakness to average my holdings price down to about 16c, so I'm now close to break-even. 

Take a look at the various postings of banksa bystrica on this thread in December 2008 for some of the rationale of why a recovery of BBI could be expected.


----------



## mark_au (7 January 2009)

Julia said:


> I've just read the last few pages of this thread.
> Could any of you who are holding BBI say why you have bought the stock?
> 
> Just curious.





Hi Julia

I had been thinking of getting infrastructure stocks for a long time now, as they are a nice long term income producing asset  and i believe that infrastructure  in australia has been ignored and fallen by the wayside for too long. Now the Government is ramping up infrastructure spending i thought its probably a good time to get in on the wave. 

After reading various posts regarding the fact that 
BBI is not intricately connected to some of the other dubious BB entities
BBI had large shares of Quality assets
BBI has successfully sold off some assets to reduce debt
BBI has successfully rolled over its debt
BBI has been "unfairly" sold down in a "baby out with the  bathwater" type sell down

i took the plunge and bought 100000 shares in various parcels ranging from 3c to 9 c  over the December period

At those prices i felt that the only way was up given that the fundamentals seemed fairly solid 

They are now one of the few shares in my portfolio that is significantly in the green at this time ;-)


----------



## Julia (7 January 2009)

Thanks for replies.  I held BBI for a couple of years but sold when the SP started to fall.

I've just looked up the yield and am mindful of that saying "if it looks too good to be true, then it usually is".  Herewith screenshot from E-trade.

How can BBI sustain this?
I have to say it's tempting!


----------



## dhukka (7 January 2009)

Julia said:


> Thanks for replies.  I held BBI for a couple of years but sold when the SP started to fall.
> 
> I've just looked up the yield and am mindful of that saying "if it looks too good to be true, then it usually is".  Herewith screenshot from E-trade.
> 
> ...




The short answer is they can't, the company announced in November that dividends have been suspended until further notice as posted  here.


----------



## eMark (7 January 2009)

Stick with the satellites, stay away from BNB.............

Especially after reading this announcement

--------------------------------------------------------------------------

Sydney - Wednesday - January 7: (RWE Australian Business News) -
Babcock & Brown (ASX:BNB) believes that asset impairment charges will be 
such that the company will be in a substantial negative net asset 
position at 31 December.
This position encompasses the reclassification of "non-core" 
assets on the balance sheet as "available for sale", in line with the 
company's revised business strategy announced to the market on 19 
November.
The impairment process is subject to finalisation and audit 
review which will not be completed until closer to the scheduled release 
of the results currently expected on 26 February.
As detailed in its announcement on 4 December and reiterated in 
its response to the ASX on 6 January, the company is in discussions with 
its banking syndicate regarding a debt for equity swap or equivalent 
restructuring to stabilise the long term capital structure of the Group.
Any debt for equity swap or similar arrangement will be designed 
to allow Babcock & Brown to continue operating its business and sell 
assets with a view to reducing its overall levels of debt.
Any such capital restructure is expected to significantly
dilute existing shareholders, negatively impacting the value of equity.


----------



## Julia (7 January 2009)

dhukka said:


> The short answer is they can't, the company announced in November that dividends have been suspended until further notice as posted  here.



Ah, as I said, too good to be true.  Thanks, Dhukka.
I'm now more than ever puzzled as to why anyone would buy it.


----------



## dhukka (8 January 2009)

Julia said:


> Ah, as I said, too good to be true.  Thanks, Dhukka.
> I'm now more than ever puzzled as to why anyone would buy it.




You and me both. A company that loses money, has oodles of debt and doesn't pay any dividends and historically has a terrible return on equity, I wouldn't even  call it investment grade. It will be interesting to see the accounts at the half year to see how much debt they are carrying after the asset sales and to see if their asset values hold up.


----------



## TheAbyss (8 January 2009)

dhukka said:


> You and me both. A company that loses money, has oodles of debt and doesn't pay any dividends and historically has a terrible return on equity, I wouldn't even  call it investment grade. It will be interesting to see the accounts at the half year to see how much debt they are carrying after the asset sales and to see if their asset values hold up.





And even if they did get out of the debt mire how can they possibly ever make any money given their business model is broken beyond repair now?

Belongs in the BNB thread i guess but you know what i mean.


----------



## justiceotp (8 January 2009)

If you guys start talking about BNB as if they are BBI you are only going to confuse people that are fairly new to this thread.

Julia id advise you to go back a few pages or more and read what Banska has had to say about them with research facts he has posted and not just opinions and then you will get a better understanding of why most of us has bought the stock and the relationship between BNB and BBI.


----------



## random (9 January 2009)

One of the most strategically important moves for that matter would be for the independant managment of BBI to opt for a name change asap to clear the air in anticipation of our future prosperity.
There is certainly a major upside to this move sooner rather than later (hopefully in this quarter) .
If a company was ever to benefit from changing its name and code this is it and this is the time!

If this is possible under their articles of association or agreement with the parent however i do not know.


----------



## banska bystrica (18 January 2009)

There are really two methods to assign fair value to a utility stock like BBI. I have looked at “NAV” using Sum of Parts valuation and FCF (free cash flow) and either method confirms BBI is seriously undervalued.

Net Asset Valuation (NAV) is approximately $1.30 based on an average EBITDA multiple for their assets of 11. This is supported by recent asset sales, namely Powerco and Euroports.

The net asset value as per BBI’s balance sheet takes into account depreciated historical cost of assets built or historical prices paid upon acquisition of assets.  This valuation “may” be inaccurate because of the current market conditions with credit still pretty well frozen. Credit in Europe is still frozen. Banks are hoarding cash and not lending. The consumers are also not wanting to borrow.  The situation is bleak. If this continues into 2010/11, BBI “could” be in trouble when it comes to refinancing at the asset level even though their free cash flow covers interest comfortably. If BBI have trouble refinancing in 2010/11 with their quality infrastructure assets, then indeed the world will be in an ugly state.
Moody’s has reduced its credit rating on BBI’s corporate debt to B2, five notches below investment grade.  Such a low credit rating makes it difficult to refinance debt via the capital markets (as it shrinks the pool of potential lenders) and also increases the cost of debt markedly.  It also raises a potential issue of reducing the credit ratings at the asset level.  I expect operating cash flow priority will be given to debt repayment over repayment of the hybrids in order to restore the credit rating. Therefore, any dividend will be welcome in the next two years but not expected. A small dividend in 2010/11 is not out of the question if corporate debt is paid down to minimal levels. Let’s see the interim results on Feb 25 first. Then we will know more.

I continue to believe that the BEPPA at a price close to parity with BBI is a value entry point into BBI if you desire exposure to the BBI story. BBI at less than 4c was a steal, however, BEPPA sit senior to ordinary BBI units in a wind-up scenario (not for one moment do I think that is happening but you never know what the financial world will be like in 12 months time) and in dividend payment priority. Its dividend yield is very high at current market prices around 13c in the dollar, paying BBSW +115 basis points on a face value of $1 and although the dividends are currently not being paid they are not lost but are instead deferred and COMPOUNDED, and the BEPPA price should converge on the payout value ($1.04+) as 2012 approaches on the assumption that BBI remains financially viable. BEPPA really seem tremendous value at such a small premium to BBI. Buy them and treat them like gold.

Moving onto the SPARCS.

Pg 19 of the October investor pack shows the SPARCS liability.  The full value is NZ$115.952M, and the notes to the balance sheet shows that half of this is considered a current liability consistent with the conversion timing.

It is a tough call on how BBI will handle the SPARCS maturing but they do have options.  The options available to BBI are as follows:

1. Refinance with senior debt (as did DUET,  ASX code: DUE), although this  would be difficult / expensive / unlikely given the current credit rating,
2. Encourage SPARCS holders to remain with better terms (ie. far higher margin) on SPARCS,
3. Use operating cash flow or asset sale proceeds to meet redemption or
4. Convert into BBI units

Clearly, the last option would not be palatable to BBI security holders because of the dilutionary impact on BBI. I cannot see Directors choosing this option. I see Option 3 as most likely.

Regarding asset sales, the company are doing exactly what they said they would at the AGM. They have made part sales of assets (Powerco and Euroports), both above book value. A sale of 100% of DBCT at an EBITDA multiple of 11 or above would give them enough surplus cash to extinguish corporate debt and also provide cash to deal with SPARCS. See Page 16 of the October Investor Pack. There are ZERO corporate debt commitments beyond 2012/13. 

On to free cash flow which is probably a more accurate reflection of BBI’s position rather than NAV since the market remains unconvinced that BBI’s assets have not been impaired. I disagree with the market but I have to accept the market’s current reluctance to value BBI at what I do. They are the facts. The market will not value BBI according to NAV. I’d be happy with 50% of NAV within 12 months. I'd sell a few then.
From the Investor Pack and taking into account the sale of Powerco and Euroports, I have ascertained that the following free cash flows per annum apply:

Powerco $10M
IEG: $33M
CSC: $3M
NGPL: $50M
AETD: $36M
DBCT: $115M
PD Ports: $45M
Euroports: $27M
Westnet Rail: $41M
Cap ex maintenance: -$60M

Total free cash flows of  300M. Therefore free cash flow per BBI security equals 12.5c. A conservative cash flow multiple of 6 gives a valuation for BBI stapled securities of 75c.

The average of 6 was taken using the following utility companies trading on the ASX:
SPN, DUE, SKI, APA, CIF, ENV and VIR.

BBI is currently trading on a P/FCF ratio of 1 which in comparison to other utilities, is a discount of 84%. Do the risks with BBI warrant an 84% discount?

NAV values BBI at $1.30
FCF values BBI at 75c.
Market values BBI at 12c.

Who is right? Time will tell but I’ll stick with somewhere between the factual fundamentals analysis of NAV ($1.30) and FCF (75c) rather than an inefficient, terrified, panic driven market price of 12c. The market was very wrong at 2.5c (thankyou market..) and it is still very wrong at 12c, in my opinion.


----------



## TheAbyss (18 January 2009)

banska bystrica said:


> There are really two methods to assign fair value to a utility stock like BBI. I have looked at “NAV” using Sum of Parts valuation and FCF (free cash flow) and either method confirms BBI is seriously undervalued.




Appreciate your efforts and time Banska. I am sure there are a lot of stocks trading below a fair value assessment at the moment. 

How does the market decide that a stock should have a market cap below their asset values? A mix of future value and sentiment is my opinion and that is something intangible and unfathomable with some companies. When some clarity and certainty arrives regarding the future of a company whether it be via dividend affirmation, commodity prices, financing, trade figures etc then the SP will move rapidly which is why you only need to own a stock for 10 days a year to tap the greatest profits however it is virtually impossible to know which 10 days you should own the stock hence the buy and hold strategy of most.


----------



## banska bystrica (18 January 2009)

There is no way BBI should be trading at NAV or FCF valuations in this environment BUT the question is what is a fair discount? The market is assigning 84% as the discount. I think that's ridiculous. 50% maybe is fair enough and big enough with regard to the risks. That would give a target price of between 37c and 65c.
BEPPA is another story. It could trade at 50c and still be way undervalued based on current hybrid yields and the BBSW rate. I'm still accumulating BEPPA having secured a good amount of stock at 8.5c on Christmas Eve. That was money for jam with BBI at 9c. When BEPPA trades at parity with BBI or below, it's buy big time. Anything up to 5c higher than BBI is value for BEPPA.


----------



## banska bystrica (23 January 2009)

I welcome all opinions on BBI (for and against) as long as the argument is supported by facts. Let's get some healthy discussion going here.


----------



## banska bystrica (24 January 2009)

There is a lot of blatant downramping going on at another forum regarding European banks not refinancing Australian companies etc etc. A particular poster with an ulterior motive is downramping about BBI not being able to refinance it’s European recourse debt.
Well I’ll give you the FACTS.
This is BBI’s recourse debt as at December 24, 2008:

Corporate bridge facility: AUD$100M Due: Feb 2009
UK revolving facility: 85M GBP Due: Feb 2010
NZ revolving facility: NZ$125M Due: Dec 2010
NZ secured bonds: NZ$150M Due: Dec 2010
A$ corporate bank debt AUD$218M Due: Dec 2011
US$ corporate debt US$515M Due: Dec 2011.

Does anyone see much “European bank” exposure?

I don’t. Be very careful of downrampers who have no idea.


----------



## noirua (24 January 2009)

banska bystrica said:


> There is a lot of blatant downramping going on at another forum regarding European banks not refinancing Australian companies etc etc. A particular poster with an ulterior motive is downramping about BBI not being able to refinance it’s European recourse debt.
> Well I’ll give you the FACTS.
> This is BBI’s recourse debt as at December 24, 2008:
> 
> ...



Hi, The Banking Syndicate is dominated by European Institutions...in accordance with compareshares article.


----------



## random (24 January 2009)

In regard to the purchasing of additional shares in Euroports, shares will be taken up by Antin Infrastructure Partners 19.9% and Babcock and Brown European Infrastructure Fund BBEIF 9.8%.
What exactly is BBEIF?
Is this an offshoot of BNB? 
I am unsure of this.
Could someone answer this for me?

If it is an offshoot the obvious question then has to be asked about the share purchase finalization.


----------



## banska bystrica (24 January 2009)

noirua said:


> Hi, The Banking Syndicate is dominated by European Institutions...in accordance with compareshares article.




I referred to RECOURSE debt, not non-recourse. RECOURSE debt is corporate debt. Please show me where European banks are owed money by BBI at the RECOURSE level.


----------



## banska bystrica (24 January 2009)

The following article from Intelligent Investor might interest forum members:

_Assets we can't live without 
Essential infrastructure assets are those which are essential to the functioning of modern society. Examples include toll roads, airports, power stations, pipelines and ports. Due to their monopolistic nature, these assets tend to be regulated by their respective governments.
Regulated or unregulated, though, the cash flow from these assets tends to be highly predictable and relatively immune to the economic cycle. People need water and electricity even in the worst of times. But that hasn't stopped the share prices of the listed players being pummelled over the past 12 months. In fact, some funds are close to insolvent, such has Babcock & Brown Power and Babcock & Brown Infrastructure (both have suspended distributions and are undertaking asset sales in order to keep the bankers at bay).
The reason is debt, and lots of it. Infrastructure funds were front and centre of the credit bubble of the past few years. Incredibly favourable borrowing terms enabled infrastructure funds and their inappropriately incentivised managers to pay exceptionally high prices for assets and to fund juicy but unsustainable distributions. Over the past five years, Macquarie Infrastructure Group returned $3.2bn to its owners - more than double the $1.6bn of cash flow it received from its underlying assets.
Ponzi scheme no more
Not only are the Ponzi-scheme days over, but several of the weaker players - mostly from the Babcock & Brown stable - are having trouble refinancing their debt at all. Those that can obtain funds are paying substantially higher margins. All of which explains why no one wants to touch infrastructure investments with a ten-foot barge pole.
Herein lies the potential opportunity. The underlying assets remain attractive - in fact they've become more attractive. With corporate profits disappearing faster than Bernie Madoff's friends, the relative stability and certainty provided by essential infrastructure is a safe haven. And the alternatives are offering very little in the way of returns.
The 'flight to safety' has pushed government bond yields to extraordinarily low levels. Lend your money to the US government for the next 30 years and you'll earn a return of 3% per annum; buy UK bonds and you'll earn 4% over the same period; and the 15-year Australian government bond is priced to yield 4.3%. 
Low long-term interest rates make essential infrastructure offering returns of 8% and 9% an attractive alternative. There are endless opportunities to invest in the sector in Australia, spread across a wide range of asset types and regulatory regimes. At one end of the spectrum, there are those that look reasonably priced and have minimal need to refinance debt, such as Macquarie Airports and Challenger Infrastructure Fund. And, at the other, there are those, such as Babcock & Brown Infrastructure (BBI), with pressing refinancing requirements, which are trading for a small fraction of their underlying asset value - but that asset value may not do you much good if the fund doesn't survive.
Plenty of cash looking for a home 
For those funds that desperately need to sell assets, there does seem to be an active market among unlisted funds. A recent article in Breaking Views highlighted some US$94bn sitting in infrastructure funds that's yet to find a home. Late last year, QIC bought 50% of Powerco, a New Zealand power company, from BBI. BBI also sold 20% of its Euroports business to Antin Infrastructure Partners, and, in December, troubled Spanish construction group Sacyr Vallehermoso sold its toll road business to Citigroup's infrastructure fund for 7.9bn euros. There are no guarantees. But for the reasons outlined earlier, there are buyers, which is more than can be said for most financial assets at the moment.
And not only have the assets become more attractive, but so have the funds. Until now, the likes of Macquarie and Babcock have made fortunes through their insidious management contracts, and no one else has made a cent. But plummeting share prices have forced managers to accept less. Some funds have completely internalised their management; others have dramatically cut fees and beefed up the independence of their boards; and the rest are moving in the right direction. Babcock & Brown Wind recently internalised its management and paid off its former manager, Babcock & Brown, to the tune of $40m - undoubtedly the best investment it's made.
It's a broad sector and, with complicated structures and frequent shuffling of assets, it's not easy to analyse. So far, at The Intelligent Investor, we've got positive recommendations on Southern Cross SKIES (a security issued by Sydney Airport trading under the ASX code SAKHA) and BBI EPS (ASX code BEPPA) but they're both income securities and suitable only for relatively sophisticated investors who understand such investments. But I'll be spending a lot of 2009 prospecting for further opportunities. For those looking to sidestep the recession, it might pay to do the same.
_
Disclosure: The author, Steve Johnson, owns shares in some of the stocks mentioned in this article, as do other staff members. For a full listing, see the staff portfolio on the website.


----------



## noirua (25 January 2009)

banska bystrica said:


> I referred to RECOURSE debt, not non-recourse. RECOURSE debt is corporate debt. Please show me where European banks are owed money by BBI at the RECOURSE level.



That may be the point here. Non-recourse debt can be seen as recourse, in a manner of speaking, if it was not set as overcollateralized. That depending on the loan to value ratio that is set - allowing overcollateralization - or/and non-recourse debt protection that may be in place.


----------



## Tysonboss1 (26 January 2009)

I have done a bit of readng about the BBI pref share - BEPPA

am I correct in thinking that Beppa which is currently about 13c will have a dividend of about 5% based on it's face value of $1 which is over 30% based on current purchase price, which although is not being paid currently will accumulate and be paid at a later date.

Also at the reset date provided the company has not gone bust, will each BEPPA stock be paid out at it's face value of $1,... what is the exact process at the reset date.


----------



## banska bystrica (27 January 2009)

The reset date is July 1, 2012. At that time, BEPPA will be reset for another period with a different interest rate (a lot higher than BBSW+115 I would suggest).
BEPPA holders, on July 1 2012, can elect to:

1. Be paid out at $1 per BEPPA.
2. Receive $1's worth of BBI securities for each BEPPA held.
3. Agree to the new reset conditions and leave your money in BEPPA.

All this is dependent on BBI surviving until 2012.

Note: In option 2, you receive $1 worth of BBI regardless of the BBI price at that time. If BBI are $1 you receive 1 for 1. If BBI are 10c, you receive 10 BBI for every BEPPA you hold.


----------



## random (4 February 2009)

So in about 3 weeks we get to see the 1/2 year results. 
If our cash flow remains the same we should all be very happy. Some sources of income may drop (my guess is the European Ports) but then some may be up.
The DBCT has been operating at full capacity i believe and of course we now have a new loading fascility which will be operating as well but the figures for this won't show up till the next 1/4.
All in all sailing along.......la de da...... until the 25th of Feb.



Don't be silly and get caught day trading - cause she's a wild one.


----------



## random (6 February 2009)

"opportunist"
"_One who determins his actions by circumstances not by principles_" 
- ref Collins dictionary.

"_We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful_." 
- Mr Warren Buffet on his investment outlook.

This is the time and this is the place. Sure it may go up and then down again by a few cents but isn't it fun.


----------



## ianm94 (6 February 2009)

Banksa, 

I am following the APR plan and therefore in long term for
ASSET SALES
PAY DOWN CORPORATE DEBT
RESUME DIVIDENDS
What other potential in this market is there to purchase stock for the same value as their future dividends?

Like many other readers I have valued the content of your posts very highly.

I have a question regarding the following along the lines of how will these jobs now be affected with the continued downturn in the UK, will more money be poured into jobs in their infastracture, and do you know how this has progressed to date?

_"PD Ports brings jobs and new projects to the Tees; MIDDLESBROUGH based PD Ports has enjoyed an exciting start to 2008 with approval of major expansion plans and an agreement with Tesco in what is potentially the biggest deal in over 30 years.(News)

Article from:
Evening Gazette (Middlesbrough, England)
Article date:
May 22, 2008.
With the expected creation of more than 6,300 jobs when both projects are delivered, PD Ports has made its mark as one of the largest employers and key economic drivers in the North-east.

In February, the campaign to build a new deep sea container terminal at Teesport, known as The Northern Gateway (NGCT) was granted final approval by the Secretary of State for Transport, Ruth Kelly. This was less than 22 months after plans were initially submitted in April 2006. "_


----------



## mikes (6 February 2009)

regarding the apr scenario -   gremlins

what is probability of scrip placement & large rights issue of bbi, or possibly issuing of beppa like scrip/notes having higher priority for repayment than beppa in gumming up the works - of course with massive fees to the insiders & their mates running the show.


----------



## banska bystrica (6 February 2009)

mikes said:


> regarding the apr scenario -   gremlins
> 
> what is probability of scrip placement & large rights issue of bbi, or possibly issuing of beppa like scrip/notes having higher priority for repayment than beppa in gumming up the works - of course with massive fees to the insiders & their mates running the show.




Probability of NIL. You do realize Directors of BBI have a duty to "ACT IN THE BEST INTERESTS OF BBI SECURITYHOLDERS" and BBI EPS Directors also have a duty to "ACT IN THE BEST INTERESTS OF BEPPA HOLDERS". 

Therefore, your scenario will not happen. Why would they do a rights issue at these prices? It's unnecessary. Once they sell DBCT, there will be no need to raise cash. Their corporate debt will be minimal and their cash flow from the remaining assets will be more than enough to cover asset level debt and resume distributions or alternatively they could elect to withhold distributions for another three years and save the cash to pay out BEPPA in 2012.

Now imagine what the security price of BBI will do if corporate debt is nil and BEPPA debt is nil circa 2012?


----------



## drsmith (6 February 2009)

If BBI's directors could raise equity they would.

Look at the number of companies with far healthier financials that are doing this.


----------



## banska bystrica (6 February 2009)

They cannot raise equity at current prices so forget it. It's not happening. There is no need for it either. A 100% of DBCT will release enough equity to pay down the corporate debt. A 49% sale would pay down enough corporate debt until 2012.


----------



## drsmith (6 February 2009)

banska bystrica said:


> They cannot raise equity at current prices so forget it. It's not happening.



That though has nothing to do with the need for equity. As for BBI's need for equity it's current distribution policy speaks volumes.

I do however agree with your prophecy of doom for BNB.


----------



## ianm94 (6 February 2009)

The question I was asking to Banska is a fairly generalised one so wondering if anyone else might have trolled across some details on the following:

Question was with the expected creation of more than 6,300 jobs on what I believe was upon the completion of both projects in PD Ports, any ideas out there if the UK Govt. is getting involved in supporting their infrastructure construction to help mobilise their economy.

This is an absolutely huge project and completely overshadows DBCT as one of the jewels for BBI.

Was also after details on how far the construction has progressed so far.

Thanks all.


----------



## ianm94 (9 February 2009)

Just received text notice from etrade - price has risen by 30%

Market likes the positive ann today of working towards separation of the management rights, with more good news to come


----------



## Tysonboss1 (12 February 2009)

banska bystrica said:


> The reset date is July 1, 2012. At that time, BEPPA will be reset for another period with a different interest rate (a lot higher than BBSW+115 I would suggest).
> BEPPA holders, on July 1 2012, can elect to:
> 
> 1. Be paid out at $1 per BEPPA.
> ...




At the reset date are you sure that it is the shareholders who decide which option they want to take, or is it the directors that decide for you.

I have a few BEPPA already and I want to buy more but it just seems to good to be true.

at todays prices if you hold till the rest date you will get a massive 1000% capital gain in 3.5 years, with a 50% cashflow return in the mean time (compounded at 5% till the payment is made).

This just seems far to good to be true, what is the real risk here.


----------



## banska bystrica (12 February 2009)

The risk is that BBI is put into administration, the assets are sold and after the banks get their debt repaid, there is nothing left for BEPPA holders. That's it in a nutshell.


----------



## Ross Walker (14 February 2009)

Tysonboss1 said:


> At the reset date are you sure that it is the shareholders who decide which option they want to take, or is it the directors that decide for you.




According to "BBI EPS Limited: Terms of Exchangeable Preference Shares":

If you submit a valid Holder Exchange Notice, the Company may, at its discretion do the following in relation to the EPS which are the subject of your Holder Exchange Notice:
• Convert the EPS into Stapled Securities;
• Procure the acquisition of the EPS by a third party on 1 July 2012 and pay you the Redemption Amount; or
• Redeem, buy back or cancel the EPS on 1 July 2012 and pay you the Redemption Amount

So not as favourable as we had hoped. Then again, if we're paid in BBI stock we can sell them on market.

I'm still unsure whether the company, at its discretion, can choose to not pay the accrued dividends


----------



## nulla nulla (14 February 2009)

We live in hope that bbi will completely seperate from bnb and tell them where to put their "management fees (at this point bbi shareholders should be asking bnb to refund all fees due to mismanagement, imo). 
Perhaps after the umbilical cord attaching bbi to bnb is removed from arround the neck of bbi, bbi can recover some of its' value for shareholders.


----------



## banska bystrica (14 February 2009)

Ross Walker said:


> According to "BBI EPS Limited: Terms of Exchangeable Preference Shares":
> 
> If you submit a valid Holder Exchange Notice, the Company may, at its discretion do the following in relation to the EPS which are the subject of your Holder Exchange Notice:
> • Convert the EPS into Stapled Securities;
> ...




Why do you say "not as favourable as we had hoped"? What were you hoping for? The BEPPA terms have been the same since BEPPA were issued.

We either receive $1 in cash plus accrued interest OR we receive $1 worth of BBI for each BEPPA.


----------



## hardyakka (15 February 2009)

Ross Walker said:


> According to "BBI EPS Limited: Terms of Exchangeable Preference Shares":
> 
> If you submit a valid Holder Exchange Notice, the Company may, at its discretion do the following in relation to the EPS which are the subject of your Holder Exchange Notice:
> • Convert the EPS into Stapled Securities;
> ...




Hi,
Hi,
I had a look at BBI EPS Limited: Terms of Exchangeable Preference Shares 
http://www.bbinfrastructure.com/media/387445/bbi eps terms.pdf

Refer clause 2.4 which deals with that part of a distribution deferred, it states:
"All Dividend Amounts which are deferred in accordance with clause 2.4(a) or otherwise not paid in full on the relevant Dividend Payment Date (until paid, Optionally Deferred Dividends) will accumulate and compound at the Dividend Rate on each Dividend Payment Date until paid."

It is worthwhile reading the document, especially the Reset Notice and Holder Exchange Notice clauses. In effect these are the clauses supporting some of BB's previous commentary.

Cheers


----------



## hardyakka (15 February 2009)

hardyakka said:


> Hi,
> Hi,
> I had a look at BBI EPS Limited: Terms of Exchangeable Preference Shares
> http://www.bbinfrastructure.com/media/387445/bbi eps terms.pdf
> ...




Apologies, the lkink was stuffed, it is:

http://www.bbinfrastructure.com/
media/387445/bbi%20eps%20terms.pdf


----------



## Ross Walker (16 February 2009)

banska bystrica said:


> Why do you say "not as favourable as we had hoped"? What were you hoping for? The BEPPA terms have been the same since BEPPA were issued.
> 
> We either receive $1 in cash plus accrued interest OR we receive $1 worth of BBI for each BEPPA.




Banska bystrica, I thank you for the analysis of BBI you've provided in this thread, but I would suggest you check your pride at the door when responding to posts. You come across as somewhat arrogant and have a tendency to attack posters when a simply rational response would suffice.

In post #208 you mislead the readers of this thread by stating that BEPPA holders can choose to be paid out in BBI shares or in cash.



banska bystrica said:


> BEPPA holders, on July 1 2012, can elect to:
> 1. Be paid out at $1 per BEPPA.
> 2. Receive $1's worth of BBI securities for each BEPPA held.
> 3. Agree to the new reset conditions and leave your money in BEPPA.




My post points out this is clearly not the case; it is " the Company" that chooses between options 1 or 2. BEPPA holders have no choice whatsoever in the form of the payout.

When Tysonboss1 legitimately questioned you on this very point in post #219 you simply chose to ignore him:



Tysonboss1 said:


> At the reset date are you sure that it is the shareholders who decide which option they want to take, or is it the directors that decide for you.
> ...
> This just seems far to good to be true, what is the real risk here.




I'm not sure about you, but I think most BEPPA holders would agree that having no choice in payout is "not as favourable" as having a choice. For most holders it may not be such a big difference (receiving BBI shares rather than cash). For others, having no choice may be a major disadvantage, i.e., the different tax treatments when receiving dividends (franking credits, etc.) as opposed to selling the equivalent BBI shares received in lieu of the dividends (capital gains tax trouble, etc.).



banska bystrica said:


> The BEPPA terms have been the same since BEPPA were issued.




This is also incorrect. See the ASX announcement issued 21st November, 2008 as one example of terms that have changed since the issue of BEPPA:

http://www.bbinfrastructure.com.au/media/386197/amendments%20to%20constitution%20and%20bbi%20eps%20terms.pdf

BEPPA is a bit of a slippery fish, and fully understanding its terms and conditions (and the extent to which the directors etc. have provided the company with loopholes/outs among the countless clauses and subclauses) is no easy task. However, I do agree with you, BEPPA may represent incredible value if BBI survives past 2012.

Disclose: I hold both BBI and BEPPA.


----------



## Ross Walker (16 February 2009)

hardyakka said:


> Hi,
> Hi,
> I had a look at BBI EPS Limited: Terms of Exchangeable Preference Shares
> http://www.bbinfrastructure.com/media/387445/bbi eps terms.pdf
> ...




Yes hardyakka, it does pay to read both documents (constitution, and terms and conditions). In the constitution we find:


> 4.1 Dividends
> (a) The directors may pay any interim and final dividends that, in their
> judgment, the financial position of the company justifies.
> (b) The directors may rescind a decision to pay a dividend if they decide,
> ...




Subclause (a) is as expected, but subclause (b) is most interesting, in that it suggests the directors can decide, at their discretion, not to pay out even the deferred dividends. Notice they did not explicitly use the words "interim and final" in this subclause, as they had in subclause (a), effectively increasing the scope of this clause to include the deferred dividends too. I guess I won't be counting my chickens until they hatch 

Cheers.


----------



## banska bystrica (16 February 2009)

Ross Walker said:


> (b) is most interesting, in that it suggests the directors can decide, at their discretion, not to pay out even the deferred dividends. Notice they did not explicitly use the words "interim and final" in this subclause, as they had in subclause (a), effectively increasing the scope of this clause to include the deferred dividends too. I guess I won't be counting my chickens until they hatch
> 
> Cheers.




You're like the rest of the market Ross. "Jumping at shadows" that are not there. Clause 4.1 (b) does not infer what you are saying at all. 

You also wrote: "Banska bystrica, I thank you for the analysis of BBI you've provided in this thread, but I would suggest you check your pride at the door when responding to posts."

I merely asked you "What were you hoping for?"

Simple question and has nothing to do with what you accused me of re: attacking posters.


----------



## banska bystrica (16 February 2009)

There seems to be some concern over how BBI will payout BEPPA in 2012. I have previously mentioned various options and there is one other option that has not been mentioned.... BANK FINANCE! Ugly word I know but look what the banks did this morning with MCG.

"Broadcast Australia (BA) has successfully raised $250m of new bank facilities to refinance Medium Term Notes (MTN), due to mature in July 2009, and extended the majority of its capital expenditure and working capital facility to 2012.
MCG Chief Executive Officer (CEO) Scott Davies said, “BA has secured new senior bank finance with a term of three years to replace the maturing MTN. The facility has been provided by a combination of local and international banks and the margin is approximately 250bps."

Yes you heard it! Banks are refinancing where assets are quality and cash flows remain robust.
In 2012, BEPPA will not be a problem for BBI.


----------



## Tysonboss1 (16 February 2009)

banska bystrica said:


> Yes you heard it! Banks are refinancing where assets are quality and cash flows remain robust.
> In 2012, BEPPA will not be a problem for BBI.




Yes, the credit freeze is starting to thaw in the USA as well. as the smoke slowly clears from 2007/2008 credit will start flowing again. at the end of the day Banks won't make money from sitting on vaults of cash, they have to lend it make a profit, albeit a bit more cautiously now.


----------



## banska bystrica (16 February 2009)

If banks do not lend, they go broke. Simple as that. As you say Tysonboss1, they will be more cautious in future.
I have no doubt BBI will have very few problems re-financing their debt when it falls due. They have 75% regulated income against quality infrastructure assets.
The market either hasn't got a clue about this stock or there is just a complete lack of investor appetite for riskier stocks. The volumes are telling us that. Instos are shirt scared and want nothing to do with stocks like BBI (that's why your seeing BEPPA weak as well) and retail investors simply do not have the firepower to push stock prices up in bear markets. Those in BBI/BEPPA really need to take long term view. I'm not talking weeks or even months. I'm talking to at least 2010/11 and perhaps longer if you want to realize $1 for your BEPPAS. Traders can make a buck here and there but long term holders will reap the greatest rewards in BBI/BEPPA.


----------



## hardyakka (16 February 2009)

Ross Walker said:


> Yes hardyakka, it does pay to read both documents (constitution, and terms and conditions). In the constitution we find:
> 
> 
> Subclause (a) is as expected, but subclause (b) is most interesting, in that it suggests the directors can decide, at their discretion, not to pay out even the deferred dividends. Notice they did not explicitly use the words "interim and final" in this subclause, as they had in subclause (a), effectively increasing the scope of this clause to include the deferred dividends too. I guess I won't be counting my chickens until they hatch
> ...




Hi, 
I want to clarify a few points, attached below are the relevant clauses from the BEPPA Constitution and Terms of Issue. We must be clear that the powers vested in the directors via the constitution are subject to the terms of issue.

In summary 

The directors have the power to defer a dividend.
The directors do not have the power to cancel a dividend for a period (ie to resolve not to accumulate or pay a dividend for a period)
A dividend must be either paid (in part or whole) or accumulated. If it is paid in part only the unpaid portion is accumulated.
The dividend consideration can be cash or other consideration.
The relevant clauses with my underlining and comments in italics are noted below.

*Constitution *
Clause 2.2
(b) Each preference share confers on the holder a right to receive a preferential dividend, in priority to the payment of any dividend on the ordinary shares, at the rate and on the basis decided by the directors under the terms of issue.
(c) In addition to the preferential dividend and rights on winding up, each
preference share may participate with the ordinary shares in profits and
assets of the company, including on a winding up, if and to the extent the directors decide under the terms of issue.
(d) The preferential dividend may be cumulative only if and to the extent the directors decide under the terms of issue, and will otherwise be noncumulative.

_The above clauses make the BEPPA Constitution subject to the Terms of Issue, ie the directors can only act in accordance with the powers vested in them in accordance with the Terms of Issue.
[*/I]
Terms of Issue Clauses*

2.1 My wording-This is the method of calculation of the "Dividend Amount", ie the $ payable.

2.3 Dividends discretionary 
(a) Notwithstanding any other provisions of these Terms, the payment of each Dividend Amount is subject to the Directors in their sole discretion resolving to pay the Dividend Amount for the relevant Dividend Period. 
(b) If the Directors resolve to pay only part of a Dividend Amount then such amount will be payable pro-rata across all of the EPS on issue on the relevant Record Date. 

This means that the Directors can defer the "Dividend Amount", ie decide whether or not the company will effect a cash payment (in whole or in part) of the "Dividend Amount". Any amount deferred is sunject to the clauses below. (It is recognised that a dividend may be paid by way of cash or other consideration.)


2.4 Optional Deferral of dividends 
(a) Subject to no Mandatory Deferral Event having occurred in relation to that Dividend Amount, the Company may defer payment in whole or part of a Dividend Amount in respect of a Dividend Period until the earlier of: 
(1) the date in respect of which the Company declares or resolves that the relevant Dividend Amount is to be paid; or 
(2) the tenth anniversary of the earliest Dividend Payment Date in respect of which there is any Optionally Deferred Dividend. 
(b) All Dividend Amounts which are deferred in accordance with clause 2.4(a) or otherwise not paid in full on the relevant Dividend Payment Date (until paid, Optionally Deferred Dividends) will accumulate and compound at the Dividend Rate on each Dividend Payment Date until paid. 

2.5 Mandatory Deferral of Dividends
(a) If a Mandatory Deferral Event exists on any day which is 25 Business Days prior to a Dividend Payment Date, the Company must defer payment of the Dividend Amount that relates to that Dividend Payment Date (until paid, Mandatory Deferred Dividend). 
(b) All Mandatory Deferred Dividends will accumulate and compound at the Dividend Rate on each Dividend Payment Date until paid. 
(c) The Company must exercise its discretion to declare or resolve to pay and to distribute a Mandatory Deferred Dividend as soon as the Company obtains funding to do so as a result of a payment to it under the BBI Support Agreement. 

Clauses 2.4 and 2.5 deal with the deferral of dividends under different circumstances, as you can see both are cumulative.

My apologies if I am stating the obvious, it just seemed there was uncertainty regarding directors powers regarding deferral.

Cheers _


----------



## Tysonboss1 (16 February 2009)

banska bystrica said:


> The market either hasn't got a clue about this stock or there is just a complete lack of investor appetite for riskier stocks.




I probally would go as far as saying that even alot of the holders of beppa stock have little idea what it is and how it functions.

my father for example received some beppa along with BBI, BBP and BBW as part of the agl / alinta break up. 

when I asked him if he knew what they were he didn't really know any details on them at all, I dare say there would be a fair few holders like my dad out there.


----------



## hardyakka (17 February 2009)

*Slightly off topic*

Hi,

For those who have had "experiences" at that other forum you may find this blog interesting and amusing.

http://hotcopperwatchdog.blogspot.com/

Cheers


----------



## eMark (17 February 2009)

Ahhh, my original place of posting. Good ol' Aussie Stocks Forum

-----------------------------------------------------------------

Seriously, I try not to watch intraday movements of BBP and BBI, as it is akin to watching grass grow at the moment (and there's not a lot of green stuff in my backyard at the moment I can tell you).

The SP appears (no is), completely controlled by bots (brokers I assume) from start to finish. If you use Web Iress you will know what I mean. Tiny amounts, strategically placed (prior to open, and after close). I mean today we have a high of 0.077 (just a nip with a tiny amount) and a low of 0.072 (lower low - surprise surprise).

Don't get me wrong, I am a huge supporter of BBI. I have been holding around the lows of November 2008.

As Melua, oops BB has said, no instos are going anywhere near this until confirmation of some much needed announcements. They can't come soon enough, as BBI is doing the nightshift at the moment.....zzzzzzzzzzzzz

Would love to be complaining about BBI doing nothing at 0.50, wouldn't that be nice!

p.s. Loved what I saw a sale  can do to a stock like PPX.....

Very nice, so it is possible.


----------



## justiceotp (17 February 2009)

Hey Emark although it may be slightly off topic could you explain what you mean by the below in more detail.

"The SP appears (no is), completely controlled by bots (brokers I assume) from start to finish. If you use Web Iress you will know what I mean. Tiny amounts, strategically placed (prior to open, and after close). I mean today we have a high of 0.077 (just a nip with a tiny amount) and a low of 0.072 (lower low - surprise surprise)."


----------



## banska bystrica (19 February 2009)

I was able to buy another 400,000 BEPPA today at average 8.05c (not 8.5c but 8.05c). This is truly amazing value as it represents only a minimal premium over the ordinary securities (BBI). BEPPA is owed approximately 3c in deferred interest payments. If BBI is 7c, fair value for BEPPA is at least 12c (3c owed in payments plus some sort of premium for standing in front of BBI holders if administration were to occur.
Recent asset sales above book value indicate there is unlikely to be any asset impairment announced on Feb 25. Even if impairment was established, impairment alone cannot trigger a debt covenant breach. Debt covenants are based on cash flow rather than book values.


----------



## mark_au (19 February 2009)

Hi Guys

call me dim, but if BEPPA are preferential convertable notes,
are paid out prior to BBI (if things go bust)
are converted into real BBI shares at some stage
etc
etc

then why are they selling at very (0.079)  similar prices rather than a premium to BBI shares at ( 0.072)



banska bystrica said:


> I was able to buy another 400,000 BEPPA today at average 8.05c (not 8.5c but 8.05c). This is truly amazing value as it represents only a minimal premium over the ordinary securities (BBI). BEPPA is owed approximately 3c in deferred interest payments. If BBI is 7c, fair value for BEPPA is at least 12c (3c owed in payments plus some sort of premium for standing in front of BBI holders if administration were to occur.
> Recent asset sales above book value indicate there is unlikely to be any asset impairment announced on Feb 25. Even if impairment was established, impairment alone cannot trigger a debt covenant breach. Debt covenants are based on cash flow rather than book values.


----------



## YELNATS (24 February 2009)

BBI is in a trading halt today until Thursday morning reason being some "issues" have developed with the sale of Powerco in NZ, a deal reportedly worth NZ$400 million.

If the deal is in jeopardy, is it significant enough to have any dampening effect on the sp? Is this an asset BBI is better off keeping anyway?


----------



## banska bystrica (24 February 2009)

Word out of NZ indicates the "issue" is about regulatory approval from the NZ authorities. We will obviously know more on Thursday. However, this news can only be negative. IF the NZ authorities are taking the opportunity to screw BBI/QIC on electricity pricing, then it could affect the value of the asset.
Sure, BBI would love to keep all their assets but we are in the middle of a global credit crunch and BBI has mountains of debt and some of it is due this coming month. They have to sell assets. There is no other choice right now. I might be able to top up at 2.5c again.


----------



## Tysonboss1 (24 February 2009)

banska bystrica said:


> However, this news can only be negative. .




Your overweight in BBI / BEPPA aren't you.

are you sweating bullets yet or still confident you can hang on for the big win.


----------



## dhukka (24 February 2009)

banska bystrica said:


> Word out of NZ indicates the "issue" is about regulatory approval from the NZ authorities. We will obviously know more on Thursday. However, this news can only be negative. IF the NZ authorities are taking the opportunity to screw BBI/QIC on electricity pricing, then it could affect the value of the asset.
> Sure, BBI would love to keep all their assets but we are in the middle of a global credit crunch and BBI has mountains of debt and some of it is due this coming month. They have to sell assets. There is no other choice right now. I might be able to top up at 2.5c again.




Even if they could, why would BBI want to hang on to all their assets considering they get such poor returns from them?


----------



## banska bystrica (24 February 2009)

Tysonboss1 said:


> Your overweight in BBI / BEPPA aren't you.
> 
> are you sweating bullets yet or still confident you can hang on for the big win.





Sweating bullets or confident? Cannot tell yet. I'll make a judgement call when I see the announcement with all the details.


----------



## Tom Jilek (25 February 2009)

Banska Bystrica's comment of the 16th February refers to the good quality of BBI assets.  The leased coal port of Dalrymple Bay is one important asset.  It is believed not insured against cyclones.  This is a significant risk quantified in a special Analytical Report by the Bureau of Meteorology reproduced in full on 
http://members.optuszoo.com.au/~tsjilek/
Were insurance now required, what would the value of the Dalrymple Bay lease be?


----------



## Bombersteve (25 February 2009)

banska bystrica said:


> Sweating bullets or confident? Cannot tell yet. I'll make a judgement call when I see the announcement with all the details.




BearCuban on another forum said you might be the person I referred to on the other forum. 

Hope so, because a few of us are missing your imput to balance out the negativity about BBI on the another forum. I got a few positive replies to saying that I missed your imput whilst you are on "holiday"

Don't expect everyone to agree with what you say, just want the most rational discussions based on research, media, co. reporting etc It is hard to cover all aspects of a stock and other peoples research helps fill some gaps. 

My gut feeling on the TH is slightly negative ST, but LT positive and can improve my 7 cent average significantly down.


----------



## banska bystrica (25 February 2009)

I think people should not fret until we see the details. It’s all speculation otherwise.
My information is that the “issues” are about price. Global markets have deteriorated since November and I think QIC are going to haggle for a lower price. They represent the Qld taxpayers at the end of the day. Even though they are a Top 20 shareholder in BBI, this investment in Powerco is worth approximately $1B, substantially more than their direct investment in BBI. So, whilst they want BBI to survive and prosper, it is more important for them that they get the best deal for Qld superannuation participants.

Personally, if the “new” sale price is around 10% less, I see that as being fine. It is still well above book value and therefore there should be no impairment on BBI’s assets as they are in the books at conservative amounts (Purchase price + development costs minus depreciation).

The only justification for a write down of asset values is if the assets have lost enough value to justify LESS than book value.

Let’s see what the details are first. However, it might be a very opportune time to top up in BBI/BEPPA as any negative reaction will be short lived in my opinion. I understand DBCT has not been sold YET but negotiations with multiple interested parties are at an advanced stage. No doubt BBI will fully inform the market once something on DBCT is formalized in writing.

A real cash flow problem emerges IF the Powerco deal does not proceed with QIC. My information tells me that is highly unlikely. QIC know BBI need this sale to proceed, QIC want it to proceed but QIC also want to save a bit of money as they are in the box seat here. 
This is an example of the “risks” in a stock like BBI that has massive debt in a global climate that views debt as toxic. It’s all about risk/reward as I have said all along. If the heat is too hot, some people should get out of the kitchen. Talk of $1 per BBI share within 12 months is ridiculous. This stock deserves to trade at a big discount to NAV. My view all along has been that but I think a 95% discount is too much. A fair price in this market right now would probably be 40c which still represents a 65% discount to NAV.
This latest “hurdle” is another reason why people should consider holding BEPPA at almost the same price as BBI. Remember BEPPA holders get a full $1 per BEPPA before BBI holders get 1c in the case of an orderly sales process. A fire sale would mean zero for BBI and BEPPA holders but honestly, what bank is going to order a fire sale of infrastructure assets when the assets are performing and more than covering the interest payments?
If administration were to happen, I believe the banks would allow an orderly sales process because the cash flows are covering debt requirements. There is a viable business there in BBI, unlike BNB and other companies who are either wiped out or are on a knife’s edge.


----------



## cbrendan (25 February 2009)

banska bystrica said:


> However, it might be a very opportune time to top up in BBI/BEPPA as any negative reaction will be short lived in my opinion.
> 
> This latest “hurdle” is another reason why people should consider holding BEPPA at almost the same price as BBI. Remember BEPPA holders get a full $1 per BEPPA before BBI holders get 1c in the case of an orderly sales process. A fire sale would mean zero for BBI and BEPPA holders but honestly, what bank is going to order a fire sale of infrastructure assets when the assets are performing and more than covering the interest payments?
> If administration were to happen, I believe the banks would allow an orderly sales process because the cash flows are covering debt requirements. There is a viable business there in BBI, unlike BNB and other companies who are either wiped out or are on a knife’s edge.





May i ask the % split of  BBI/ BEPPA you own.

Personally i transferred 100% of my BBI to BEPPA at parity, and am curious if you have been steadily transferring as much as possible from BBI to BEPPA in recent weeks with a ~1c price gap?

I'd predict your split is somewhere close to 80% BBI/ 20% BEPPA due to the difficulty of acquiring large numbers of BEPPA without climbing up the price ladder, but would love to better understand your thoughts and reasoning behind the balance of your BBI/ BEPPA holdings.

Cheers


----------



## banska bystrica (25 February 2009)

I'm 60/40 (BBI/BEPPA) now but will be aiming for 20/80 in the next month or two. Anything around a 2c difference is worth switching. There is currently 3.25c owing to BEPPA holders and this must be paid before BBI holders get anything in distributions.
In a liquidation, remember BEPPA gets paid out in FULL before BBI holders get anything. Normally, note holders/bond holders get nothing in a fire sale liquidation but I don't think these assets will sold in a fire sale. It's just not possible to sell ports and gas/electricity assets quickly. The banks know this.


----------



## banska bystrica (26 February 2009)

Why are people getting all worked up over when the announcement is due? If it's too hot for you, get out of the kitchen. QIC have pulled this stunt so why are people blaming BBI management? I'm convinced that most holders of this have weak knees. Getting all wobbly over when the announcement might or might not be coming. I hope it's not until 5.00pm just so the weak holders can sweat a bit more.


----------



## banska bystrica (26 February 2009)

Announcement is good news. Sale will go through for 58% rather than 50%. Looking at the original agreement that netted NZ$400M and this one for NZ$423 for 58%, you can see that BBI have only been given a very small haircut by QIC.

The 200 basis points increase in corporate debt facilities is what one would expect in this Global Financial Crisis. It is offset by the base rate having come down by at least 200 basis points so it's probably cash flow neutral.

I will be switching out of as many BBI as I can and buying BEPPA whilst there is a forced seller in BEPPA willing to dump them at zero premium considering there is over 3c owing in accumulated dividends. The fact that the bank has demanded corporate debt repayment out of cash flows confirms there will be no BBI distribution for quite a while (unless they unload 100% of DBCT for around 2.4 Billion). This is extremely positive for BEPPA holders as we know management cannot do anything but repay corporate debt. Once corporate debt is negligible, each BEPPA is almost guaranteed to be worth $1 worth of BBI.

By the way, the panic merchants are showing poor characteristics (jelly legs) regarding investing in risky stocks like BBI. As I said, if it's too risky, get out and invest in WOW.


----------



## banska bystrica (26 February 2009)

By the way, all credit to Dr Hamill and Mr Kendrew. I understand negotiations went into the early hours of this morning.
A big tick for both men as well on deciding to hedge their foreign currency exposures in September last year. The NZ$ has lost a bit against the AUD since November but cash flow will not be affected because of the hedging.

Smart astute team this one at BBI now without the BNB influence.


----------



## hardyakka (26 February 2009)

Reading between the lines on the PowerCo announcement is it IMO a definitive step in the right direction and will cause major investors to start to take notice. 

The price renegotiation I consider irrelevant as it is not material. What has clearly been demonstrated is that, in the worst financial markets any have ever encountered, the BBI assets can be realised in an orderly sale process well above book value. What does this tell you about the quality of the assets and the new management team.

I am expecting further positive news regarding asset disposal negotiations and the half year results to be announced tomorrow. If the market reads these results similarly then IMO we will start to see a long term upward trend in the BBI and BEPPA prices, more so the latter due to the reduced risk. 

When you consider that various so called "experts" are commenting that we will start recovering from the GFC in later 2009 or early 2010 then the longterm effect on the BBI price is obvious.

In summary IMO these financials are the by far the most important for BBI. They will either support my view regarding the assets and management and clearly demonstrate, as is the nature for infrastructure assets (especially regulated), that they are a defensive asset class with a much greater capability to ride out a financial storm or the opposite. 

In summary if tomorrow results are above neutral and can be regarded as positive I will be opening a nice bottle of wine.

Cheers 

NB/I hold only BEPPA.


----------



## banska bystrica (27 February 2009)

Hot off the press from ABN Amro.

* BBI have announced that it expects to achieve financial close on the
Powerco sell down (to QIC) today

* The terms of the sell down have changed to a 58% interest for NZ$423m
from a 50% interest for circa NZ$400m. This would suggest that the revised terms are in QIC's favour, but not of huge significance to BBI given its need for cash. Effectively the premium to book value has decreased from 25% to 12%.

* The application of the proceeds is not unexpected with the removal of
A$130m Powerco Tasmania debt, a reduction of A$116m corporate debt with the balance circa A$100m together with cash balances being paid meet Westnet Rail minority obligation (~A$145m).

* The Bank requirement to sweep all future cashflows and asset sale
proceeds to pay down debt is not a surprise. This is what BBI and we
expected would have to happen anyway. We estimate that BBI will have to pay down at least a further A$600-800m in corporate debt before it will get anywhere near an investment grade rating in the current market.

* Distributions will not be paid and BBI EPS dividends will remain deferred until BBI removes the cash sweep obligation by either: removing all corporate debt (asset sales); reduces corporate debt (asset sales and cash sweep) and refinances remaining corporate debt; OR reduces corporate debt (asset sales and cash sweep) and attains investment grade credit rating from Moody's.

* We continue to expect further asset sell down in Euro Ports which could net circa A$300m if the recent sell down terms and conditions are achieved.
We suspect DBCT is also attracting some interest, which we have an equity value of circa A$600m to A$700m (100%). However, BBI is not in a
particularly strong bargaining position and the European and Coal markets are not at their healthiest at present.

* The banks have also increased corporate debt margins by 200bps, which we estimate will add an extra A$30m to annual debt costs. Not of huge
significance but it may just prolong debt repayment.

* Today's announcement is in fact a pleasant surprise, we were fearing the worst. Anyway this eases slightly our short term debt concerns. However, BBI is not 'out of the woods' yet. The next milestones include: 
•	tomorrows HY result and underlying cashflows; 
•	PD Port refinancing expected to announced at tomorrows result; 
•	asset sales to further reduce corporate debt; 
•	NZ$210m Powerco refinancing (48%) due in Aug 09; 
•	A$250m DBNP (50%) refinance due July/Aug 09; and, 
•	â‚¬130m Europort refinance due July/Aug.

* The underlying asset value remains far higher than the current market
price. However, this will continue to be overshadowed by debt reduction and BBI's ability to meet its debt obligations and refinance commitments. This news is positive for existing BBI holders but we still think it is too early for new entrants to be chasing the stock just yet.


----------



## ozeBuDDha (27 February 2009)

Thanks Banksa

What is your opinion re: ABN's view of the amount BBI would net given a 100% sale of DBCT and current market conditions for the sale of such an asset? 

Also on another note I seem to recall that the regulator will review the contract price DBCT is able to charge this year as well - do you have any information on this and how it would affect revenues?

I understand this is pure speculation especially given that the financials should be released today.. 

Cheers

OzeBuDDha
(holding BBI)


----------



## nulla nulla (27 February 2009)

banska bystrica said:


> Hot off the press from ABN Amro.
> 
> * BBI have announced that it expects to achieve financial close on the
> Powerco sell down (to QIC) today
> ...





Thanks for that, best neutral post i've seen in this time of Babcock bashing. Might hold on for a little longer now. Dunno about accumulating more though.


----------



## banska bystrica (28 February 2009)

The interim report highlighted two important points.

1. BBI still have a long way to go to reduce corporate debt but they are making progress
2. *NO ASSETS WERE IMPAIRED*.

Now, for all the positives and negatives, I think it can be best summarised as follows.

BBI have an NAV of $1+ and the NAV is not pie in the sky. It is based on cashflows and stringent assets tests. As at Dec 31, 2008, there was no impairment. In other words, if BBI sold off all their assets at book value and then paid back corporate bank debt, asset level debt, NZ bonds and BEPPA, there would be approximately 3 billion in cash left over. That equates to $1.25 per BBI share. Let's call it $1 being ultra conservative. You can buy BBI for 6.5c. That's right! Less than 7c in the dollar. Some corporate bonds in the US with weaker agency ratings than BBI are trading at 20c in the dollar. The current share price implies eventual administration. There is still a chance of that but less than 7c in the dollar is way overdone. I bought more BEPPA on Friday and will continue to accumulate whilst they are trading around parity with BBI.


----------



## hardyakka (28 February 2009)

BB, 
I have just undertaken a detailed analysis of the financials and concur with your view, my comments are below.

Having been through the BBI financials in detail the following summary is my view of BBI. There are more positives than negatives very simply because that is my interpretation of the numbers.

Current Environment
As we all know times are tough. There is recession, business and consumer spending (especially discretionary spending) is down (offset a little by government stimulus packages), the AUD is low, interest rates are at record lows, cash is king and businesses are going to the wall left right and centre (due either to gearing or lack of product demand). This will be the situation at least for another one to two years.

Future Environment
Once we move out of the current negative environment debt availability will increase along with demand as business and consumer confidence grows. This will stimulate the demand for goods and services, especially resources. I would expect this to strengthen the Australian dollar and give rise to interest rate increases to curb inflation.

BBI Financials-Negatives
-Whilst cash flow positive the margin of operating cashflow at the moment is on a knife edge. This has been exacerbated by the 200bps increase in the cost of corporate debt.
-Contingent liability to the ATO of $143M. BBI is confident of a win, however a degree of risk exists.
-The obvious, the level of debt and associated costs, one comforting factor is the majority being asset specific only.
-Repayment of SPARCS, this is a short term cashflow issue only. BBI must address this so they are not screwed at the last minute as they were with the PowerCo sale. The financials specify that they expect to repay these from operating cashflows so dilution of equity will not occur.
-Interest rate swap charge, this is both a positive and negative. The IFRS MTM of the cost of swaps, whilst a none-cash item, is material. However when you consider the positive aspects of the charge it is not material.

BBI Financials-Positives
-In these markets the diversified nature of the primarily regulated revenue streams have held ground or improved (except for PD Ports and Euroports which are marginally down). This reaffirms the defensive nature of the assets. In a more normal market these would improve as confidence returns.
-Sale processes at various stages to release funds to reduce debt. My personal view here is that at least 50% of DBCT should be retained.
-FX and interest rate swaps, the IFRS charge represents the full MTM at balance date. However when you consider in the future environment interest rates will trend upward as economies recover then the amounts actually realised over future years will be much less.
-Unqualified audit report, it is simply another indicative factor on the overall health of BBI.
-I am always very careful of Goodwill charges and am pleased to see the asset virtually halve as it relates to discontinued operations.
-Asset values, no impairment charges in the worst possible market from what some naively consider is a distressed vendor.
-Unsolicited approaches by third parties seeking an interest in the assets. This simply reaffirms the quality of the assets and magnitude of $, especially with regulated income, seeking an equity home. Gives a brief explanation of the competition Australian funds face for quality infrastructure assets.

http://www.financialstandard.com.au/news/view/25111/

-NTA, note that these numbers are after recognising the full liability for the SPARCS and BEPPA. The BBI price is a factor of about 15X the current unit price. Quality geared REITS run at a factor of about 2X, so the BBI price should be about 7 times what it is now.
-Most importantly of all, management. There is a quality team running BBI. Without good management it does not matter how good your assets or business is, you will be stuffed.

Priority Issues
Increase operating cashflow & reduce debt. IMO a 50% sale of DBCT and a few other assets will significantly achieve this. Thus bringing BBI back into the quality investment arena.

Conclusion
IMO these financials will be the worst that will be issued by BBI and there is nothing unexpected. I consider overall BBI is on the recovery path and the price on a definitive upward trend with the first major impact of the unit price to be when there is certainty about DBCT disposal.

I hold a significant number of BEPPAs and will now be building a BBI stake.

Note that the above is what the guy in the pub told me a mate of his overheard in another pub, so it might be an idea to complete your own analysis and formulate your view accordingly.

Cheers


----------



## banska bystrica (28 February 2009)

You are effectively buying $1 worth of net assets for 6.5c. The mammoth discount can be attributed to a few things but I think the debt is the number one concern, with the perceived Babcock and Brown association coming a close second.


----------



## hardyakka (28 February 2009)

Agree on the debt issue but the name issue, whilst important is secondary. The key driver for increases in unit price will be institutional demand and those boys will look at the fundamentals as against the name.
Cheers


----------



## mark_au (28 February 2009)

Great to read these anaylsies after BBI's latest announcements.. I feel that the share price has been over done in the doom and gloom. I think this is a quality company  with solid assets.

What we all now need is more editorials like that in the latest Bmag, actually talking up the economy and its underlying strength rather than all the self perpetuating doom and gloom of how bad it all is...


I have increased my holding of BBI by another 50,000, 
cheers


----------



## banska bystrica (1 March 2009)

There will no quick re-rating of the BBI or BEPPA share price. Have a look at what some listed REIT's are trading at and the similarities are obvious.

Fund Name Price-to-Net Tangible Asset
Value per share (NTA)

APN European Retail Property 6% 
Centro Retail Trust 5% 
Galileo Japan Trust 6%
ING Industrial Fund 7% 
ING Real Estate Community Living 5%
Macquarie CountryWide Trust 12% 
Macquarie DDR Trust 3% 
Mirvac Industrial Trust 12% 
Reckson New York Property Trust 11% 
Valad Property Group 5% 

Average 7% 

From Orbis Funds management:

_"These REITs offer extraordinary value. You can basically buy these REITs for less than 10% of their latest independent valuations (net of associated debt), and well below the cost of building. Net income (excluding any items of an unusual nature) is more than 100% of the purchase price. While debt levels are higher than one would like, rentals, on average, cover interest twice. Many REITs have decided to slash distributions (effectively dividends paid to investors) and retain the cash to reduce debt, a sensible
strategy in our opinion and one which will reduce future risk. Nevertheless, with only 20% of profits paid out, we estimate the average distribution yield will be over 20%.
The two major risks for investors are that banks refuse to renew the REITs’ loans when they mature and tenant bankruptcy. Since they are still covering their interest easily and are reducing rather than increasing debt, we think it very likely that the banks will roll the debt forward. In fact, in December, a large consortium of banks extended Centro Retail Trust’s debt for two years despite it being one of the most leveraged players. Directors have also been significant buyers of a number of these shares in the last quarter. The risk of tenant bankruptcy is higher than usual given the weak economic conditions,
however this risk is very diversified.
Perhaps it is easier to see the value by reducing the parameters above into a single building. Take a building that costs $1 million to build and generates $70,000 in annual rental income with leases fixed for six years (the average length of leases in the table above). The building has a $570,000 mortgage which you have to take over with interest costs of $35,000 per annum. The equity should be worth $430,000 with annual pre-tax income of $35,000. The market currently offers this opportunity to us for somewhere between $30,000 and $40,000, down from more than $500,000 last year.
So while we are deeply disappointed by the losses suffered in 2008, we think that, in some cases, markets have hugely overreacted presenting investment opportunities which have not been available for decades. It is impossible to tell when markets will recover, but even if a recovery in prices is not forthcoming, income yields are very likely to exceed cash returns by a wide margin. When the recovery happens, the upside, as some of these values move to more normal levels, is very high."_

Now I would put forward an argument that BBI is in a stronger position than the REIT's listed. What would you rather own in a severe recession? A diversified, 75% regulated portfolio of essential infrastructure assets or commercial property? On that basis, BBI should be trading at higher than the REIT average of 7c in the dollar and BEPPA should be even higher still.

Patience everyone. This will take a long time.


----------



## random (1 March 2009)

It is great to read the informed valid commentary in this forum especially over recent days.
I have learnt a lot about beppa and their position in the pecking order etc.

In relation to the sp however the price reflects the risks and the markets perception of the likelihood of survival for bbi (as simple as that i feel). Unless there is no question that bbi will survive the price will languish and most are looking no further than that. (Then we can get to banska bystricas 40c and beyond). 
Yes, we have great assets and they do provide and will provide considerably more returns in coming years, with i am sure wonderfull dividends but will they survive the next year?
Once we establish this in the market place wer'e off.
I have no doubt that we will, most of us here on this forum believe this also but the general investor is yet to be convinced hence our current situation.

Personally i am waiting for two pieces of news.
1) The sale of a piece of dbct or another part asset.
2) An update on our future obligations and payments to bnb.

Has anyone heard an update about the management fees?


----------



## banska bystrica (1 March 2009)

Random,
You're right about what the market's view is. The market is pricing BBI for liquidation. If the market is right, BBI/BEPPA holders probably lose the lot in a firesale of assets. Mind you, I find it hard to see banks implementing a firesale on ports and gas pipelines. It's a bit different to selling vacant commercial/residential properties.
Anyway, getting back to the point. If the market is right in pricing BBI at 6.5c, then we are probably stuffed. If the market is wrong through fear, panic and irrationality, then we make a fortune. 
Personally I am quite comfortable if the BBI price does nothing for a long time, so long as they survive this global nightmare and come out the other end. When this deep recession does eventually end, the bounce back in the stocks that have survived will be impressive.


----------



## banska bystrica (2 March 2009)

The fact that the bank has formally ordered BBI to pay down corporate debt from asset sales/free cash flows is very positive for BEPPA (because the only thing that can render BEPPA worthless is failure to pay down corporate debt whilst in administration.) Whilst I am sure management were always going to do that anyway, now that the bank has insisted on this sweep facility, there is no way management can ever deviate from that strategy. 
I see little chance of BBI's share price getting to even 40c before 2011 UNLESS they sell 100% of DBCT and 100% of their 26% holding in NGPL. This would change everything as corporate debt would be nil.
The best scenario for BBI is to sell as many assets at book value as possible. Even if it means you are left with maybe two assets and zero debt at the corporate level and asset level. The only catalyst for the BBI share price to go up now is asset sales.


----------



## random (2 March 2009)

I am confident that whatever the price we sell part or the whole of dbct for it will be above book value.

Yes, we are in tough times (and I'm not referring to bbi here) but the coal terminal is a jewel to certain parties and they know it. Even though they know that we know it - if you get my drift.
There can be a lot of blough and procrastination but these parties are aware that an opportunity missed here will be one that they will be unlikely to have the good fortune of being presented with again.
Some of the parties have healthy amounts of cash in their purse and there is nothing wrong with paying a fair price for an asset in these times. Especially when it fits so nicely into their business model.
One doesn't have to get a bargain and screw the seller to get a good deal all the time. 
Both parties don't have to be just ok with deal either. 
Indeed, there is nothing wrong with both parties actually being very happy with the sale/purchase - of this asset in particular.

This is not just another asset - it is in my opinion a special case.
I also have confidence in our directors which helps matters considerably.

Here endeth my rant!


----------



## banska bystrica (2 March 2009)

"Charts don't lie" someone said. Sure, every chart is perfect in hindsight. What did Burns Philps chart say at 1c? Sell? What did the SCS chart say when AMP sold out at 7c after buying at 50c? Sell? Well that stock hit $1+ years later.
I am not interested in what a chart says or what an analyst from a poor outfit like ML says. I am not interested in what the stock price is doing today or next week or next month. I am sure I have done hundreds of hours more homework than all those analysts combined. Doesn't mean I'm right but doesn't mean they are right either.

Talk of BBI going bust is fanciful. Where's the evidence?
NO asset impairment.
NO breach of any debt covenants.
EBITDA up 5% in a savage bear market.
On a look through basis, they are still generating about $200M free cash flow per year. Even without an asset sale, they can pay back half their corporate debt by 2011/12. What's all the panic about?
I'll tell you the big difference between BBI and CNP, BNB, AFG, OZL etc.
1. NO asset impairments because of the quality of assets withstanding this deep global recession and
2. The underlying business is cash flow positive.

No bank will not refinance in 2011 under those scenarios.
The only thing that can stuff BBI is if this global recession turns into the mother of all depressions and if that happens, not even CBA will be worth a cracker.


----------



## random (2 March 2009)

Today many holders who do not take an active interest in bbi received notification of the 1/2 year results.
Newspaper reports have also given short stories on BBI quoting not much more than the figure $245 mill.
BBI posts a 1/2 year loss of $245 million (no mention as to why). This is the be all end all for many right now.  
The circumstances and additional info detailed and posted in the report is of no interest to them. 
The overall sentiment in the market today has not helped today either.
This is playing a role in todays movement downward in BBI.

On the positive side here were a number of individual purchases today for 7 figure amounts in bbi shares. 

Like Banska i will be rich or i will be poor when the bbi game is played out in full. (well.... not quite _as_ rich)





I have increased my holding by 20% today.


----------



## banska bystrica (2 March 2009)

A small mongoose like creature said this over the road: "surely it's not whether Merrill's are right or wrong - but the fact that they said it? - so did UBS and that's why the sell off.... BBI urgently needs a sale to ward off further sp erosion? never mind most debts are some time away from needing to be paid, the market wants some BBI cred right now.... or else...."

Has anyone else heard so much rubbish in all their life? BBI has no covenants relating to market cap therefore share price is irrelevant. The price can go to 1c in the short term. It matters not except short term traders like the small mongoose type creature who are now caught in the stock will wet their pants. Long term holders breathe easy. BBI is doing fine with the APR plan.


----------



## hardyakka (3 March 2009)

I have just read the information regarding the sp movement today and I want to make sure I have my facts right.

Two analysts basically predicted that BBI would not be able to pay its debts in Nov 2011, the proceeds of DBCT being discounted by one analyst by 50% below book, him reducing the estimate of sp from $1 to 10 cents.

Now these two esteemed analysts are from entities that have virtually gone to the wall (and required multi billion dollar bailouts) because they were unable to recognise the inherent risks in the products they were actually selling, now called toxic debt.

Can someone please explain why these analysts were unable to see these risks etc, yet are able to give a valid view on events nearly 3 years in the future on a fund owning assets when they only have access to the same published information that you are I do? (To provide an analyst with information not in the public arena is a breach  of continuous disclosure regime).

Also can someone explain how these analysts have a much greater understanding of the intricacies of operating a multi billion $ infrastructure business, ie BBI, than management and the board does? (Lets ignore the fact that the financials are audited).

To diverge I have seen comments on charting. Charting can indicate trends in a normal market, however this is not a normal market. For example look at the spread between sovereign debt and the cost of debt to banks, it remained constant until mid 2007, then went totally haywire. Charting has its place as a tool, but it is one tool only of many, like statistics.

Like most I rely on my own analysis, but that must be wrong because an analyst at two very failed banks says so, or am I missing something here?

Cheers


----------



## TheAbyss (3 March 2009)

The very same analysts were claiming all was well with the world a year ago and recommending we buy various stocks all the way down. They know little more than the rest of us unless they have been invited to sit in on senior board meetings etc which they are not. Most analysts receive a printed sheet and a 15 minute discussion with very well defined terms of reference.

I understand there are owners of BBi/Beppa who are keen to see the SP increase etc and derivatives of same lift their net worth but the chart says it all. Why get in until it turns around? A v shaped pattern is a very rare commodity and is usually temporary. Wait fo rthe base and upturn before committing your funds people or you may be left with no ammunition when the time comes to recover lost ground and further the advancement.

This thread is fast becoming a support group for the terminal imo (dont be offended, i am happy to be proven wrong in time. This is only my opinion and i am allowed to have one).

Good luck to all however stick to the facts and do not become emotionally attached to an idea or value you have placed on something. In the end the market will decide and only the strong will survive.


----------



## banska bystrica (3 March 2009)

All views welcome.
What facts imply BBI is "terminal"? Please do not say the "chart". The chart said the same for Burns Philp at 1c.
Give me some facts from the reported financials that indicate BBI is gonzo.


----------



## dogby (3 March 2009)

"the chart says it all. Why get in until it turns around?" 

Abyss,
According to your chart, the sp turned around 2 -9 feb. If you had started buying then, you would be dissappointed now.

I would like to believe in the predictive power of charts, but I am yet to be convinced.


----------



## TheAbyss (3 March 2009)

banska bystrica said:


> All views welcome.
> What facts imply BBI is "terminal"? Please do not say the "chart". The chart said the same for Burns Philp at 1c.
> Give me some facts from the reported financials that indicate BBI is gonzo.





Interesting that you prefer to hang your hat on a hail mary play such as Burns Philp rather than the irrefutable hard facts a chart provides you. 

Sure there are varying modes of investment from intraday to long term and each to their own. My point is BBI is extreme high risk and the general tone within the thread is of a support group with closed ranks who will hear no ill and praying for a turnaround. Hope it does turn around, just cant see it happening until a major sell off of assets and a company restructure which does not involve borrowing money, inflating the value of said asset and flogging units off to the general public and charging a generous commission for doing so.

The chgart says quite clearly that BBI is in trouble and may take a very long time to recover if it ever does.

Says it all really.


----------



## TheAbyss (3 March 2009)

dogby said:


> "the chart says it all. Why get in until it turns around?"
> 
> Abyss,
> According to your chart, the sp turned around 2 -9 feb. If you had started buying then, you would be dissappointed now.
> ...




That turn around you highlight could also be described as a lower high within a downtrend. Each to their own and good luck with your investment. 

Fundamental trading may not be a profitable one in the current climate.


----------



## banska bystrica (3 March 2009)

Still waiting with baited breath for some FACTS that support the notion BBI is a goner. I guess they will not be forthcoming. Maybe because they don't exist?
Hang on. The chart looks ugly. I better sell. Give me a break. I prefer to base my investment decisions on financial facts rather than lines on a piece of paper with 25 different scenarios depending on which way the short term price goes.
Ah I see a "descending triangle" or a "head and shoulder" or a blah blah blah mumbo jumbo. The chartists actually all joined in BBI at 12c if you remember because it had "broken the 10/11c resistance three times. Smart move by the chartists there. Now the chartists want to tell us it's "history". Buy at 12c, sell at 5c. Good way to go broke.


----------



## alphaman (3 March 2009)

Reported financials are useful, I don't trade without first going through them. 

But reported financials are the results of a lot of judgement and estimates. Just adjust one assumption, you can change the asset value all over the place. 

In BBI's case, the instos are obviously using a different set of assumptions to value BBI's assets. They could be wrong, but the fact is BBI is now held hostage by the banks. Hopefully BBI will work its way out, but it's never a good situation to be in.


----------



## TheAbyss (3 March 2009)

Each to their own and time will tell. 

I dont see any news on how they will turn the company around to support any increase in their EPS so what will break the downward trend? 

I need no facts to support my position as the share price says it all. I want to know why you believe it will ever turn around other than a miracle rerating of its assets which is not going to happen in this climate.


----------



## banska bystrica (3 March 2009)

This was posted: _"They would be better off selling 100% of DBCT and despatching all of their corporate debt now, forever. Then they can get on and trade their way out and build up cash to payout bonds and hopefully have something left for the prefs."_

If they haven't got the $700M in cash for the BEPPAs in 2012 and the BBI share price is too low, they will offer more attractive terms to BEPPA holders to roll over for another period. The Directors have the power to do that so this nonsense of massive dilution in 2012 is pie in the sky uninformed rubbish. *THERE WILL BE NO DILUTION.*


----------



## blue2 (3 March 2009)

_If they haven't got the $700M in cash for the BEPPAs in 2012 and the BBI share price is too low, they will offer more attractive terms to BEPPA holders to roll over for another period. The Directors have the power to do that so this nonsense of massive dilution in 2012 is pie in the sky uninformed rubbish. THERE WILL BE NO DILUTION._

Unless BEPPA divs are paid before then I dont think there would be too many acceptances of new terms. Whats the point of accepting a high interest rate if it doesn't get paid?


----------



## drsmith (3 March 2009)

banska bystrica said:


> There will no quick re-rating of the BBI or BEPPA share price. Have a look at what some listed REIT's are trading at and the similarities are obvious.
> 
> Fund Name Price-to-Net Tangible Asset
> Value per share (NTA)
> ...



The key to successful investments in the REIT's listed above will be to pick survivers, if any.

REIT's and infrastructure funds will over the next few years become much more conservative investments with much less debt. Those who are unable to adapt will perish. Recapitalisations Centro style are possible but this solution leaves little equity for existing shareholders and hence very little upside in a recovery.

Other things to consider that are not covered in the above report on REIT's are,

1) Further property devaluations are anticipated by the market and these are magnified by the gearing. This is one reason for the large discount to NTA.

2) Potential for reduced income as the downturn bites.

3) Impact of increased interest margins on debt servicing costs.

4) With regard to Centro's refinancing the banks may have been motivated more by fear than confidence. Consider what may have happened to commercial property valuations had Centro's large portfolio been dumped at fire sale prices. In terms of where property valuations go this may only delay the inevitable but it will buy time for the lenders.


----------



## random (3 March 2009)

Helllo, perhaps you have not noticed but nearly everything is going down.
It is not just bbi. 
Even the haloed Macqurie Infrastructure is dismal.
Look around, people are scared, they don't want to lose what they have left in the market so they are getting out.
Forget fundamentals and arguing about logistics. What is happening is happening because people are panicked.
Don't look for trends in graphs, don't look for logic when people are scared. Why? because there is very little of either sense or logic. For many this is a very new first time experience in the economy.
Don't make it more technical than it is. Cause all you have to do is look at human nature. Scared, scared and scared.

As bb said before, it doesn't matter if the sp goes to 1c but of course we hope that it doesn't.

The only thing that will make me rethink is if our free cash flow dries up or assets are sold tto cheaply.
Live with it and stop pi**ing in your pants.


----------



## hardyakka (3 March 2009)

TheAbyss said:


> I understand there are owners of BBi/Beppa who are keen to see the SP increase etc and derivatives of same lift their net worth but the chart says it all. Why get in until it turns around? A v shaped pattern is a very rare commodity and is usually temporary. Wait fo rthe base and upturn before committing your funds people or you may be left with no ammunition when the time comes to recover lost ground and further the advancement.
> 
> This thread is fast becoming a support group for the terminal imo (dont be offended, i am happy to be proven wrong in time. This is only my opinion and i am allowed to have one).




Abyss,

I appreciate your opinion and its clear that you place heavy reliance upon charting techniques. However I do consider that a chart is only one of many tools that can be used in evaluating an investment. In my experience not once has an investment decision been made solely upon the basis of a chart, however they have been relied upon to demonstrate things such as demographic trends etc.

I am in total agreement with the views expressed earlier that fundamental reliance is placed upon audited financials. Normally in a major investment decision the target also would provide access to due diligence materials such as management accounts, board papers etc. We do not have that luxury in the case of BBI.

It would be very interesting if you were able to point out significant facts from the financial and demonstrate why these are incorrect when viewed from a charting viewpoint. For example before the GFC many considered there was a negative correlation between equities and REIT prices, does this hold true in the charts? Does the same situation exist in the current markets when fundamentals have been thrown out of the door?

Only yesterday I was at an industry seminar where the spread between bank and sovereign debt was shown on a chart, for years it was reasonably constant, then went haywire in the latter part of 2007. This chart demonstrated an inherent weakness in charting in exceptional circumstances, ie the GFC.

But please provide a bit more support rather than "the chart shows it", many are just technically minded investors who seek facts to support a view.

Cheers


----------



## alphaman (3 March 2009)

hardyakka said:


> Only yesterday I was at an industry seminar where the spread between bank and sovereign debt was shown on a chart, for years it was reasonably constant, then went haywire in the latter part of 2007. This chart demonstrated an inherent weakness in charting in exceptional circumstances, ie the GFC.



A chart is simply a graph of objective data; in your example it sounds like a graph of yield spreads. Are you saying the data are wrong?


----------



## banska bystrica (3 March 2009)

blue2 said:


> _If they haven't got the $700M in cash for the BEPPAs in 2012 and the BBI share price is too low, they will offer more attractive terms to BEPPA holders to roll over for another period. The Directors have the power to do that so this nonsense of massive dilution in 2012 is pie in the sky uninformed rubbish. THERE WILL BE NO DILUTION._
> 
> Unless BEPPA divs are paid before then I dont think there would be too many acceptances of new terms. Whats the point of accepting a high interest rate if it doesn't get paid?




I am referring to the 2012 reset date for BEPPA. Interest payments will be well and truly being paid by then. They may not have the $700M in cash though for repayment of principle.


----------



## hardyakka (4 March 2009)

alphaman said:


> A chart is simply a graph of objective data; in your example it sounds like a graph of yield spreads. Are you saying the data are wrong?




If I understand your question properly the point is that prior to the GFC there was a consistent spread so a chart could be used to extrapoilate this accurately. In the GFC it is a totally new ball game and there is no relationship between the spread so extrapolation using a chart is meaningless.

To reiterate charting is only one tool of many, it is not the be all and end all.

Cheers


----------



## alphaman (4 March 2009)

hardyakka said:


> In the GFC it is a totally new ball game and there is no relationship between the spread so extrapolation using a chart is meaningless.



Well, the chart was just reflecting what happened with the yield spreads. There is nothing "inherently weak" with the chart. 

The weakness came from whoever decided that future can be simply extrapolated from the past and bet his house on it.


----------



## banska bystrica (4 March 2009)

Brendan said: _"I wasn't 100% serious, if in the lead up to the SPARCS issue the cash is not available, the SP of BBI & BEPPA will presumably sink, and looking at it another way it does give potential buyers of BBI's assets more leverage to sort out a lesser sale price quickly in order to allow bbi to ward of dillution witht he proceeds.

I think some management guidance is necessary seeing the SP has fallen 30% following a relatively positive announcement. A simple, everything is still going as planned, talks are continuing announcement just to settle some nerves may be in order."_

Well I might just ask all you good people to have a look at the CASH at hand balance as at Dec 31, 2008. SPARCS is not one iota of a problem.
As for BBI saying something about the 30% drop in share price, they should say NOTHING. They have already said everything less than a week ago. Do people want them to hold their hands? If they said anything now, the share price would get sold off even further. The market would see it as being too defensive. Let the market do what it wants to. Why should people worry about the share price today or tomorrow or next month unless you are a trader.


----------



## hardyakka (4 March 2009)

alphaman said:


> Well, the chart was just reflecting what happened with the yield spreads. There is nothing "inherently weak" with the chart.
> 
> The weakness came from whoever decided that future can be simply extrapolated from the past and bet his house on it.




I dont really think this is adding any value to the debate on BBI and BEPPA so lets just agree to disagree, I will rely on my own analysis and I assume you will rely on your charts.

Cheers


----------



## dhukka (4 March 2009)

Interesting that the company didn't write down the value of any of their assets at the half year. It is clear that the company paid too much for their assets as evidenced by the massive amounts of goodwill on the balance sheet (some of which has disappeared with subsequent sales) and the extremely poor returns they get form those assets using any measurement you like, such as ROE, ROA or ROIC. 

If you want to make the claim that the assets in the balance sheet are valued fairly, you first have to believe that during an asset bubble driven by excessively cheap leverage that somehow BBI didn't get caught up in the fervor and paid sensible prices. A hard case to make in light of the fact that they were one of the biggest participants in the orgy of cheap credit and again, the excessive amounts of goodwill and other intangibles on the balance sheet. 

Secondly you have to think that BBI management are hopelessly incompetent. Why buy assets that deliver returns that are worse than you can get by putting your money in the bank at 4.5% interest? This is not to say that the assets are of poor quality, just that management horribly overpaid, the cash generation ability of the assets does not justify the price paid for them. If BBI had paid sensible prices for assets that produced good returns, they wouldn't need to sell-off assets.


----------



## skc (4 March 2009)

dhukka said:


> Secondly you have to think that BBI management are hopelessly incompetent. Why buy assets that deliver returns that are worse than you can get by putting your money in the bank at 4.5% interest? This is not to say that the assets are of poor quality, just that management horribly overpaid, the cash generation ability of the assets does not justify the price paid for them. If BBI had paid sensible prices for assets that produced good returns, they wouldn't need to sell-off assets.




They are not incompetent, they were simply not acting in the interest of their shareholders. They acted in the interest of their masters (BNB the mothership) and their own bonus pool. 

Some of these entities (including BBW and a host of REITs) warrant comparison with the mythical Oozlum bird (as suggested by a recent article in SMH) - a bird that flies in ever decreasing circle until it disappears up it's own backside (the word a_r_s_e is banned!!). http://en.wikipedia.org/wiki/Oozlum_bird


----------



## banska bystrica (4 March 2009)

dhukka said:


> Interesting that the company didn't write down the value of any of their assets at the half year.




Why should they write them down? BBI was one of the very few companies who did NOT "revalue their assets" UPWARDS in the bull market.
The auditors have been over them like a fine tooth comb and the result is ZERO IMPAIRMENT.
That's because the book value is "COST price + DEV costs - depreciation". VERY conservative and well managed assets outperforming in a global meltdown.
BBI's result was very solid. FCFx8 is 80c. NAV is $1. By any metric, the share price of 4.5c is very undervalued. I'm sitting on BBI and BEPPA. They are in the bottom drawer and they'll be sweet. Those who have faint hearts or wobbly knees, go and buy WOW.


----------



## drsmith (4 March 2009)

I hope they wern't the same auditors that signed off on the mothership prior to it's implosion.

An auditors signature is not always a reliable indicator of a company's prospects.


----------



## dogby (4 March 2009)

banska bystrica said:


> BBI was one of the very few companies who did NOT "revalue their assets" UPWARDS in the bull market.
> ...
> That's because the book value is "COST price + DEV costs - depreciation".




That theory is swell for assets (like Powerco) that were bought many years ago (2004), and have had sufficient time to appreciate.

In fact saying that Powerco is being sold at book value or above, isn't saying much. I'd be very worried if Powerco could not be sold above its 2004 price.

However many of BBI's assets were acquired within the last year or so, at top dollar.


----------



## banska bystrica (4 March 2009)

If cash flow is not impaired, then why would the assets be impaired? These assets are performing. Look at the EBITDA figures. If people want to jump at shadows and look at every worst case scenario, then great. Let them keep selling their BBI/BEPPA to me at these prices.


----------



## drsmith (4 March 2009)

banska bystrica said:


> Let them keep selling their BBI/BEPPA to me at these prices.



Out of curiosity, have you been buying up more units with the most recent sell-off below five cents ?


----------



## dhukka (4 March 2009)

banska bystrica said:


> Why should they write them down?



 Simply, because they overpaid for them, or at least some of them as evidenced by their dismal returns and large amounts of goodwill. 



banska bystrica said:


> BBI was one of the very few companies who did NOT "revalue their assets" UPWARDS in the bull market.
> The auditors have been over them like a fine tooth comb and the result is ZERO IMPAIRMENT.
> 
> That's because the book value is "COST price + DEV costs - depreciation". VERY conservative and well managed assets outperforming in a global meltdown.
> BBI's result was very solid. FCFx8 is 80c. NAV is $1. By any metric, the share price of 4.5c is very undervalued. I'm sitting on BBI and BEPPA. They are in the bottom drawer and they'll be sweet. Those who have faint hearts or wobbly knees, go and buy WOW.




Faith in auditors, now that is a leap of faith. If these assets are so fantastic why such pathetic returns? Either they're not that great, management overpaid or a combination of both.


----------



## dhukka (4 March 2009)

banska bystrica said:


> If cash flow is not impaired, then why would the assets be impaired? These assets are performing. Look at the EBITDA figures. If people want to jump at shadows and look at every worst case scenario, then great. Let them keep selling their BBI/BEPPA to me at these prices.




Why should we look at EBITDA? Shareholders don't share in EBITDA, they share in NPAT and this company generates none, even if you take out hedging losses the company makes nothing.


----------



## banska bystrica (4 March 2009)

BBI make plenty. They make about 10c per share FCF annually. Obviously there will no dividend for the next year because they are paying down debt. The "loss" was a mark-to-market adjustment. The "loss" will never be realised.
On my numbers, NPAT in 2010 will be $180M and 2011 $220M. I'm a bit conservative as Wilson HTM have 2010 and 2011 NPAT at $193M and $234M respectively. That puts them on a P/E of less than 1. 

What people are focusing on now are all the negatives and doomsday scenarios and I understand that because they are fearful and shell-shocked at what has happened in the last 9 months. I understand all that but feel it has created an enormous opportunity that we will probably never see again. This is the mother of all bubble busts and as such, the market has overreacted on the downside just like it over-reacted on the upside. Sure BBI has risks but but that's why it's 4.5c and not 45c. This stock is not getting re-rated anytime soon. However, the long term investor will be handsomely rewarded.

I bought a stock on the NASDAQ last night that is trading at less than cash backing and is debt free. Opportunities like those come up once in a lifetime. I took the opportunity, bought the stock and will throw it in the bottom drawer. If it's not a twenty bagger in the next decade, I'll give the game away. A $50K investment that I expect to be worth a million inside a decade.


----------



## alphaman (4 March 2009)

I'm not sure what you mean by FCFx8, but for the financial year ended 30 June 2008, BBI's free cash flow is negative. For the half year to Dec 08, also negative. 

With the proceeds from the asset sale BBI should have positive free cash flow for this current half year, assuming BBI takes it easy on capex.


----------



## banska bystrica (5 March 2009)

dogby said:


> That theory is swell for assets (like Powerco) that were bought many years ago (2004), and have had sufficient time to appreciate.
> 
> In fact saying that Powerco is being sold at book value or above, isn't saying much. I'd be very worried if Powerco could not be sold above its 2004 price.
> 
> However many of BBI's assets were acquired within the last year or so, at top dollar.




NGPL was the most recent purchase in 2007 and they paid 10.7X EBITDA. They got a bargain. SEC Gas transacted in the same year for 14X EBITDA. BBI did not overpay for their assets. The market perception is they did because of the BNB connection but the facts are they paid reasonable prices. 
Euroports was a recent purchase yet they recently sold a portion for a tick above purchase price.
There is a lot of BS in the market and press about BBI. That's fine because it's allowing those who know what the real story is to keep buying at a 95% discount to NAV. That is just sensational value regardless of the risks involved. Everything has a price and BBI's price is a steal.


----------



## dhukka (5 March 2009)

banska bystrica said:


> BBI make plenty. They make about 10c per share FCF annually. Obviously there will no dividend for the next year because they are paying down debt. The "loss" was a mark-to-market adjustment. The "loss" will never be realised.
> On my numbers, NPAT in 2010 will be $180M and 2011 $220M. I'm a bit conservative as Wilson HTM have 2010 and 2011 NPAT at $193M and $234M respectively. That puts them on a P/E of less than 1.
> 
> What people are focusing on now are all the negatives and doomsday scenarios and I understand that because they are fearful and shell-shocked at what has happened in the last 9 months. I understand all that but feel it has created an enormous opportunity that we will probably never see again. This is the mother of all bubble busts and as such, the market has overreacted on the downside just like it over-reacted on the upside. Sure BBI has risks but but that's why it's 4.5c and not 45c. This stock is not getting re-rated anytime soon. However, the long term investor will be handsomely rewarded.




BBI made nothing in 1H09 and nothing in FY08, when your NPAT has a negative sign in front of it, it's a loss and means you made nothing.  

Take a look at the balance sheet, shareholders equity has been eroded, MTM losses do matter. they have reduced equity and therefore the value of the business. 

BBI may well make money in 2H09 and FY10 and it may well be worth more than $0.045 but it is still a very medicore business on the basis of the returns it generates, even assuming Wilsons Forecasts for FY10 and FY11.



banska bystrica said:


> I bought a stock on the NASDAQ last night that is trading at less than cash backing and is debt free. Opportunities like those come up once in a lifetime. I took the opportunity, bought the stock and will throw it in the bottom drawer. If it's not a twenty bagger in the next decade, I'll give the game away. A $50K investment that I expect to be worth a million inside a decade.




Congratulations, do you want a medal or a chest to pin it on?


----------



## hardyakka (5 March 2009)

dhukka said:


> Interesting that the company didn't write down the value of any of their assets at the half year. It is clear that the company paid too much for their assets as evidenced by the massive amounts of goodwill on the balance sheet (some of which has disappeared with subsequent sales) and the extremely poor returns they get form those assets using any measurement you like, such as ROE, ROA or ROIC.
> 
> If you want to make the claim that the assets in the balance sheet are valued fairly, you first have to believe that during an asset bubble driven by excessively cheap leverage that somehow BBI didn't get caught up in the fervor and paid sensible prices. A hard case to make in light of the fact that they were one of the biggest participants in the orgy of cheap credit and again, the excessive amounts of goodwill and other intangibles on the balance sheet.
> 
> Secondly you have to think that BBI management are hopelessly incompetent. Why buy assets that deliver returns that are worse than you can get by putting your money in the bank at 4.5% interest? This is not to say that the assets are of poor quality, just that management horribly overpaid, the cash generation ability of the assets does not justify the price paid for them. If BBI had paid sensible prices for assets that produced good returns, they wouldn't need to sell-off assets.




IMO the auditors would have paid the closest attention to the asset values and if there was any doubt whatsoever as to the carrying value of the assets then we would have seen an impairment charge in the financials. You only need to compare the impairment charges applied to the bluechips such as Westfield to appreciate the attention these would have been given. 

Cheers


----------



## banska bystrica (5 March 2009)

dhukka said:


> BBI made nothing in 1H09 and nothing in FY08, when your NPAT has a negative sign in front of it, it's a loss and means you made nothing.
> 
> Take a look at the balance sheet, shareholders equity has been eroded, MTM losses do matter. they have reduced equity and therefore the value of the business.




MTM is an accounting loss which will never be realised. This is infrastructure and as such FCF is the most accurate guide to valuation. It is quite obvious that you have no real understanding of the underlying business or it's balance sheet or it's assets. The facts are it has net equity of $1 per security with ZERO asset impairments and the market has factored in a 95% discount to NAV. On any reasonable metric, that is VALUE with a CAPITAL V.
There are obviously plenty who agree with your uninformed view. That's why they are 4.5c. I thank each and everyone of you for providing me with this once in a lifetime opportunity. We will see where BBI are trading at in a couple of years.


----------



## banska bystrica (5 March 2009)

How could anyone possibly justify asset impairments when cash flow was positive on the pcp and recent asset sales have ALL been above book?

The auditors are well aware of the quality of these assets and their ability to weather a global recession.


----------



## hardyakka (5 March 2009)

dhukka said:


> BBI made nothing in 1H09 and nothing in FY08, when your NPAT has a negative sign in front of it, it's a loss and means you made nothing.
> 
> Take a look at the balance sheet, shareholders equity has been eroded, MTM losses do matter. they have reduced equity and therefore the value of the business.
> 
> ...




All companies have periods when they have short term problems, even BHP (Magma Copper, briquet plant in WA). It seems that your approach is that of a short term investor. Others adopt the longterm approach and hence daily/weekly/monthly fluctuations in price are irrelevant.

IMO for the degree of risk it carries BBI offers outstanding value, this being affirmed by the financials and its performance in the GFC. Also understand a regulated infrastructure business is a defensive investment, so you should never expect wild fluctuations in returns.

Before you jump in and point out the level of debt etc, yes I agree these are high and as stated there is a degree of risk. But as I said, IMO one of the best investments on the market. 

Consider if you put your money in the bank after tax and inflation you are actually going backwards. But then each has their own objectives and risk appetites.

Cheers


----------



## dhukka (5 March 2009)

banska bystrica said:


> MTM is an accounting loss which will never be realised. This is infrastructure and as such FCF is the most accurate guide to valuation. It is quite obvious that you have no real understanding of the underlying business or it's balance sheet or it's assets. The facts are it has net equity of $1 per security with ZERO asset impairments and the market has factored in a 95% discount to NAV. On any reasonable metric, that is VALUE with a CAPITAL V.
> There are obviously plenty who agree with your uninformed view. That's why they are 4.5c. I thank each and everyone of you for providing me with this once in a lifetime opportunity. We will see where BBI are trading at in a couple of years.




It is obvious you have no understanding of how accounting losses affect the balance sheet and therefore the value of the business. I guess all those mark to market losses by US banks are of no significance? FCF is not the most accurate guide to valuation. It always makes me laugh when people insist that such and such a method should be used for certain businesses. Why not value them all the same way? How about ROE or ROC? on that basis BBI is a very mediocre business generating very poor returns and whilst its value may well be much higher than 4.5c but based on current fundamentals it is worth well south of $1.


----------



## dhukka (5 March 2009)

banska bystrica said:


> How could anyone possibly justify asset impairments when cash flow was positive on the pcp and recent asset sales have ALL been above book?
> 
> The auditors are well aware of the quality of these assets and their ability to weather a global recession.




You could easily justify it on the basis that BBI's return on assets is woeful which implies that they are not performing to expectations or that they are performing well and that management significantly overpaid for them. Or better yet management are complete idiots who think sub 5% rates of return are good.


----------



## dhukka (5 March 2009)

hardyakka said:


> All companies have periods when they have short term problems, even BHP (Magma Copper, briquet plant in WA). It seems that your approach is that of a short term investor. Others adopt the longterm approach and hence daily/weekly/monthly fluctuations in price are irrelevant.
> 
> IMO for the degree of risk it carries BBI offers outstanding value, this being affirmed by the financials and its performance in the GFC. Also understand a regulated infrastructure business is a defensive investment, so you should never expect wild fluctuations in returns.
> 
> ...



What do you mean even "even BHP has problems", BHP frequently has problems as do most resource companies as their fortunes are hitched to volatile commodity prices. BHP has enjoyed it's best run ever in the last few years, prior to the 2000's BHP continually had problems. 

I am a long term investor and the company's fundamentals do not make it investment grade in my book. I agree it is worth a speculative punt, it is being priced for liquidation and if it actually survives and continues to eke out the paltry returns forecast by bb it will probably be worth more than 4.5c.


----------



## banska bystrica (5 March 2009)

Everything has a price. It's all about risk/reward. The market overdid BBI at the peak when trading at $2.07 and now the market has overdone it on the slide at 4c. The beauty of it being 4c is that the leverage from here is huge. 

If BBI survive this GFC (and all the evidence points to survival, albeit with less assets and less debt), then BEPPA is worth $1 + accumulated interest payments in 2012. That's not a bad return from 5c.

Just because something is risky, doesn't mean it's a bad investment. It depends on price.


----------



## mark_au (5 March 2009)

dhukka said:


> Interesting that the company didn't write down the value of any of their assets at the half year. It is clear that the company paid too much for their assets as evidenced by the massive amounts of goodwill on the balance sheet (some of which has disappeared with subsequent sales) and the extremely poor returns they get form those assets using any measurement you like, such as ROE, ROA or ROIC.
> 
> If you want to make the claim that the assets in the balance sheet are valued fairly, you first have to believe that during an asset bubble driven by excessively cheap leverage that somehow BBI didn't get caught up in the fervor and paid sensible prices. A hard case to make in light of the fact that they were one of the biggest participants in the orgy of cheap credit and again, the excessive amounts of goodwill and other intangibles on the balance sheet.
> 
> Secondly you have to think that BBI management are hopelessly incompetent. Why buy assets that deliver returns that are worse than you can get by putting your money in the bank at 4.5% interest? This is not to say that the assets are of poor quality, just that management horribly overpaid, the cash generation ability of the assets does not justify the price paid for them. If BBI had paid sensible prices for assets that produced good returns, they wouldn't need to sell-off assets.





i find it amazing and intriguing that presented with the same "factual "information sources (financial report etc) that  two people (dhukka and banska bystrica  in this case) can have such opposing views. Humans are truly interesting and complex beings ;-)

It would seem logical that given the same information, there would be degrees of interpretation around some vague areas, but the general analysis should be in the same direction...

Im loving this forum and its valuable opinions


----------



## banska bystrica (5 March 2009)

To uninformed people who just read bad press, I say look at the FACTS.

NGPL was the most recent purchase in 2007 and they paid 10.7X EBITDA. They got a bargain. SEC Gas transacted in the same year for 14X EBITDA. BBI did not overpay for their assets. The market perception is they did because of the BNB connection but the facts are they paid reasonable prices.
Euroports was a recent purchase yet they recently sold a portion for a tick above purchase price.
There is a lot of BS in the market and press about BBI.
You cannot deny the facts as presented above on NGPL unless of course people believe the ASX releases and contracts signed between BBI and NGPL are all just made up. People are scared and they are jumping at shadows. Pretty typical behaviour in a bear market.


----------



## alphaman (5 March 2009)

mark_au said:


> It would seem logical that given the same information, there would be degrees of interpretation around some vague areas, but the general analysis should be in the same direction...



That's why the market exists. Seller thinks it's overvalued, buyers thinks otherwise. If everyone shares the same view there would very little market activity.

But in this case, I have to say I'm a bit surprised that it even needs arguing. Just look at BBI's income and operating cash flows, divide them by assets. Answer is unequivocal, BBI's profitability is tiny on both income and cash basis. It's all in the reported financials. Very simple maths.

I can borrow tonnes of money to buy a high quality asset, but so what? When I'm only getting 3% return, is it great business? Now I have to try to sell the asset to pay off my loan. Start with nothing, ends with nothing. This is what the credit bubble is about.


----------



## hardyakka (5 March 2009)

dhukka said:


> I am a long term investor and the company's fundamentals do not make it investment grade in my book. I agree it is worth a speculative punt, it is being priced for liquidation and if it actually survives and continues to eke out the paltry returns forecast by bb it will probably be worth more than 4.5c.




I have no problems whatsoever if BBI does not make investment grade "in your books". From what you have said I assume your portfolio consists of the safe blue chips such as WOW and similar. I think that is safe, secure and wise strategy and you will sleep well at night.

I would like to point out a few BBI facts:
a) The financials state that BBI is cashflow positive. (Lets not waste time discussing accounting profit and cash.non-cash adjustments such as IFRS, depreciation etc).
b) My recollection of the audit report was that there was no going concern qualification, hence the auditors do not seem to concur with your liquidation view.
c) Your comment that the market is pricing BBI for liquidation has a fundamental flaw. It assumes that the market is 100% right all of the time. If the market was we would sell when the price was dropping and buy when it was rising. We all know that markets are at times imperfect, that is what creates arbitraging opportunities. The BBI mispricing is the result of a major flaw in a very unusual market.
d) Inputs into a market that cannot be modelled  include fear and greed, very simply people are running scared. This coupled with an extreme market creates greater opportunity for profit or loss.  

To summarise your view of liquidation is inconsistent with the financials and markets are imperfect, especially in volatile times. This combined with the human factors creates abnormal mispricing scenarios of which BBI is one.

Cheers


----------



## random (5 March 2009)

Looking back at the sp say 4-5months ago is equivalent to looking at ancient history for me. So much has changed in the financial world.

What does intrigue me however is that a few weeks ago bbi was at 14c. Can someone please tell me what news has there been to justify the drop to todays prices.
What has changed? Have we misplaced an asset somewhere? Did our cash flow find a drain to run down that we didn't know about?
Was there something in the report I missed?
Or is it just people snowballing the panic.
I'd love an answer please.

Pleased to be able to top up myself though.


----------



## banska bystrica (5 March 2009)

You have two big instos who have clients selling BBI/BEPPA on the back of their analysts downgrading BBI to "underperform". Now if you know how instos work it is easy to explain the drop in share price. They sell at whatever price when the analyst says "underperform". The retail buyers just do not have the firepower to withstand the relentless insto selling. The instos do not care about whether they are selling a value stock or not. They honestly would know less than most about the prospects of BBI. It would be a very small percentage of their portfolio and as such, does not rate. Their attitude would be "Just sell".
We saw the same when Deutche were selling in November. They just sold relentessly down to 2.4c until they were done.
I saw this in the early 90's with a tech stock I was very keen on. SCS was the code. AMP decided to sell around 30c. By the time they had nearly finished, the price was 10c. A group of private investors including myself approached AMP to buy out their remaining shares in one big crossing at 7c. They agreed. The stock was crossed at 7c and we sold our stake years later for $1+.


----------



## dhukka (5 March 2009)

hardyakka said:


> I have no problems whatsoever if BBI does not make investment grade "in your books". From what you have said I assume your portfolio consists of the safe blue chips such as WOW and similar. I think that is safe, secure and wise strategy and you will sleep well at night.
> 
> I would like to point out a few BBI facts:
> a) The financials state that BBI is cashflow positive. (Lets not waste time discussing accounting profit and cash.non-cash adjustments such as IFRS, depreciation etc).
> ...




Hardyakka, instead of making assumptions and straw man arguments, I suggest you actually read my posts rather than reacting on emotion. Firstly you are completely wrong with respect to the kinds of companies I have in my portfolio. 

Secondly it is NOT my belief BBI will be liquidated, I have no view one way or the other, I simply don't know.  My point is that at 4.5c the stockmarket is pricing it with a stong possibility that  it is going out of business.

Thirdly, I absolutely reject the Efficient Market Hypothesis, the stock market is wrong at least as much as it is right, my view is that the stock market is pricing the stock as though there is a good chance the company may not be around in 12 months time. Again I don't necessarily agree with that view.  I have enough humility to say that I honestly don't know.   

My main point all along is that this is a mediocre business that generates mediocre returns, a point that none of the BBI supporters have been able to refute, because it is indisputable. 

I will concede that if BB's forecast profits for FY10 and FY11 are realized then the stock is most probably worth more than 4.5c, but forecasts of earnings 18 months out, are pie in the sky stuff in the current environment.


----------



## BearCuban12 (5 March 2009)

> You have two big instos who have clients selling BBI/BEPPA on the back of their analysts downgrading BBI to "underperform". Now if you know how instos work it is easy to explain the drop in share price. They sell at whatever price when the analyst says "underperform". The retail buyers just do not have the firepower to withstand the relentless insto selling. The instos do not care about whether they are selling a value stock or not. They honestly would know less than most about the prospects of BBI. It would be a very small percentage of their portfolio and as such, does not rate. Their attitude would be "Just sell".
> We saw the same when Deutche were selling in November. They just sold relentessly down to 2.4c until they were done.
> I saw this in the early 90's with a tech stock I was very keen on. SCS was the code. AMP decided to sell around 30c. By the time they had nearly finished, the price was 10c. A group of private investors including myself approached AMP to buy out their remaining shares in one big crossing at 7c. They agreed. The stock was crossed at 7c and we sold our stake years later for $1+.





Banksa - when can we expect your return to HC? Is the suspension over yet?                    cheers


----------



## banska bystrica (5 March 2009)

I'm still suspended until tonight. I have read most of the posts over there and to be honest, the quality has dropped off markedly. dargie is still going on about the death spiral etc and I don't feel inclined to even respond to rubbish like that.
I can tell you categorically the market is not interested in what is happening next month let alone 2012. 
The important thing to remember is that a 50% sale of PD Ports and 50% sale of DBCT will render BBI "out of the woods". I personally believe there is enormous interest in DBCT and there is sufficient interest in PD Ports to be able to sell 50% at prices above what BBI paid for it in 2005.

_"B&B Infrastructure yesterday told Bloomberg it was considering selling PD Ports. Despite falling asset prices, bankers close to the sale were hopeful of fetching more than $US1 billion, compared with the $US941.5 million paid for the business in 2005."_

These two asset sales would payout about $800M of corporate debt. That would ensure BBI's survival. They are also generating enough free cash to pay down another $500M of debt by 2011. With stable markets by then and corporate debt wiped out to almost zero, BBI will be back above the 50c level and BEPPA around 65/70c. 
The NTA is $1. Simple as that. It's not a BS figure. Its assets are not impaired like a Centro or BNB of GPT. These are 75% regulated assets with stable cash flows. Just look at the result. Very solid. The market is pricing them at 4% of NTA. That is plain crazy and I am still buying BEPPA at 5/5.1c and will continue to keep accumulating whilst I've got other stocks to sell.

Remember in November I said it was the opportunity of a lifetime. I still believe that. When are you going to be able to buy $1 worth of net assets for 4c again?


----------



## drsmith (5 March 2009)

According to page 28 of BBI's half year report, net asset backing is $1.00 per security. No mention of tangible there.

Page 29 has net tangible assets at $0.69 per security but this counts certain assets as tangible which under A-IFRS are classified as intangible.

The balance sheet clearly shows net tangable asset backing to be negative. That's not to say that the goodwill and intangables are without value but let's not confuse them with tangible assets.

By comparison GPT is carrying very little in the way of goodwill and intangibles on it's balance sheet.


----------



## banska bystrica (5 March 2009)

Dalrymple Bay Coal Terminal (DBCT) is intangible. It's a 99 year leasehold asset.
I reckon it might just be worth a bit more than a commercial property.
EV of $2.4 BILLION for DBCT. Not a bad intangible.


----------



## BearCuban12 (5 March 2009)

banska bystrica said:


> Dalrymple Bay Coal Terminal (DBCT) is intangible. It's a 99 year leasehold asset.
> I reckon it might just be worth a bit more than a commercial property.
> EV of $2.4 BILLION for DBCT. Not a bad intangible.




Where do you get the EV of $ 2.4 BIL from?

I cannot find its value in the reports. 

What is a realistic sale price for 100%?


----------



## banska bystrica (5 March 2009)

DBCT is in the books at $1.6 Billion. They were offered $2.8 Billion early 2008 (should have taken it.lol)
I'm assuming a 400M haircut from last year. BBI will only sell if the price is right. $2.4B would be about right I think. That would free up $400M to pay corporate debt if they sold a 50% share.

PS. Will not be posting over the road whilst the quality is garbage and also dargie rabbiting on about death spirals.


----------



## drsmith (5 March 2009)

$1.6b will only cover the debt associated with DBCT so it will indeed be interesting to see what BBI actually gets for it.

The following may also be of interest.

http://steelguru.com/news/index/200...ship_loadings_reduced_to_half_in_January.html


----------



## banska bystrica (5 March 2009)

You have done your homework so you would be aware lower shipping visits does not affect BBI's revenue one iota. They have "take or pay" contracts which is another reason the ports users (BHP, Xstrata, Macarthur Coal)would be keen to buy it.


----------



## BearCuban12 (5 March 2009)

banska bystrica said:


> DBCT is in the books at $1.6 Billion. They were offered $2.8 Billion early 2008 (should have taken it.lol)
> I'm assuming a 400M haircut from last year. BBI will only sell if the price is right. $2.4B would be about right I think. That would free up $400M to pay corporate debt if they sold a 50% share.
> 
> PS. Will not be posting over the road whilst the quality is garbage and also dargie rabbiting on about death spirals.





Have they not developed DBCT to increase capacity since the last offer? 

Is there a chance that the potenital bidders for DBCT will band together and pinch it for a song? 


The Powerco sale for me was an eye opener about leverage (like a robber with a knife has leverage over their victim). With the deadline the offers of DBCT being so close to having to fund the SPARCS payout, there is a chance that a potential bidder could pull a QIC last minute.


It would be good to have you back at HC as well as here. If you keep emotion out of it and answer the serious concerns that everyone has, then BBI should go back to being the best read thread on HC. For all Dargies foibles, he is able to give the more positive BBI supporters a different view. Think of him as a (sometimes) rational devils advocate. Hope you do decide to return. Todays talk of death spirals were a little tongue in cheek.

cheers


----------



## drsmith (5 March 2009)

banska bystrica said:


> You have done your homework so you would be aware lower shipping visits does not affect BBI's revenue one iota. They have "take or pay" contracts which is another reason the ports users (BHP, Xstrata, Macarthur Coal)would be keen to buy it.



I saw the graphic on page 23 of BBI's investor pack showing current contracted demand out to 2020 but note that it comes with the following caveat,



> "Current Contracted Demand" assumes current contracts at current levels with full extension of evergreen expiry date option.




That statement, vague as it is, suggests to me that some of the current contracted demand indicated in the graphic is not locked in but optional.


----------



## random (5 March 2009)

Can i just point out also that DBCT Management proposed a rate increase last year on volumes of coal moving through the terminal.
To the best of my knowledge these are now in place.

The rates are:
1) From $2.12 per tonne to $2.38 on 1 January 2009.
2) $2.42 per tonne on 1 April 2009

If these prices were built in to your models already i do apologise.
Perhaps some annalysts may not be aware.


----------



## banska bystrica (5 March 2009)

BearCuban12 said:


> With the deadline the offers of DBCT being so close to having to fund the SPARCS payout, there is a chance that a potential bidder could pull a QIC last minute.




BearCuban,
SPARCS is not an issue. They already have the cash to take care of that. Look at the cash on hand at Dec 31, 2008. $300M. SPARCS is not an issue....only in the mind of dargie. People are jumping at shadows.


----------



## hardyakka (5 March 2009)

dhukka said:


> Hardyakka, instead of making assumptions and straw man arguments, I suggest you actually read my posts rather than reacting on emotion. Firstly you are completely wrong with respect to the kinds of companies I have in my portfolio.
> 
> Secondly it is NOT my belief BBI will be liquidated, I have no view one way or the other, I simply don't know.  My point is that at 4.5c the stockmarket is pricing it with a stong possibility that  it is going out of business.
> 
> ...




Dhukka,

The points made are factual and not based upon "strawman" arguments, you only need read the financials to verify that. However I do withdraw the assumption regarding the content of your portfolio.

The issues of market inefficiency creating mispricing opportunities clearly stands, IMO BBI is a prime example. Regarding the income side, in the current BBI situation this is a minor issue. For BEPPA holders there is the advantage of accumulation and priority of payment only.

NB/Pls dont use caps

Cheers


----------



## dhukka (5 March 2009)

hardyakka said:


> Dhukka,
> 
> The points made are factual and not based upon "strawman" arguments, you only need read the financials to verify that. However I do withdraw the assumption regarding the content of your portfolio.
> 
> ...




I don't like using caps, it's only when you come across people who can't understand the written word that it becomes necessary. The straw man arguments you created are: 1) I believe the company is going out of business, you wrote:



> b) My recollection of the audit report was that there was no going concern qualification, hence the auditors do not seem to concur with your liquidation view.




This is a classic straw man argument, you created one that didn't exist, I have never said that I thought the company is going to be liquidated.  

2) Illogical conclusions drawn by you:



> c) Your comment that the market is pricing BBI for liquidation has a fundamental flaw. It assumes that the market is 100% right all of the time.




Why does the comment that the market is pricing the company for liquidation imply that I think the market is always right? If I make the observation that 9 out of 10 people in the street are carrying umbrellas because they think it is going to rain, does that mean I believe them? The market was pricing ABS for success 2 years ago and I was very vocal on this forum that it was headed for a tough time. Clearly I don't believe the market is always right. 



> To summarise your view of liquidation is inconsistent with the financials and markets are imperfect, especially in volatile times. This combined with the human factors creates abnormal mispricing scenarios of which BBI is one.




Again a completely erroneous conclusion and straw man argument because I do not believe the company is going to be liquidated, I simply don't know. 

The only facts or fact in this case, in your whole post is that operating cashflow was positive for the half.


----------



## hardyakka (5 March 2009)

Dhukka,

I do not think it contributes to the BBI debate by continuing this exchange. Regarding the content of my original post that I stand by, however if you have taken personally, then they were not intended as such.

Cheers


----------



## BearCuban12 (6 March 2009)

Banksa,
I am a BEPPA and BBI holder and instead of watching the DJIA fall this evening, have been reading he old BEPPA threads, and am struggling to see how it is possible that BEPPA holders do not get paid andything

Once SPARCS is paid off then BEPPA holders are next in line.

CREDITORS 
SPARCS ($300,000,000)
BEPPA (700,000,000)
BBI Ordinary (2,400,000,000)

So if the company went bust tomorrow with a NTA of 1.00 per share

after CREDITORS, SPARCS, and the administrators are paid, there must be at least 30c per share left over?

What are your thoughts on this?

I guess the timeline would be around 5 years to see anything.

If you had to play devils advocate, is there anyway on earth that BEPPA holders will not see any money?

What about if the company was nationalised by the Government? Is that a possible scenario?


Also, I note on the BEPPA T+C's that BBI are able to issue BONDS that have an equal or lesser priority than BEPPA. Would they consider raising capital by issuing other BONDS equal to BEPPA, and if so, what are the ramifications for BEPPA and BBI holders?


----------



## banska bystrica (6 March 2009)

BearCuban12 said:


> If you had to play devils advocate, is there anyway on earth that BEPPA holders will not see any money?




BEPPA would most probably be left with nothing in a windup scenario as you would not get positive NTA in a firesale.
However, what evidence is there to even suggest BBI are going into administration? Forget about the share price. It has nothing to do with whether BBI are viable or not. The share price is at 4c because of panic, a flee to cash by investors, and two large institutional brokers exiting their clients. We will probably see a new low of under 2.4c before it starts to rise. 

I'm in the process of getting a few investors together and approaching the instos with a view to buying all their BEPPAs in one crossing at 2c. I'm meeting with interested parties at 10.00am Brisbane time.


----------



## alphaman (6 March 2009)

To get any chance of investor support, any new debt would have to rank above BEPPA, not equal or below. 

As to nationalisaiton, governments might bail out companies that are considered too important to fail, but they don't like to bail out shareholders or even creditors.

Typically you would see existing shareholders wiped out (or hopelessly diluted, look at Citi), creditors turned shareholders. Essentially new investors rank on top, existing investors move down (or out). So no, nationalisation will not help.


----------



## investorpaul (6 March 2009)

banska bystrica said:


> BEPPA would most probably be left with nothing in a windup scenario as you would not get positive NTA in a firesale.
> However, what evidence is there to even suggest BBI are going into administration? Forget about the share price. It has nothing to do with whether BBI are viable or not. The share price is at 4c because of panic, a flee to cash by investors, and two large institutional brokers exiting their clients. We will probably see a new low of under 2.4c before it starts to rise.
> *
> I'm in the process of getting a few investors together and approaching the instos with a view to buying all their BEPPAs in one crossing at 2c. I'm meeting with interested parties at 10.00am Brisbane time.*




Interesting, you will have to let us know how it goes?

How many investors have you managed to get together?


----------



## BearCuban12 (6 March 2009)

From The Age - Business Daily

Fund eyes 'battered assets'Clancy Yeates
March 6, 2009 
THE taxpayer-backed Future Fund is considering taking bigger stakes in battered asset classes that many investors have abandoned, including property, infrastructure and hedge funds.

At the end of December the fund had 1.3 per cent of assets in property and 1.9 per cent in infrastructure, stakes general manager Paul Costello described as "very modest".

Several companies in both sectors have been forced to offload assets because they have been unable to repay their loans or refinance debt.

"From our organisation's point of view, this is a very interesting time in those areas," Mr Costello said.

"We have been extremely cautious in terms of making commitments right now, and that area is under very active study from ourselves."

The Future Fund aims to return 4.5 per cent a year above inflation to meet about $150 billion in public service pension payments from 2020, but in 2008 it lost 8.49 per cent as markets plunged.

Mr Costello did not give details of any deals under consideration, and said buyers and sellers were yet to agree on the appropriate prices in these two asset classes.

There are a swag of infrastructure funds looking to sell stakes in their assets, including Babcock and Brown Infrastructure, B&B Power, and Macquarie Infrastructure Group.

Mr Costello also revealed that the fund was doing "a lot of thinking" about activity in the hedge fund market, which was a high-flyer in the boom years but is undergoing consolidation as the weaker players are weeded out.

The $60 billion Future Fund does not operate hedge funds, but 3.7 per cent, or $1.9 billion of its portfolio, is invested in "alternative assets", which Mr Costello said included a "hedge-fund-like" investment program.


----------



## Tysonboss1 (6 March 2009)

banska bystrica said:


> I'm in the process of getting a few investors together and approaching the instos with a view to buying all their BEPPAs in one crossing at 2c. I'm meeting with interested parties at 10.00am Brisbane time.




what would make the instos sell out at 2c, What is the rational behind people dumping stock at such levels.

do the instos have infomation that we don't, are we the patsey in this.


----------



## drsmith (6 March 2009)

I wonder what proportion of BBI's units are actually on the accounts of institutional share holders.


----------



## hardyakka (7 March 2009)

BearCuban12 said:


> Banksa,
> I am a BEPPA and BBI holder and instead of watching the DJIA fall this evening, have been reading he old BEPPA threads, and am struggling to see how it is possible that BEPPA holders do not get paid andything
> 
> Once SPARCS is paid off then BEPPA holders are next in line.
> ...




It helps to step back from the detail and look at it from that way.

Net equity after fully providing for all liabilities including SPARCS and BEPPAS is $2.4 billion. Lets assume the worst and write off a $1 billion of that net equity, call it impairement or whatever you like. Then assume another $400M of sundry costs to arrive at a realisable value number (ie cash). That leaves about $1 billion of cash attributable to the 2.4 billion units on issue or about 35 cents per unit.

Simple, full of holes but an easy way to stress test the potential unit price. There were no impairment provisions in the financials and I expect assets on average to realise book. On that basis the write off against net equity above of $1 billion can be written back. In this situation the unit price would double to about 70 cents even after allowing for the "sundry costs" of $400M.

This assumes of course BBI survives, which I consider it will do so long as it realises assets in the short term.

To summarise at a high level you can stress test the unit price for whatever scenario you chose and get an idea of the impact of these on the unit price.

Cheers


----------



## banska bystrica (7 March 2009)

drsmith said:


> I wonder what proportion of BBI's units are actually on the accounts of institutional share holders.




Not many instos own BBI but a large percentage of BEPPA are owned by instos.
The instos may just be prepared to dump all their BEPPAs at 2c to "clean their books".


----------



## boff (10 March 2009)

I see on the news today that BBI has hired Royal Bank of Scotland and Dresdner Kleinwort to sell UK ports operator PD Ports (as reported in the Australian).
Off the back of that the share price drops another 15%. Perhaps the market thinks that BBI is preparing to wind itself up?
On the other hand the consensus seems to be that if BBI is able to survive the next year or two we'll come up smelling of roses. Isn't the ports operation one of it's better assets though?


----------



## BearCuban12 (10 March 2009)

BOFF - that is not the reason for the drop today - have a look at their announcements - it is about the SPARCS conversion


----------



## boff (10 March 2009)

sorry, you're quite right. I've just read it, has the price dropped due to an expected dilution of shares? Or because BBI may be paying out a load of cash?


----------



## banska bystrica (10 March 2009)

The potential dilution to BBI holders is self evident and explains why the share price has fallen today.
I would doubt SPARCS holders would elect to convert to BBI however, the company's hand may have been forced by the banks here.


----------



## YELNATS (10 March 2009)

banska bystrica said:


> BearCuban,
> SPARCS is not an issue. They already have the cash to take care of that. Look at the cash on hand at Dec 31, 2008. $300M. SPARCS is not an issue....only in the mind of dargie. People are jumping at shadows.






banska bystrica said:


> The potential dilution to BBI holders is self evident and explains why the share price has fallen today.
> I would doubt SPARCS holders would elect to convert to BBI however, the company's hand may have been forced by the banks here.




Hi Banksa, as a holder of both BBI and BEPPA, I am always interested in your analysis. If SPARCS is not an issue, what could be the effect of today's director's decision on SPARCS have on the long term future of BBI/BEPPA.

Is it time to do a rethink?

Many thanks.


----------



## banska bystrica (10 March 2009)

Hi Yelnats,

SPARCS is now an issue for the reason I gave above. Whilst BBI has enough cash to pay SPARCS holders in cash, they are not doing this. Therefore, we can only assume a directive has come from BBI's bankers to use all free cash to pay off corporate debt.
It reinforces my view that BEPPA is by far the preferred exposure in this play.
I continue to buy BEPPA, however I did buy a very small parcel of BBI at 3.1c after the announcement this morning as I thought it was an over-reaction. 

Ironically, if SPARCS holders all decided to convert to BBI, this would smash the BBI price but would be beneficial to BEPPA holders as dilution is not a concern if you are holding BEPPA. SPARCS rank equally with BEPPA so any SPARCS holders that convert to BBI give up their preferred status.


----------



## mark_au (10 March 2009)

banska bystrica said:


> Hi Yelnats,
> 
> SPARCS is now an issue for the reason I gave above. Whilst BBI has enough cash to pay SPARCS holders in cash, they are not doing this. Therefore, we can only assume a directive has come from BBI's bankers to use all free cash to pay off corporate debt.
> It reinforces my view that BEPPA is by far the preferred exposure in this play.
> ...




Thanks for the insight BB, this is a very interesting scenario... Perhaps time for me to consider selling BBI for BEPPA


----------



## banska bystrica (10 March 2009)

mark_au,

Now more than ever, BEPPA is the stock to be in. The banks are calling the shots and they do not give one iota about dilution to BBI holders.
Imagine what happens in 2012 assuming the BBI share price is still in the toilet?


----------



## hardyakka (10 March 2009)

banska bystrica said:


> mark_au,
> 
> Now more than ever, BEPPA is the stock to be in. The banks are calling the shots and they do not give one iota about dilution to BBI holders.
> Imagine what happens in 2012 assuming the BBI share price is still in the toilet?




I have noted a few comments about the "banks calling the shots" or similar. 

Lets consider a purely hypothetical situation. 
Banks, as sources of finance, are critical to a Responsible Entity (RE) and necessary in the operation of a registered scheme such as BBI. Now as I understand it the RE is not in breach of any lending covenants etc, although it is sailing very close to the wind.

If the RE was allowing the banks to run the business in their interests and considerating BBI is not under any form of formal management then the RE would likely be in breach of its obligations under Corporations Act s601FC, this states as follows (important sections only noted with key sections underlined):

In exercising its powers and carrying out its duties, the responsible entity of a registered scheme must:
(a) act honestly; and
(b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the responsible entity's position; and
(c) act in the best interests of the members and, if there is a conflict between the members' interests and its own interests, give priority to the members' interests; and
(d) treat the members who hold interests of the same class equally and members who hold interests of different classes fairly; and
(e) not make use of information acquired through being the responsible entity in order to:
    (i) gain an improper advantage for itself or another person; or 
    (ii) cause detriment to the members of the scheme; and 
(f) ensure that the scheme's constitution meets the requirements of sections 601GA and 601GB; and
(j) ensure that the scheme property is valued at regular intervals appropriate to the nature of the property; and
(k) ensure that all payments out of the scheme property are made in accordance with the scheme's constitution and this Act; and
(l) report to ASIC any breach of this Act that:
    (i) relates to the scheme; and 
    (ii) has had, or is likely to have, a materially adverse effect on the interests of members; 
as soon as practicable after it becomes aware of the breach; and
(m) carry out or comply with any other duty, not inconsistent with this Act, that is conferred on the responsible entity by the scheme's constitution.

Also the directors of an RE are jointly and personally responsible for ensuring an Australian Financial Services licensees compliance with the financial services laws, which includes key sections of the Corps Act.

If an RE ever put the interests of a service provider or financier before those of members and this was done other than in the best interests of members then the RE would have all sorts of problems. And we havent even started looking at the obligations under the Constitution.

All this of course is purely hypothetical as I am sure such a situation would never arise.

I hold BEPPA only

Cheers


----------



## banska bystrica (10 March 2009)

Hardyakka,

Do you see today's announcement (with attached potential dilution scenarios) as a ploy by BBI to entice SPARCS holders to accept the new reset terms rather than convert to BBI?

Cheers.


----------



## hardyakka (11 March 2009)

banska bystrica said:


> Hardyakka,
> 
> Do you see today's announcement (with attached potential dilution scenarios) as a ploy by BBI to entice SPARCS holders to accept the new reset terms rather than convert to BBI?
> 
> Cheers.




BB,
I noted the very careful wording of the announcement. The wording was non-committal and gave the directors the scope to change their minds, if they did so they would not be in breach of the listing rules. An "intention" is by its very definition non-binding. So to answer your question I think you are spot on. 
The wild card here is what is the situation of individual SPARCS investors. I think it very hard to predict an outcome because it is not only a case of receiving BBI securities. Some may want to receive these and get out on the basis that some cash plus a tax loss is better than nothing.
Cheers


----------



## Viva_Las_Vegas (12 March 2009)

Hi Guys,

As a holder of BBI shares I am following your comments. However I have no idea what a BEPPA holding is. How is it different to a BBI share and where is it listed?

Cheers


----------



## Tysonboss1 (12 March 2009)

Viva_Las_Vegas said:


> Hi Guys,
> 
> As a holder of BBI shares I am following your comments. However I have no idea what a BEPPA holding is. How is it different to a BBI share and where is it listed?
> 
> Cheers




Beppa is a prefrence share. Basically as part of funding the alinta take over BBI paid alinta and agl share holders partly by giving them Beppa shares which are kind of like an IOU ( I owe you ).

each beppa share has a face value of $1, which means that BBI has a debt to the beppa share holder of $1 for every Beppa share. BBI must pay interest to the Beppa share holder based on the $1 face value until they have repayed the $1 debt in by either paying them out in cash or giving them $1 worth of BBI shares.

there is a little more to it also but BB should beable to fill in the gaps I have missed.


----------



## Viva_Las_Vegas (13 March 2009)

Your explanation has set me straight! Thanks for taking the time. Obviously i still have a lot to learn.


----------



## mark_au (13 March 2009)

Viva_Las_Vegas said:


> Your explanation has set me straight! Thanks for taking the time. Obviously i still have a lot to learn.





Gday

we all do in this current environment ;-)

The BEPPA thing isn't immediately obvious as there is no information on comsec regarding it, you can enter the code and get trade info but no announcements/analysis etc  so you need to know that BBI is the "parent company"  so to speak... very confusing unless you've followed the whole BBI thread here , which i recommend you do, its a very interesting read with lots of great analysis and opinions


----------



## deano9801 (13 March 2009)

Babcock & Brown has been placed into voluntary administration 

http://www.news.com.au/business/story/0,27753,25180768-462,00.html

I'm thinking this is a good time to buy because of this paragrah..."The appointment of administrators was not expected to have an impact on parent company Babcock & Brown International (BBI)"

Any comments appreciated.

Dean.


----------



## random (13 March 2009)

BB,
With the receivers appointed to BNB now, does this terminate all payments now and in the future for management fees to BNB from BBI?


----------



## boff (13 March 2009)

deano9801 said:


> Babcock & Brown has been placed into voluntary administration
> 
> I'm thinking this is a good time to buy because of this paragrah..."The appointment of administrators was not expected to have an impact on parent company Babcock & Brown International (BBI)"
> 
> Any comments appreciated.




Dean - Babcock & Brown International is not Babcock & Brown Infrastructure !! Thank god!
Not withstanding, I think it's good that the whole BNB mess is finally drawing to a close. I've had close on $200k evaporate because of that. Now perhaps the (ex)satellites that are left that represent good value will start to shine.....


----------



## random (13 March 2009)

Sorry for previous post.
I meant to say voluntary administrators being appointed - not receivers.
My mistake.


----------



## deano9801 (13 March 2009)

oh yer - sorry - didn't read it properly! Regardless how do you think this will affect BBI stock in the short term i.e next few weeks?


----------



## Tysonboss1 (13 March 2009)

Hopefully we can fully cut the cord with a name change and re branding.

anyone know if this is likly.


----------



## roland (13 March 2009)

From Comsec's Insight today:

*Babcock & Brown Infrastructure: A bank + buyers market*
Last Traded: $0.03
Market Cap: $71,040T
Sector: Utilities Summary of report dated 05/03/09
*ACCUMULATE / MARKET PERFORM*
*Valuation: $0.54*

What’s new? The vulnerable position of BBI couldn’t be better exemplified by the circumstances surrounding the sale of a 58% stake in Powerco (NZ) where:

- *Buyer leverage:* The buyer (QIC) was able to leverage a significantly better deal when negotiating completion of the sale with BBI (the effective price was 9% lower compared to when the transaction was announced in November).

-  *Bank leverage:* The banking syndicates behind BBI‟s corporate debt imposed new requirements on BBI including a cash sweep in addition to a ~200bps increase to the debt margins until a stable investment grade credit rating is obtained.

*Significant asset sales required *
We estimate that BBI needs to repay somewhere between $700-$1,000m in corporate debt to improve ICRs to at least >2.0X by FY11 and achieve an investment grade corporate credit rating. 

The amount of corporate debt needed to be repaid and the impact on BBI’s credit metrics will ultimately depend on the sale prices received but also the mix of asset sales given their varying cash flow profiles. If we assume BBI sells 49% in DBCT, 49% in PD Ports and sells down to a 25% interest in Euroports at CommSec DCF valuations progressively over the next 18 months, BBI will not reach an ICR >2.0X until FY11. 

Given asset sales are likely to be increasingly difficult, and that credit agencies will want to see a sustainable set of credit metrics, an upgrade to investment grade of BBI’s corporate debt is unlikely to occur until well into FY11 and possibly FY12. 

BBI must refinance a $177m (£85m) corporate debt facility in February 2010. Asset sales must therefore be completed by this date as BBI is likely to have difficulty in refinancing this facility. BBI has very significant FY10 refinance task as it must refinance a total of ~$1b asset level debt and the corporate facility. 

BBI’s banking syndicate clearly wouldn’t want to see BBI fail or end up in a position where it is unable to retain the necessary management team to negotiate and execute on asset sales. But equally the banks have an incentive (and ability) to further increase debt margins when subsequent asset sales are conducted further hindering BBI’s ability to achieve an investment grade corporate credit rating and commence paying distributions to equity.

*Investment thesis* 

In light of BBI’s current position we have downgraded our recommendation to ACCUMULATE / MARKET PERFORM after admittedly being wrong for so long. 

We were previously of the view that BBI would be able to adequately manage its capital issues and that the risks, although significant, were priced in. It is still possible that BBI will find a path to salvation and given the current equity price virtually assumes complete failure, there is no point going completely negative now. 

Still it is hard to escape the fact that BBI faces some enormous challenges ahead if credit markets and the macro environment remain depressed in terms of refinancing its debt, undertaking assets sales and reducing gearing to the appeasement of lenders and credit agencies. 

Our DCF asset based valuation is 54 cents per security (down 80cps) based on updated forecasts from the 1H09 result, the sale of Powerco, and 200bps higher cost of corporate debt. 

We have also increased the cost of equity from 12% to 15% to reflect BBI’s capital risks. We have a 12 month target price of 27cps based on a 50% discount to DCF


----------



## investorpaul (13 March 2009)

What is the quality of the assets that will be left after the sale of the assets mentioned in the commsec report?


----------



## random (13 March 2009)

investorpaul said:


> What is the quality of the assets that will be left after the sale of the assets mentioned in the commsec report?





The *quality *of the assets isn't really the issue after the sales process has been completed to reduce debt investorpaul. All are fine assets and all will produce good income and cash flow in time (given the time).
A more appropriate question would probably be which assets and what percentage of these assets do we continue to own after the sales.
This in turn leads to the forthcoming sp and the question of income generated to issue any dividends which might be distributed.
All a little way off yet however.


----------



## Tysonboss1 (13 March 2009)

investorpaul said:


> What is the quality of the assets that will be left after the sale of the assets mentioned in the commsec report?




they are only selling a % of the assets, so they still retain a stake in them.

such as the powerco sale where they sold 58% so they retain 42%.


----------



## banska bystrica (13 March 2009)

I think the offers for DBCT are very strong. Therefore, I wouldn't be surprised if they sold 100% of it. It would go a long way to clearing their corporate debt and they still have their best asset (NGPL).


----------



## banska bystrica (14 March 2009)

From ABN Amro, Sydney, Australia

BBI has announced the following amendments will be proposed to the reset terms and trust deed of the SPARCS: 

*1.	BBI will not make any cash distributions to either BBI Stapled Securities or the BEPPAS for as long as there are SPARCS on issue - we are of the view that BBI would need to buy back the SPARCS anyway (after it has paid down corporate debt) before it could resume paying distributions or be considered investment grade.* Our discussions with the company indicate that BBI is restricted to buying back the SPARCS on certain dates which are yet to be finalised (and will depend on the outcome of the meeting and vote of SPARCS holders). 

*2.	SPARCS holder will have a right of conversion into BBI stapled securities in the event BBI fails to pay interest on the SPARCS within 20 business days of due date. *

*3.	SPARCS holder will have a right of conversion into BBI stapled securities in the event BEPPAS are exchanged to BBI Stapled Securities as a result of a change to the responsible entity triggering "a change of control" event. *

*4.	The first reset date will be changed from 17 November 2009  to 17 November 2010
Essentially these new terms will rank SPARCS ahead of the BEPPAS.* We don't consider the impact of the Spark reset terms that material in light of the bigger picture, which is the need for asset sales. Without significant asset sales BBI are in no position to resume paying distributions on either the BEPPAS or its stapled securities. With BNB now in voluntary administration we expect the asset sale process will now be entirely handled externally by BBI's advisors - other than that we don't expect any impact to BBI other than a possible change to the Responsible Entity. We understand BBI are still seeking legal advice regarding the issue of new BEPPAS (in the event the Responsible Entity changes from a BNB controlled entity triggering a conversion of the current issued BEPPAS). 

*Resolution of the BEPPAS and asset sales remain key to realising any shareholder value.*


----------



## hardyakka (14 March 2009)

BB,
The whole SPARCS issue had the potential to further seriously damage the credibility of BBI from the investor viewpoint. The way that the BBI Responsible Entity and management have dealt with matter have not only averted this, but they dealt with it in a very positive way.

This clearly demonstrates to the market that there is a competent management team which looks after the interests of investors, even when it has massive pressure from lenders etc.

This sort of competency does not go unnoticed and is another tick in the box of restoring institutional confidence in BBI. 

Cheers


----------



## spartn (14 March 2009)

Hey Guys

Seriously. But for the people that were still holding shares in BNB when it went under. I am sorry, but you have got no one to blame but yourselves.

And I have serious doubt's that BBI will last much longer either. If the Parent Company goes I don't think there will be much hope for the Satellites 

BBI - $8Bil(AUS) in debt + $0 net profit = Voluntary Administration.

Cheers

Spartn

:viking:


----------



## hardyakka (14 March 2009)

spartn said:


> Hey Guys
> 
> Seriously. But for the people that were still holding shares in BNB when it went under. I am sorry, but you have got no one to blame but yourselves.
> 
> ...




Spartn,

Have a read of the audited financials.

http://www.bbinfrastructure.com/media/406567/bbi 2009 interim results.pdf

If you think it is going to go the way of BNB then I would love to take off your hands any BEPPA or BBI you have for say 3.5 cents in the $. BNB noteholders were only offered 1 cent per $100.

Wishful thinking on my part I know


----------



## banska bystrica (15 March 2009)

spartn said:


> If the Parent Company goes I don't think there will be much hope for the Satellites





Have a read of this:

http://imagesignal.comsec.com.au/asxdata/20090313/pdf/00936168.pdf

Now tell me what has BNB going into admin got to do with BBI? Some facts please, not "best guesses".
It's been tremendous picking BBI up for 2.5c in November and now getting BEPPA at under 5c in the dollar. I thank all the uninformed holders who have sold to me and I thank the uninformed media who have continually confused BBI with BNB and BNB's affiliate Babcock and Brown International. 
To those that have confused Babcock and Brown International with Babcock and Brown Infrastructure, I thank you as well. Without all the misinformation and misunderstanding, I would never have got the opportunity to purchase such large quantities of BBI and BEPPA at such trashed prices.

The bottom line is that BBI has massive debt but it also has more than enough free cash flows to service that debt. Because of the fear, panic about the Babcock and Brown empire, we can buy BBI for 4c in the dollar and BEPPA unbelievably at 5c in the dollar. I've never seen a bigger bargain than BEPPA and I've been around equity markets for probably longer than a few of you have been alive.
If you don't understand BBI/BEPPA, then best to buy something else and leave the gems to those that do understand.


----------



## noirua (15 March 2009)

BBI it is said will take up to 3 years for the orderly realization of assets to be completed to reduce debt.

NZ bondholders have moved to setup a struggle between the parent firms administrators and BBI which is effectively under sway of the groups major bankers.
The banks are owed A$3 billion in debt maturing up to 2011.

The recent BBI ASX announcement says that BNB going into administration will not have any IMMEDIATE impact on the entities that manage the day to day business of BBI.


----------



## hardyakka (15 March 2009)

noirua said:


> BBI it is said will take up to 3 years for the orderly realization of assets to be completed to reduce debt.
> 
> NZ bondholders have moved to setup a struggle between the parent firms administrators and BBI which is effectively under sway of the groups major bankers.
> The banks are owed A$3 billion in debt maturing up to 2011.
> ...




In summary the purpose of administration is so that there can be an orderly realisation of assets (BNB assets) to maximise the return to creditors (bearing in mind their respective priorities).

An administrator is bound by existing contractual arrangements and only has further rights to recover monies in certain specific circumstances, for example if a director gave a personal guarantee and tried to quarantine his liability by transferring personal assets to a spouse or trust within the previous 12 months or payment of a bonus when the company was insolvent (as was the case with $2M with Storm).

The primary BNB assets that may affect BBI are BNB's 8% holding in BBI and to a much lesser extent the management agreement. BBI owes BNB zilch by way of debt.

In both the above the administrator has no more rights than any other unitholder and may not exercise any powers that BNB does not already have in the management agreement. My analysis of the management agreement summary previously was administration constitutes a management agreement termination event. here BBI is in the position of strength.

In summary the administration of BNB is a massive benefit for BBI and talk of a "fight" between BNB and BBI is incorrect as BNB basically has no rights or cause upon which to base such

Cheers


----------



## Viva_Las_Vegas (16 March 2009)

Viva_Las_Vegas said:


> Your explanation has set me straight! Thanks for taking the time. Obviously i still have a lot to learn.




OK, now I am sort of getting this.
So currently those BEPPA "shares" selling for around the $0.05 mark, means they have a $1 paper value, being sold cheap by people thinking they'll never see that dollar right?
Now I have another question......
Does this "I owe you" BEPPA stock/share have an expiry date? Can BBI call for money from BEPPA holders as in the example of the QLD guy buying 10, 000 units of something for $0.05, later finding out he then has to pay an additional $1 per unit?
Sorry for the stupid sounding questions, I just don't want to catch myself out like I did by buying BNB.
Seeing all the interest in BEPPA certainly gets me interested in it.

Thanks again.


----------



## hardyakka (16 March 2009)

Viva_Las_Vegas said:


> OK, now I am sort of getting this.
> So currently those BEPPA "shares" selling for around the $0.05 mark, means they have a $1 paper value, being sold cheap by people thinking they'll never see that dollar right?
> Now I have another question......
> Does this "I owe you" BEPPA stock/share have an expiry date? Can BBI call for money from BEPPA holders as in the example of the QLD guy buying 10, 000 units of something for $0.05, later finding out he then has to pay an additional $1 per unit?
> ...




There will be 2 components to the value of BEPPA, the $1 per convertible note and 20 cents, this being interest from Dec 2008 to Dec 2012 on the assumption it is unpaid by Dec 2012. So the value is $1.20.

BBI has net assets of $2.4 billion, this is AFTER recording a liability for the amount payable to BEPPA holders. BEPPA holders must be paid before BBI unit holders, so in effect the $2.4b is like a safety cushion. This assumes that assets fetch at least book value, in the case of PowerCo sold a few months ago the sale price was about 10% above book, other asset sales are likely (very likely IMO) to be at least comparable.

There is no additional amounts payable on BEPPA, they are priced low because the market is expecting them to go bust. I do not share this view and feel sheep follow sheep, but you must form your own view.

The type of units that you mention are called "partly paid" units  and subject to a call. You can always tell these by the ASX code, they normally have a  5 letter code, the last 2 letters being CA, indicating a call is payable.

Always do your own research, here is the web site for BEPPA.

http://www.bbinfrastructure.com/bbi-investor-information/bbi-eps-ltd.aspx

Cheers


----------



## Viva_Las_Vegas (16 March 2009)

hardyakka said:


> There will be 2 components to the value of BEPPA, the $1 per convertible note and 20 cents, this being interest from Dec 2008 to Dec 2012 on the assumption it is unpaid by Dec 2012. So the value is $1.20.
> 
> BBI has net assets of $2.4 billion, this is AFTER recording a liability for the amount payable to BEPPA holders. BEPPA holders must be paid before BBI unit holders, so in effect the $2.4b is like a safety cushion. This assumes that assets fetch at least book value, in the case of PowerCo sold a few months ago the sale price was about 10% above book, other asset sales are likely (very likely IMO) to be at least comparable.
> 
> ...







Thanks Hardyaka!!!!

Awesome explanation, thanks heaps.
I sure hope BBI doesn't go bust, I've lost a little on BNB and don't want to repeat my mistakes. I'll do my research and decide on what to do!

Cheers


----------



## banska bystrica (17 March 2009)

noirua said:


> BBI it is said will take up to 3 years for the orderly realization of assets to be completed to reduce debt.
> 
> NZ bondholders have moved to setup a struggle between the parent firms administrators and BBI which is effectively under sway of the groups major bankers.
> The banks are owed A$3 billion in debt maturing up to 2011.




Are you sure you are not confusing Babcock and Brown International with Babcock and Brown Infrastructure?
Where have Babcock and Brown Infrastructure (BBI) ever said it will take up to three years for the ordely realization of assets?


----------



## Tysonboss1 (17 March 2009)

Viva_Las_Vegas said:


> Sorry for the stupid sounding questions, )




There's no such thing as a stupid question, most likly there are 50 other people wondering the same thing but didn't want to say anything.


----------



## banska bystrica (17 March 2009)

No questions are stupid. That's what a forum is about. Sharing knowledge.
By the way, I don't expect the share price to do much whilst Deutche Bank are dumping millions of BBI and BEPPA.


----------



## alphaman (18 March 2009)

banska bystrica said:


> I don't expect the share price to do much whilst Deutche Bank are dumping millions of BBI and BEPPA.



ASX's disclosure rules are pretty slack when it comes to hybrids (actually probably slack in general). How do you know DB is also dumping BEPPA?


----------



## banska bystrica (19 March 2009)

I look at the Top 20 list of BEPPA every fortnight starting Jan 1. It is not available free of charge but you can get a copy sent by the BBI share registry (Link Market Services) for a small cost.


----------



## select (19 March 2009)

BB,

FCF = net earnings + depreciation - maintenance capex.

Just ask Warren Buffet if you don't believe it.

I hope you have learnt something.


----------



## banska bystrica (19 March 2009)

select said:


> BB,
> 
> FCF = net earnings + depreciation - maintenance capex.




I posted this: "FCF = Net Income plus amortisation/depreciation minus capital expenditure."

So what's your point select? It appears as though my formula is identical to yours.


----------



## select (19 March 2009)

BB,

That's where I am confused. More simply, FCF is Operating Cash Flow - Capital Expenditure - Acquisitions.

It's great that you can quote what the FCF equation is but it doesn't appear that you are using it. You have been stating that BBI has a FCF of approx $280 million pa and I was wondering how you arrived at this figure. It looks to me that you have used the 6 month Operating Cash Flow of $140 million and multiplied it by 2. But this isn't correct is it?

Thanks.


----------



## alphaman (19 March 2009)

banska bystrica said:


> you can get a copy sent by the BBI share registry (Link Market Services) for a small cost.



That's interesting, I didn't realise such services are available. Thanks for the tip, might come in handy one day.


----------



## alphaman (19 March 2009)

select said:


> That's where I am confused. More simply, FCF is Operating Cash Flow - Capital Expenditure - Acquisitions.



That's the most common definition of FCF, but accounting standards do not actually define FCF (it's not on the cash flow statement), so BBI has been using an earnings based definition, which makes its referral of free "cash flows" a bit of a misnomer. 

Using the cash flow definition of FCF, normally you want to see very positive operating cash flows, so that after investing cash flows (usually negative because the firm wants to spend on capex), the firm still has cash left to pay creditors and shareholders. In BBI's case, it is relying on asset sales to generate FCF. Obviously that's not how a business is normally run, but banks are calling the shots now.


----------



## select (19 March 2009)

Alphaman,

Yes FCF is rarely reported but I would really like BB to tell us what BBI's free cash flow was in the 6 months to Dec 31.

It's clear that it wasn't $140 million as he has claimed.

Is it closer to $6 million?

BBI is 4c for a reason.


----------



## banska bystrica (19 March 2009)

select said:


> Alphaman,
> 
> Yes FCF is rarely reported but I would really like BB to tell us what BBI's free cash flow was in the 6 months to Dec 31.
> 
> ...




Firstly, when did I say the FCF was $140M? Was that statement made prior to or after the half yearly results were announced?

Secondly, BBI is 4c because the market is shyte scared about any stock with lots of debt. 4c is a result of instos bailing out big time. See latest Deutche Bank announcement. Big instos do not care about fundamentals or price. When they decide to exit, they just exit. If you honestly think 4c is a fair value price, then that's your call. I am long the stock because I think 4c is an oversold undervalued price. Therefore, it's horses for courses.
In November, I loaded up at 3c and below. The stock rallied 400% within 6 weeks. Please tell when the "market" was efficient. At 3c in November, or 14c in January? The market is all over the place, hence the opportunity for those who recognize value.


----------



## random (19 March 2009)

Yes BBI has substantial debt.
Yes BBI has to sell assets and yes the banks have put a "top up" on the interest rate for the corporate debt.
None of this is groundbreaking news!

Management of BBI are well aware of this and are conducting their own show with no misaprehension about their true position.
I say this because some keep saying that the shots are being called by the banks..... well i disagree, shots are not being called by the banks. Why exagerate the situation and make it into something it is not. The current management would be doing exactly what they are doing now if the banks wern't being banks. 

Why is it 4c?
A large part is because Deutch have their own problems and they are not insignificant problems.
The want out and they want to mop up. They want out now. The decision has been made. The fact that they lose is of little concern to them. They want to rid themselves of as many bad investments as possible at this time to have a clean set of books.
Small investors get rattled and bail out taking it further down the slippery slope. A real shame.

When Deutch have finished it will be interesting to see what the administrators of BNB do with their shareholding in BBI.
Will they hold or will they sell? 
Yes, could be more negative vibes.

None of this does the sp any good right now sure, its just part of the process we have to go through.
Most on this forum have no expectation of an early windfall but are looking down the road.

Cheers


----------



## select (19 March 2009)

You have been claiming BBI has FCF of $280 million (you have obviously taken the HY $140 million and multiplied it by 2 to create a FY figure) and this claim has persisted post the half year accounts being released.

It looks like you made a simple but tragic mistake with your research and you understood Operating Cash Flow to be Free Cash Flow.

How much longer will the creditors allow BBI to continue to fund their capex requirements with debt when the FCF is so very poor?


----------



## banska bystrica (19 March 2009)

select said:


> You have been claiming BBI has FCF of $280 million (you have obviously taken the HY $140 million and multiplied it by 2 to create a FY figure) and this claim has persisted post the half year accounts being released.




Please direct me to the posts since the first half result where I have claimed BBI has FCF of $280 million.


----------



## banska bystrica (19 March 2009)

select said:


> You have been claiming BBI has FCF of $280 million (you have obviously taken the HY $140 million and multiplied it by 2 to create a FY figure) and this claim has persisted post the half year accounts being released.




I have just looked back through every post I have made since the first half result and *NOT ONCE* have I "been claiming BBI has FCF of $280 million".

You stated that this claim _"has persisted post the half year accounts being released"_. That is a complete fabrication. Please apologize immediately and state your real intentions on this forum.


----------



## skc (19 March 2009)

banska bystrica said:


> I have just looked back through every post I have made since the first half result and *NOT ONCE* have I "been claiming BBI has FCF of $280 million".
> 
> You stated that this claim _"has persisted post the half year accounts being released"_. That is a complete fabrication. Please apologize immediately and state your real intentions on this forum.






banska bystrica said:


> BBI make plenty. They make about 10c per share FCF annually. Obviously there will no dividend for the next year because they are paying down debt.




FWIW, this is the only mention (4 Mar) I can find regarding FCF by BB since the interim result.  Based on 10c per share, and total share of ~2376m, that's ~$237.6m.

Not really taking any sides here - you guys go ahead and duel it out. I enjoy the debate here and one can learn a lot about how to analyse a company's fundamental. 

BB, out of interest, do you build your own model on BBI's financials? If so, what do you use for discount rate?


----------



## alphaman (19 March 2009)

banska bystrica said:


> The stock rallied 400% within 6 weeks. Please tell when the "market" was efficient.



3c to 14c is exciting percentage change for traders, but fundamentally given the size of BBI's debt relative to market cap, the change in BBI's toal enterprise value is actually almost negligible. So I would not really use that to disprove market efficiency.

Even a more substantial change would not necessarily disprove market efficiencty, which is based on "currently available information". If Kevin Rudd announces tomorrow that he will give BBI $3 billion for free, and BBI jumps, does that mean people were wrong to be cautious about BBI today? No, it just means the shareholders are lucky, but no one would have reasonably priced in Rudd's gift.

By the way I'm not saying market is always right, just saying price changes alone do not disprove market efficiency.


----------



## TheAbyss (19 March 2009)

The below actually states FCF of $300m or 2376m shares at 12.5c $297m.

Either way BBI may come out on trumps. Their chances are a lot greater than BNB that is for certain.





banska bystrica said:


> There are really two methods to assign fair value to a utility stock like BBI. I have looked at “NAV” using Sum of Parts valuation and FCF (free cash flow) and either method confirms BBI is seriously undervalued.
> 
> Net Asset Valuation (NAV) is approximately $1.30 based on an average EBITDA multiple for their assets of 11. This is supported by recent asset sales, namely Powerco and Euroports.
> 
> ...


----------



## banska bystrica (19 March 2009)

The BBI half yearly was released late Feb. On what date did I make that post you refer to?
"select" has told an outright porky pie and hasn't got the guts to even apologize.


----------



## select (19 March 2009)

banska bystrica said:


> I have just looked back through every post I have made since the first half result and *NOT ONCE* have I "been claiming BBI has FCF of $280 million".
> 
> You stated that this claim _"has persisted post the half year accounts being released"_. That is a complete fabrication. Please apologize immediately and state your real intentions on this forum.






banska bystrica said:


> "Charts don't lie" someone said. Sure, every chart is perfect in hindsight. What did Burns Philps chart say at 1c? Sell? What did the SCS chart say when AMP sold out at 7c after buying at 50c? Sell? Well that stock hit $1+ years later.
> I am not interested in what a chart says or what an analyst from a poor outfit like ML says. I am not interested in what the stock price is doing today or next week or next month. I am sure I have done hundreds of hours more homework than all those analysts combined. Doesn't mean I'm right but doesn't mean they are right either.
> 
> Talk of BBI going bust is fanciful. Where's the evidence?
> ...




This could drag on forever. I am simply wanting to know how you arrive at all the different FCF's that you post.

One post made prior to the half year result says $300 million, another post made after the half year result says 10c per share ($240 million), another says $200 million.

What was BBI's FCF in the first half to Decembr? Was it approx $6 million?

Why is BBI debt funding their capex requirements if their FCF is as good as you suggest it is?

Thanks


----------



## banska bystrica (19 March 2009)

Please direct me to the posts since the first half result where I have claimed BBI has FCF of $280 million.


----------



## random (19 March 2009)

Banska,
Do you mind listing here the top 4 shareholders and % owned of BBI and BEPPA as per your latest "link market services" report?


----------



## banska bystrica (19 March 2009)

random said:


> Banska,
> Do you mind listing here the top 4 shareholders and % owned of BBI and BEPPA as per your latest "link market services" report?




random,
I would normally have no problem doing that BUT...... think about it. I pay for the listing from Link and if I posted it on here for free, people like "select" get to see that info for nix. Some here have attacked me with porky pies and I honestly do not feel inclined to "share" something I have paid for with those people.


----------



## random (19 March 2009)

Fair enough.
I probably would have said the same myself because of the fear i would be asked every 5 minutes on top of your listed reason.


----------



## hardyakka (19 March 2009)

select said:


> This could drag on forever. I am simply wanting to know how you arrive at all the different FCF's that you post.
> 
> One post made prior to the half year result says $300 million, another post made after the half year result says 10c per share ($240 million), another says $200 million.
> 
> ...




The following numbers are available from the latest Investor Pack


Operating cash flow before organic growth capex
123.2 Actual 6 months 31/12/07
155.8 Actual6 months 30/06/08
*279.0 Actual12 months 30/06/08
141.1 Actual 6 months 31/12/08*
BBI’s proportionate share of organic growth capex
(67.4) Actual 6 months 31/12/07
(97.3) Actual6 months 30/06/08
(164.7) Actual12 months 30/06/08
(135.0) Actual 6 months 31/12/08
BBI’s proportionate share of debt funding of organic growth capex
53.9 Actual 6 months 31/12/07
58.8 Actual6 months 30/06/08 
112.7 Actual12 months 30/06/08
64.1 Actual 6 months 31/12/08
Operating cash flow post equity funding organic growth
109.7 Actual 6 months 31/12/07
117.3 Actual6 months 30/06/08
*227.0 Actual12 months 30/06/08
70.2 Actual 6 months 31/12/08*

It took me 5 minutes to find that information. 

Porky pies... death spirals..what next...I havent laughed so hard in a while. I think you guys need to kiss and make up...I need a beer...

BB, your research and commentary is appreciated

Cheers

NB/ Thought for the day *"Man who try to pick bottom get dirty finger"  * (can't remember who I pinched that from)


----------



## select (19 March 2009)

hardyakka said:


> The following numbers are available from the latest Investor Pack
> 
> 
> Operating cash flow before organic growth capex
> ...




Hardyakka,

Thanks for the contribution but the numbers you have provided aren't Free Cash Flow, they are Operating Cash Flow figures.

So think the 70.2 million for the half year to December that you have quoted includes $64.1 million of debt funding for the "organic growth capex". 

The Operating Cash Flow was $141.1 million LESS organic growth capex of $135 million.

Thus, FCF = $6.1 million

As you can see BBI have debt funded their share of capex.

Am i wrong?

If I am right, BBI is in a very dark place.


----------



## hardyakka (19 March 2009)

select said:


> Hardyakka,
> 
> Thanks for the contribution but the numbers you have provided aren't Free Cash Flow, they are Operating Cash Flow figures.
> 
> ...




I have had a quick look and see where your numbers are coming from, however there are two one off cash flows which are not currently recurring items as distributions are now suspended, these are:

a) Distributions paid to Stapled Security Holders     59393
b) Dividends paid to minority interests                    5170
Total                                                              64563

So your $6.1M + $64.6M = $70.7M

So you can see why I am happy with the $70M, what do you think?

Cheers


----------



## skc (19 March 2009)

select said:


> Hardyakka,
> 
> Thanks for the contribution but the numbers you have provided aren't Free Cash Flow, they are Operating Cash Flow figures.
> 
> ...




Hmmm.. what's the definition of "organic growth capex"? I have never heard of the term being used before. 

FCF should include maintenance capex, as it is money that needs to be plowed back into the business for it to keep earning the profit. But for growth capex, if they add new capacity to earn future profits, then it may be OK to omit in the definite of "FCF from operations".

Afterall, there are many different types of FCF and it depends on what purpose you are using it for.


----------



## select (19 March 2009)

hardyakka said:


> I have had a quick look and see where your numbers are coming from, however there are two one off cash flows which are not currently recurring items as distributions are now suspended, these are:
> 
> a) Distributions paid to Stapled Security Holders     59393
> b) Dividends paid to minority interests                    5170
> ...




Let me get this right. You are saying that BBI's FCF in the half year ($6.1 million) + the distributions that weren't paid (I'm quoting YOU $64.6 million) = HAPPY?

I must be on another planet.

The distributions that weren't paid in the half year to December actually show how fragile BBI's balance sheet is. It's not something to rejoice. 

Dividends come from Free Cash Flow and NO didvidends were paid and FCF was a mesely $6.1 million.

If $64.6 million had have been distributed, $58.5 million would have been DEBT funded ($6.1 - $64.6) 

Here is what BBI's distribution policy  is,

Distribution Approach
In August 2008 BBI adopted a new capital management policy which included a new distribution payout policy. It is expected that the policy will apply to any distributions in the future. The BBI Distribution policy is as follows:
•
Distributions are to be funded from free cash flow (FCF) (broadly defined as EBITDA less net interest cash flows, cash tax and recurring capital expenditure);
•
Funding distributions from FCF is a more prudent and sustainable approach to capital management and enables greater liquidity in the short term; and
•
BBI directors will take into consideration any significant non-recurring items in respect of either earnings or capital expenditure. This includes the equity component of organic growth capex (historically funded through equity raising initiatives e.g. DRP, SPP, entitlements etc).


----------



## banska bystrica (19 March 2009)

Geez some like stating the obvious. Of course BBI's balance sheet is fragile. If it were robust, do you think the shares would be going for 3.8c? 
They have a heap of debt and they need to sell assets. That's why the share price is in the toilet. Please tell us something we don't know.


----------



## select (19 March 2009)

banska bystrica said:


> Geez some like stating the obvious. Of course BBI's balance sheet is fragile. If it were robust, do you think the shares would be going for 3.8c?
> They have a heap of debt and they need to sell assets. That's why the share price is in the toilet. Please tell us something we don't know.




BB,

You can have a dig at me all you like but the evidence suggests you don't understand FCF and perhaps you need to be a bit more open minded and less focussed on defending your investment position.

You weren't even prepared to detail the top 4 shareholders because you had paid for it and didn't want to share the info with the person that asked yet you are more than happy to spend 12 hours of the day flogging BBI "research" to anybody that will listen. I can't get my head around that.

Tell you something you don't know? Well "On a look through basis" on March 2you certainly didn't think BBI's balance sheet was fragile. This is what you had to say.

Talk of BBI going bust is fanciful. Where's the evidence?
NO asset impairment.
NO breach of any debt covenants.
EBITDA up 5% in a savage bear market.
On a look through basis, they are still generating about $200M free cash flow per year. Even without an asset sale, they can pay back half their corporate debt by 2011/12. What's all the panic about?
I'll tell you the big difference between BBI and CNP, BNB, AFG, OZL etc.
1. NO asset impairments because of the quality of assets withstanding this deep global recession and
2. The underlying business is cash flow positive.


----------



## banska bystrica (20 March 2009)

select,
You cannot even admit that you lied. End of story.
Everything I said about BBI was spot on. What is all the panic about? Just because the BS is fragile doesn't mean they are not a great buy at less than 4c.
You have no concept of value. Risk /reward good buddy. If you don't want risk go and buy WOW.


----------



## hardyakka (20 March 2009)

select said:


> Let me get this right. You are saying that BBI's FCF in the half year ($6.1 million) + the distributions that weren't paid (I'm quoting YOU $64.6 million) = HAPPY?
> 
> I must be on another planet.
> 
> ...




Select,

Let me put this more simply so that you understand and then you will appreciate your error.

The distributions referred to above WERE paid out of cashflow during the 6 months to 31-12-08. Try looking at the cashflow statement on page 14 of the financials. 

Distributions are suspended, effectively non-recurring, so will not in the immediate future be a deduction against future cashflows. 

So net cash $6.1M (your figure) add back distributions which are now suspended  of $64.6M =$70.7M.

If the second half of FY09 performed exactly the same in all respects as the first half cashflow would be as per above. 

Cheers


----------



## banska bystrica (20 March 2009)

hardyakka said:


> If the second half of FY09 performed exactly the same in all respects as the first half cashflow would be as per above.
> 
> Cheers




Hi HY,
Traditionally, the 2nd half is much stronger for BBI so those numbers would be a minimum.

They are generating 8-10c per share free cash flow on an annualized basis. Things are a bit tight and the balance sheet is stretched but whether that warrants a 96% discount to net asset value is another question. I guess conservative risk intolerant people like select would say 96% is not a big enough discount because he thinks it will probably go to zero.
Remember: Risky stocks don't necessarily mean bad investment. It all depends on the big P........PRICE. 
At 4c, I say screaming buy, at 40c I would say fair value "LONG TERM OUTPERFORM", at 80c I would say take some profits.


----------



## banska bystrica (20 March 2009)

select said:


> BB,
> 
> You can have a dig at me all you like but the evidence suggests you don't understand FCF




On the contrary, you display a very poor understanding of the concept.

Also, why should I share with ungrateful people like yourself something I have paid for. You are kidding. It's all take and no give with people like you. The bell's ringing buddy and no it's not Mr Whippy.


----------



## sinner (20 March 2009)

Hi banksa,

Can you tell those who care about it? I care enough that I went out and scalped $600 on the forex tonight to place a small order on BEPPA in the morning 

Not willing to put any of my own cash into a indebted company but will happily put a free bet on one


----------



## hardyakka (20 March 2009)

select said:


> BB,
> 
> You can have a dig at me all you like but the evidence suggests you don't understand FCF and perhaps you need to be a bit more open minded and less focussed on defending your investment position.
> 
> ...




Select,

If you took the time to read the detailed posts summarising an analysis of the financials at the end of February you would see under "key issues" a comment that BBI was sailing very close to the wind on cashflow of $70M. For an registered scheme such as BBI an amount of $300M is too close to the wind, that is one of many key reasons the price is at 4 cents.

The cashflow is one of many reasons, I am not going to restate these as you can read the above noted posts. On the other side of the ledger there are a lot of pluses in favour of BBI. 

It is an imperfect market and my risk appetite considers this a good risk reward equation. Its very simple, an investment of $100k has the potential to return millions, or you may lose the lot. I have formed my view on the basis of my research.

The Sage of Omaha's comment sums it up nicely for me, it is along the lines of "when most are greedy be fearful, when most are fearful be greedy". Consider this and the market we are in.

If you have any other reasons other than cashflow why you consider BBI a poor investment please post them.

Cheers


----------



## hardyakka (20 March 2009)

banska bystrica said:


> Hi HY,
> Traditionally, the 2nd half is much stronger for BBI so those numbers would be a minimum.
> 
> They are generating 8-10c per share free cash flow on an annualized basis. Things are a bit tight and the balance sheet is stretched but whether that warrants a 96% discount to net asset value is another question. I guess conservative risk intolerant people like select would say 96% is not a big enough discount because he thinks it will probably go to zero.
> ...




BB,

We can look back in history and simply marvel with the benefit of hindsight at the bargains some people got. But nearly always a lot of risk was involved before the event. Will BBI be one of those? No one knows, but you can form a view. 

Based upon my research if a few decent cashflows are generated from asset sales your numbers above seem pretty reasonable, though if BEPPA hit about 70cents I would seek to diversify. That is a problem I would like to have.

A lot of traders are complaining about the short term effect of DB selling down its holding. I think this is great as it is an accumulation opportunity. I am at the stage of having to sell down some of my favourite small caps (including NOD that I acquired at 23 cents) to fund my BEPPA and BBI purchases.

I am looking to now acquire BBI. I  recall a number you once quoted a long while back (which I will not state) I am targeting half that amount split 30/70 BBI/BEPPA.

Either I'll rock up in the Ferrari and we can go for a very expensive lunch, or I will see you down at the soup kitchen, both courtesy of BBI <g>.

Cheers


----------



## banska bystrica (20 March 2009)

hardyakka said:


> "when most are greedy be fearful, when most are fearful be greedy". Consider this and the market we are in.




Spot on HY. The market has never been more fearful probably since 1930. It is this exact fear and people "jumping at shadows" looking for any sort of "risk" that provides those of us with fat bank accounts and high risk tolerances the opportunity.
If BBI goes under, it will not change my life. I have the equivalent of an average house in my city of Brisbane tied up in BBI. If BBI survives the next 12 months, I will eventually be able to buy 10-20 houses from my investment. I cannot think of a better risk/reward scenario. I have looked long and hard across the ASX and cannot find a stock with unimpaired assets trading at a 96% discount to NAV with the quality of assets BBI has.
I can understand how people are afraid of risk and even I will not invest in risky stocks without a high "reward" component attached. That's why PRICE is everything. Without Phil Green selling and these instos exiting without care for price, BBI would perhaps never have got down to these give away levels. Perhaps 20c would have been the bottom and we would still be saying 20c is a trashed price. It's all relative. Whilst BBI has significant risks, I think the "reward" if they survive is well worth the investment at these levels.


----------



## banska bystrica (20 March 2009)

hardyakka said:


> Either I'll rock up in the Ferrari and we can go for a very expensive lunch, or I will see you down at the soup kitchen, both courtesy of BBI <g>.




There's a soup kitchen in South Brisbane I have done a bit of voluntary work for (serving tucker for the homeless). We will either meet there for lunch or perhaps at my favourite restaurant in Budapest which serves the best food you will ever taste. Our destination depends on BBI.


----------



## hardyakka (20 March 2009)

banska bystrica said:


> I have looked long and hard across the ASX and cannot find a stock with unimpaired assets trading at a 96% discount to NAV with the quality of assets BBI has..




BB,
I am in a similar position in Sydney re house etc. I have been doing likewise and have taken a holding of 200,000 units in an interesting entity. Have a look at your email.

Cheers


----------



## nulla nulla (20 March 2009)

Sounds like a mexican stand-off between one party that sees the negatives and one party that sees the positives. 

A couple more positives:
a. they are not in Administration, Receivership or Liquidation;
b. they are not in breach of covenants;
c. they have their funding/refinancing covered, for now; and
d. they are working to reduce debt through the sale of assets in an orderly manner so as to realise value rather than simply unloading at fire sale prices.

Additionaly, if you buy a parcel, whether as a speculation for a short term gain or long term investment, they still send out:

e. the paperwork for tax files numbers, abn numbers etc;
f. the paperwork for your bank account details so they know where to pay dividends; and....wait for it...
g. the booklet on "Distribution Reinvestment Plan Rules.

Now, either someone has a wicked sense of humor or it could be that management of bbi expect to weather this Global Financial Crisis and return to paying dividends?

Time will tell.


----------



## skc (20 March 2009)

nulla nulla said:


> Additionaly, if you buy a parcel, whether as a speculation for a short term gain or long term investment, they still send out:
> 
> e. the paperwork for tax files numbers, abn numbers etc;
> f. the paperwork for your bank account details so they know where to pay dividends; and....wait for it...
> ...




Perhaps I didn't understand your sense of humour, but I guess few will agree that sending out the paperwork is an indication of future dividend! It is simply regulatory requirement and basic service you get when a listed company pays Computershare or Link Market Services to manage their shareholders.


----------



## Viva_Las_Vegas (20 March 2009)

I agree with the last comment. The sending out of correspondence is something they MUST do anyway.
However, this does not put in the negative territory.
I too would like to be a greedy little bastard and make my millions.....will hundreds of thousands would suffice.
I think infrastructure they hold such as ports is a good one, and the point you make at their asset sales being the non "fire sale" type is possibly an indicator that BBI management have time on their hands and are not as desperate as others make out to be.
Quite honestly I am hoping to see them around the 3 cent mark again so i can buy more at cheaper prices.
I'm still not sure about taking the plunge into BEPPA......


----------



## banska bystrica (20 March 2009)

nulla nulla said:


> Sounds like a mexican stand-off between one party that sees the negatives and one party that sees the positives.




That's where I'm different. I see very clearly the negatives but I can be objective and weigh the negatives up against the positives and come to a conclusion that the market has priced in too much "negative noise".
You will notice that most bears only see the negatives and therefore price doesn't play any part. If there is significant risk, they point blank refuse to consider that particular stock worthy of investment regardless of price.

The investors who are petrified of risk cannot understand this concept and that's fine. Just don't expect to ever see them stand out in a crowd. They are more likely to be a solid wage earner comfortable in the fact they have a secure job, pay their mortgage etc etc. That's not me.


----------



## bellenuit (20 March 2009)

banska bystrica said:


> I have looked long and hard across the ASX and cannot find a stock with unimpaired assets trading at a 96% discount to NAV with the quality of assets BBI has.




BB, I would very much appreciate it if you could indicate what your next 2 choices after BBI are. I am invested in BEPPA, but I am looking for other opportunities. I am aware that you have put a lot of time into your research, so I will understand if you do not want to share such information.


----------



## Tysonboss1 (20 March 2009)

Viva_Las_Vegas said:


> I'm still not sure about taking the plunge into BEPPA......




If you are willing to invest in the BBI story over the next few years I think that Beppa has a bit of an advantage over BBI.

the biggest advantage is that if everything goes well you are garanteed of unlocking $1.20 of value per share within 2.5 years.

with BBI you may unlock more than $1.20 per share if they start paying divs and share price recovers, but with no divs till beppa divs are looked after and the possibilty that beppa will cause dilloution to bbi shares if they are still trading at the low end, then it is likly that BBI won't return you $1.20 of value in the same time that Beppa will.


----------



## Viva_Las_Vegas (20 March 2009)

Tysonboss1 said:


> If you are willing to invest in the BBI story over the next few years I think that Beppa has a bit of an advantage over BBI.
> 
> the biggest advantage is that if everything goes well you are garanteed of unlocking $1.20 of value per share within 2.5 years.
> 
> with BBI you may unlock more than $1.20 per share if they start paying divs and share price recovers, but with no divs till beppa divs are looked after and the possibilty that beppa will cause dilloution to bbi shares if they are still trading at the low end, then it is likly that BBI won't return you $1.20 of value in the same time that Beppa will.




Not trying to be a pessimist here, but in regards to the $1.20  in 2.5 years, IS there a possibility that BBI could convert that debt into BBI shares, therefore issuing BEPPA holders with $1.20 worth of BBI shares? Or is there some sort of framework in place to protect the investor, such as BEPPA holders would have to vote for such a thing to take place?


----------



## banska bystrica (20 March 2009)

Viva,
So what if they give BEPPA holders $1.20 worth of BBI shares? $1.20 is a $1.20 whichever way you look at it. It would dilute BBI shareholders but would not affect BEPPA holders. The lower the conversion price the more BBI shares you get for your BEPPA.


----------



## nathanblack (20 March 2009)

But many would want the cash. If too many tried to sell at once it would put a bit of downward pressure on SP. having said that, it wouldnt effect long term holders.


----------



## sinner (20 March 2009)

Hi banska,

Look, don't let (vehement) disagreement stop you from posting your findings. They might even be enough to silence the critics?

We should try and make it a conducive environment for information to be shared, but also remember this is a forum, just like the forums in Sth America or ancient Rome and Greece. One has the right to voice their opinion but should be aware of unavoidable hecklers in the crowd! 

Only time will prove anyone wrong or right in this scenario so there is no hurt voicing your speculation in the meantime.

In another thread someone posted a link where a guy had one the March stock tipping comp for some website (by picking LNC). When they asked what he would do with the prize, he said buy a BEPPA parcel. 

This inspired me so I did the same, went and scalped a few lots on the SP500 and forex last night to buy a 10,001 lot of BEPPA this morning. The risk -$500- is pretty small considering the max reward -$10,000- so we are laying a bet for BBI managing to sell off assets instead of going pop. Even if they only end up returning 10c on the dollar this is still a good "punt".

Seems this has already begun:

Apologies if this has already been posted, I am a newcomer to the thread.
http://www.joc.com/node/410153
*EU Clears European Ports Deal *
March 18 2009


> LONDON — European Union antitrust regulators have cleared a deal giving French and Luxembourg investment funds joint control of one of Europe’s biggest port operators.
> 
> The EU fast tracked approval of the sale by Australia’s Babcock and Brown Infrastructure of a near 30 percent share of its Euroports unit to France’s Antin Infrastructure Partners and BBEIF, a Luxembourg-based investment fund, because it will not impact competition among European ports.
> 
> ...




Oops that was a huge ramble, I only wanted to write a quick post asking if you would update us on your meeting with the instos in regard to a buy.


----------



## YELNATS (20 March 2009)

sinner said:


> Hi banska,
> 
> Look, don't let (vehement) disagreement stop you from posting your findings. They might even be enough to silence the critics?




I'd like to second that, As a BBI/BEPPA holder I'm appreciating and enjoying the robust high-level debate on this thread between BB, HY, Select and others. Keep it up, the thrust and parry, it's all very informative and relevant.


----------



## Viva_Las_Vegas (20 March 2009)

I too am enjoying hearing all of your opinions. I think it is informative and constructive. Having all of these opinions debated helps me in my decision making process.

Yesterday you made refernces to BBI's debt, does the BEPPA $1.20 debt to BEPPA holders make up part of that debt? 

If that is the case then, I think it is a better debt to have than to a bank.


----------



## nathanblack (20 March 2009)

All investments are made according to an individuals risk profile/tolerance and timeframe/goals.

Nobody is claiming BBI is a bluechip investment. If you want that, invest in the big banks. 

BBI does however offer a large upside for long term investor. The beauty of this upside is it has little downside. At most you are losing 5cents. Its up to individual investors to use advisors and own research to determine the prospects of BBI and the likely retun on investment and timeframe.

The first main determining factor is will BBI survive. If NO then will the assets return book value, or above, or less. Then determine the likely return to BBI / BEPPA holders. Could range from 0cents-40cents???

If you research/belief are that BBI survives, it then depends on if you hold BBI or BEPPA. If you hold BBI you must think how long will it take for dividends to be reinstated, what will possible share price be and what time frame will it be to achieve return. 

After asset sales, and debt reduction what will be left ? $0debt? wat assets and wat percentages will remain? wat would be the book value of ther company under the new structure? wat will be the new share price? 

How much will the asset sale effect future income generating?

Also of some concern will be your opinion on how SPARCS and BEPPA will be handled as they could substancially dilute your holding.

Further more if BEPPA/SPARCS were reset in favourable terms to BBI it could result in share price upside. 

The handling of BEPPA is the key to BEPPA holders. Are you holding out on an early rebuy/reset offer? If governance allowed would you accept an offer of say 40cents in a few months time? If you were paid out in 2012 in BBI shares would it bother you?

You can only use financials to determine likely asset values and incomes. Some people may draw different conclusions from the same numbers. Recent announcements regarding SPARCS may offer some guidance on future BEPPA reset.

Put your own value on the shares and buy if the numbers add up to YOU

Personally i think if a $1000 investment can return $20k by 2012 i think its worth the risk for that return. Worse case $0 return in near future or a small return if wound up. At various stages in the asset sale process you may be able to sell out at smaller gains if not in it for the long term. 

Disclosure: I own $1000 BEPPA/ $0BBI. im in it medium term. if the price hit 40cents by years end i would probably sell.


----------



## banska bystrica (21 March 2009)

From Wilson HTM Ltd.

_“VALUATION

Our fully diluted valuation has adjusted to reflect the above EBITDA changes, as well as movements in debt and cash. We have also incorporated the fall in the share price on the potential dilution from BEPPA and SPARCS conversion.

The upside is significant if the conversion of BEPPA and SPARCS can be avoided. The potential dilution is removed in our modeling such that the valuation per unit increases to 74c.”_

Wilsons have been notoriously negative on BBI for a while now.

From ABN Amro, Senior Analyst, Sydney, Australia.

_"EBITDA TABLE: 2011F

Energy Transmission & Distribution:

Powerco $86.1M
IEG 95.7M
CSC 19.7M
NGPL 277.1M
AETD 226.7M

Transport Infrastructure:

*DBCT $241M*
PD Ports 101.2M
Euro Ports 97.7M
Westnet Rail 119.3M

Corporate Fees -36.4M

Total EBITDA $1228.2"_

Now, apply a conservative *12X EBITDA multiple* to DBCT. That gives an Enterprise Value of $2.9Bn or net cash after debt of $1.3Bn. Current corporate debt totals $1.4Bn. Interesting isn't it?
Even the 2009/10 EBITDA for DBCT is $224M which equated to an EV of $2.7Bn.
I think BBI's strategy of keeping tenders open until June 30 is a very astute one. It allows time for competitive price tension. We know there are multiple interested parties and they would all be doing similar number crunching.
A sale of DBCT at these indicative prices would put a rocket up the BBI/BEPPA share prices. I'm not talking a few cents. Surely even the bears can see the upside.
A corporate debt free BBI would justify 30c+ in my opinion as they could use all the future free cash to take care of BEPPA in 2012. 
What do others think?

You can also see that DBCT is not the "jewel in the crown" as the media keep saying. It's a great asset but NGPL is the jewel. I say flog 100% of DBCT, clear the corporate debt and Bob's your uncle.


----------



## hardyakka (21 March 2009)

banska bystrica said:


> Viva,
> So what if they give BEPPA holders $1.20 worth of BBI shares? $1.20 is a $1.20 whichever way you look at it. It would dilute BBI shareholders but would not affect BEPPA holders. The lower the conversion price the more BBI shares you get for your BEPPA.




I have just caught up with the forum after being away a day and there have some great posts. 

I am mainly invested in BEPPAs because I consider them much less risky than BBI with a maximum upside of $1.20 for each BEPPA, currently priced at 5.5cents.

This is because the BBI NTA is about $2.4billion and this is arrived at after provision has been made for full payment of BEPPA ($1) and any accrued interest (which would be 20 cents by 2012).

Because BEPPA has a priority over BBI then technically you could write down BBI by the amount of NTA, ie $2.4 billion and BEPPA would still be paid out in full. This is because the ordinary BBI units bear any equity risk/reward.

The other side of the equation is that if asset sales etc are above book then the BBI ordinary unitholders receive the full benefit of this, BEPPA holders being restricted to a maximum return of $1.20. So the reward side of the risk/reward equation is received only by BBI holders.

The B&B business model using debt etc is stuffed, but they did one thing well, that is acquiring blue chip assets, hence I expects sales prices to exceed book comfortably.

I am looking now to acquire BBI at a suitable price so I have a mix of BBI and less risky BEPPA.

Cheers


----------



## Tysonboss1 (21 March 2009)

Viva_Las_Vegas said:


> Not trying to be a pessimist here, but in regards to the $1.20  in 2.5 years, IS there a possibility that BBI could convert that debt into BBI shares, therefore issuing BEPPA holders with $1.20 worth of BBI shares? Or is there some sort of framework in place to protect the investor, such as BEPPA holders would have to vote for such a thing to take place?




there is a good chance of that, but that is what makes Beppa the better option,

lets look at an example,

say you were tossing up putting $1000 into either Beppa or BBI,... For this example we will assume that by that by 2012 BBI has recovered back to 50cents per share.

the following example shows what would happen if you invested $1000 in either BBI or Beppa.

BBI     - $1000 / $0.05 = 20,000 shares 
Beppa - $1000 / $0.06 = 16,666 shares

In 2012 your holdings would look like this,

BBI     = 20,000 shares x 0.50cents = $10,000

Beppa = 16,666 shares x $1.20 = $19,999 of value / $0.50 per BBI share = 39,998 BBI shares = $19,990.

Offcourse if the BBi shares recover in value back to more that a $1 in that time frame then you may be better holding BBI, however Buying Beppa is kind of like locking in a fixed return no matter what happens to the BBI share price the Beppa share holder will get $1.20 of value per share (not a bad return if you ask me), 

Most Beppa share holders probally hold BBI as well, but  both operate differently, so should be treated differently.

I personally hold both on a 70 / 30 split with Beppa being the large portion.


----------



## Tysonboss1 (21 March 2009)

banska bystrica said:


> You can also see that DBCT is not the "jewel in the crown" as the media keep saying. It's a great asset but NGPL is the jewel. I say flog 100% of DBCT, clear the corporate debt and Bob's your uncle.




Agreed, I would still like to see them hold some stake in DBCT though, 

But yes I see NGPL as a fantastic asset, and there is room for them to expand there holding in the future,


----------



## nathanblack (21 March 2009)

its hard to anticipate future earnings when we dont know what assets and percentages they will still own. the longer they hold onto some the higher earnings will be.

i also favour disposing of one asset to pay off debt and keep the rest of the assets as untouched as possible.

do you think BBI need to eliminate debt or just reduce substancially? a bit of gearing has benefits tax wise and can magnify growth and allow more assets to be retained.


----------



## Tysonboss1 (21 March 2009)

nathanblack said:


> do you think BBI need to eliminate debt or just reduce substancially? a bit of gearing has benefits tax wise and can magnify growth and allow more assets to be retained.




They only have to reduce it to the point where they can regain their investment credit rating.

So the plan is to use all earnings from assets combined with asset sales to reduce this debt to the point where lenders are happy to refinance on favorable terms.

from there hopfully the game will start again with a more conservative plan of paying divs from operating cash flow, continuing to use some of the cash flow to further reduce debt, and eventually start growing through aquistion albeit on much lower LVR's than in the past.

I would be happy to see a 50 / 50 split of earnings into divs / debt repayment become part of the stratergy, with new assets aquired in the future only when they can be bought on 50% lvr's.


----------



## nulla nulla (21 March 2009)

Tysonboss1 said:


> They only have to reduce it to the point where they can regain their investment credit rating.
> 
> So the plan is to use all earnings from assets combined with asset sales to reduce this debt to the point where lenders are happy to refinance on favorable terms.
> 
> ...




In this time of turmoil, I would like to see a conservative approach: 

Optimistically asset sales at prices to realise more than their acquisition costs, with the proceeds from sale being used to retire debt and improve gearing; 
Staff reductions as the wheeling and dealing of acquisition is put on hold;
 Reduction in management fees payable to Babcock and Brown (because, lets face it, they would be getting paid for something they are not providing or have provided poorly); and 
A return to paying dividends from profits from core earnings. 

Happy to take a reduced dividend if it means they use the proceeds to further reduce debt and improve gearing. Not happy for management and directors to receive bonuses (except options of shares set at prices to reflect a recovery of the share price in the market). 

I am curious as to why the price spiked from $0.039 to $0.05 at close of business on Friday 20 March 2009 and such a huge volume turned over in the closing auction?


----------



## Viva_Las_Vegas (21 March 2009)

nulla nulla said:


> In this time of turmoil, I would like to see a conservative approach:
> 
> 
> I am curious as to why the price spiked from $0.039 to $0.05 at close of business on Friday 20 March 2009 and such a huge volume turned over in the closing auction?




I too was baffled at the huge jump at close of trade. Sometimes I wonder if some people out there have the inside word on pending announcements or similar.
 I was hoping to buy at 3.8 on that Friday...so much for that.


----------



## Malindidzumu (21 March 2009)

Hi Nulla Nulla & Viva_Las_Vegas,

I think the answer to your question about the sudden and sharp price rise lies in the announcement by the WA Government on Friday that it has approved the $3.5BN Oakajee deep water port and rail project that will benefit West Net Rail which is 100% owned by BBI.


----------



## Malindidzumu (21 March 2009)

Here's a link to one of the articles I read which I forgot to include in the previous post:

http://www.thewest.com.au/aapstory.aspx?StoryName=559572


----------



## Malindidzumu (21 March 2009)

Prior to the GFC there was talk of a BBI demerger where BBI would split into two entities, one being a pure-play transportation entity and the other being a pure-play energy transmission and distribution entity. I would be interested to hear the thoughts of others on this forum as to what they think the likelihood of such a demerger happening in the future is, assuming BBI survives its current difficulties. 

From where I sit I can't imagine BBI demerging given its current situation where it is selling part if not whole interests in many of its better assets with acquisitions out of the question for the foreseeable future. What does everyone else think about this? 

I would also be interested to hear whether any of you think BBI would be best served either going one way or the other i.e. Do you think it would be better for BBI to focus on one asset class instead of two?


----------



## Tysonboss1 (22 March 2009)

Malindidzumu said:


> Prior to the GFC there was talk of a BBI demerger where BBI would split into two entities, one being a pure-play transportation entity and the other being a pure-play energy transmission and distribution entity. I would be interested to hear the thoughts of others on this forum as to what they think the likelihood of such a demerger happening in the future is, assuming BBI survives its current difficulties.
> 
> From where I sit I can't imagine BBI demerging given its current situation where it is selling part if not whole interests in many of its better assets with acquisitions out of the question for the foreseeable future. What does everyone else think about this?
> 
> I would also be interested to hear whether any of you think BBI would be best served either going one way or the other i.e. Do you think it would be better for BBI to focus on one asset class instead of two?




I can't see it happening in the near term, not until credit rating and divs are restored, and Beppa is dealt with.

I think I would prefer to have BBI remain intact, I quite like having the exposure to both asset types under the one roof.


----------



## Viva_Las_Vegas (22 March 2009)

So what happens to BEPPA in 2012 assuming BBI pays holders the $1.20?
Does BEPPA cease to exist?
I would not be surprised to see BBI hit $0.07 this week if the news of the port in WA is 100% correct. Good to see a positive amoungst all this doom and gloom


----------



## Tysonboss1 (22 March 2009)

Viva_Las_Vegas said:


> So what happens to BEPPA in 2012 assuming BBI pays holders the $1.20?
> Does BEPPA cease to exist?
> I would not be surprised to see BBI hit $0.07 this week if the news of the port in WA is 100% correct. Good to see a positive amoungst all this doom and gloom




A stock like Beppa is not really designed to be around for ever, at each reset date Beppa shareholders will be offered new terms, the next reset date is in 2012.

in 2012 BBI may try to persuade Beppa holders to remain in Beppa by raising the interest rate to some where near 10%.

But generally at each reset date some shareholders will cash out in either cash or BBI shares and some will stay on, so generally at each reset date the total number of Beppa shares on issue gets less and less.

If by 2012 the BBI share price is still at a big discount to Beppa's $1 face value then you may see a large portion swapping a decent chunk of their beppa for BBI which has the chance of diluting BBI.

How ever if BBI's share price has recovered to more than the one dollar face value, beppa shareholders would probally elect to take the 20c interest payment and retain the $1 face value at 10% interest. in the past investors would hold a stock like beppa for income (however this is blowen out of the water because interest is currently differed) So investors would simply be looking at which option will lead to them havin g the higher cashflow.

The options that Beppa shareholders take in 2012, all depends of what happens between now and then, it depends on bbi's shareprice in 2012, it depends on the reset terms offered and it depends on wether divs and interest are being paid on BBI or Beppa.


----------



## hardyakka (22 March 2009)

Malindidzumu said:


> I would also be interested to hear whether any of you think BBI would be best served either going one way or the other i.e. Do you think it would be better for BBI to focus on one asset class instead of two?




Very interesting proposition, but as has already been said it would be off the cards until BBI returns to normality and any split would not be possible until the BEPPAs were paid out.

From a personal perspective I would not like to see BBI split up for a few reasons, these being:

a) Diversification of asset types, risk profile and income streams.
b) Any split would be bound to result in duplicated functions and hence costs.
c) Whilst about 80% is a regulated income stream, it adds upside when there is a % of assets unregulated eg Euroports, assuming they are not flogged.

Cheers


----------



## alphaman (22 March 2009)

Generally split up is better. A single segment business is more transparent and easier to analyse. It's also easier to align the manager's interest to shareholder return. These practical benefits far outweigh the saving on duplication costs. 

Smart investors do the diversification themselves. When a company demerges to two, you can choose to keep both, sell one, or sell both, depending on your outlook of the assets. 

Managers and directors always like bigger companies though, not just for the money, but for bragging rights too. So it's a choice of whether you want to do yourself a favour, or do them a favour.


----------



## sinner (23 March 2009)

BEPPA up 15% as of right now, with bid units outnumbering offered units by almost 6:1.

Volume seems relatively light but I am not so familiar with this stock.

So far the best performer in my portfolio for the day :


----------



## banska bystrica (23 March 2009)

BEPPA are outstanding value at less than a cent premium to BBI. I bought another 200K at 6c. Asset sales are the key. I see Xstrata is all cashed up now and looking for assets. DBCT would be a very good buy for Xstrata as a user of the port.


----------



## Viva_Las_Vegas (23 March 2009)

Banksa, I too could not resist BEPPA today and purchased my first batch of 20,000.  Who is this Xstrata mob you are referring to? Buying 200k of them, you must be confident in the $1.20 payment in 2012....
Interestingly not much movement in BBI considering the port news on friday??? What is your take on this?


----------



## Tysonboss1 (23 March 2009)

banska bystrica said:


> BEPPA are outstanding value at less than a cent premium to BBI. I bought another 200K at 6c. Asset sales are the key. I see Xstrata is all cashed up now and looking for assets. DBCT would be a very good buy for Xstrata as a user of the port.




I increased my Beppa holding by 50% today as well, I still don't hold any where near as many as you though.


----------



## sinner (23 March 2009)

Viva_Las_Vegas said:


> Interestingly not much movement in BBI considering the port news on friday??? What is your take on this?




Because the port news does not add value to BBI, only increases their chance of paying off debt to holders.


----------



## Viva_Las_Vegas (23 March 2009)

I understand the port news doesn't "add" value to BBI, but I thought it would stimulate more interest in it since now it can pay off more debts by potentially selling this infrastructure at well over book price...........I hope as I am exposed to BBI and BEPPA now.


----------



## onshow (23 March 2009)

looks like the market is going to have another good day tommorrow by the way the overseas markets are heading tonight. Im thinking we might even see BBI up around the .06 mark tommorrow with the number of buys heavily out weighing the sells and the upward trend that the markets are taking at present with europe up around 2% as i write.  What do others think?


----------



## Viva_Las_Vegas (23 March 2009)

I really hope you are right. Seeing a sea of green tomorrow would be awesome.
I think there is a good chance, but judging by BBI today, it was very slow to rise, which surprised me.
Is anyone willing to speculate on how the market would react to BBI SP if BBI were to sell the westnet rail link thing they own 100% of?
Would it be seen as a positive for providing liquidity to pay off debt, or a negative for getting rid of such a good asset with future potential?


----------



## onshow (23 March 2009)

Viva_Las_Vegas said:


> I really hope you are right. Seeing a sea of green tomorrow would be awesome.
> I think there is a good chance, but judging by BBI today, it was very slow to rise, which surprised me.
> Is anyone willing to speculate on how the market would react to BBI SP if BBI were to sell the westnet rail link thing they own 100% of?
> Would it be seen as a positive for providing liquidity to pay off debt, or a negative for getting rid of such a good asset with future potential?




Thats a very good question! Its a bit of a catch 22 in one sence selling this asset would greatly reduce debt but then again like you mention its a very good one to hold onto with the number of smaller miners in the midwest that they could take advantage of the inferstructure needed to be built to service these companys! I guess they will have to work that one out for there selves! lol thats why they get the big bucks! lol


----------



## Viva_Las_Vegas (23 March 2009)

I would assume companies with some forsight would already be considering an offer on that asset. As for the big bucks...... I WANT THE BIG BUCKS lol


----------



## Malindidzumu (23 March 2009)

Hi VLV,

If the management of BBI are to sell 100% of anything I would much rather it be DBCT than any of their other major assets such as WestNet Rail, PD Ports, BBI Euroports etc. In the case of WestNet Rail, I think it is an asset that has enormous potential in the long-term future with companies such as Gindalbie, but such mining companies are exposed to political risk given recent and ongoing events with the FIRB and investments to be made in these companies by Chinese entities which were originally given the go-ahead and which are now under review as the government debates the pros and cons of foreign investment in Australian mining companies. The last thing companies such as Gindalbie need in the GFC is to receive mixed signals from the government, yes one minute, no the next. The two issues at play here are the uncertainty surrounding the survival of mining companies in WA and whether or not the government prefers Australian mining companies go bankrupt rather than end up with major Chinese investments which at the end of the day could be the only thing saving them from bankruptcy, continued uncertainty which holds significant risk to the value of WestNet Rail going forward should mining companies with such major projects in the pipeline as Gindalbie go out of business. As things stand now, BBI is heavily reliant on the growth of iron ore volume that is expected to be provided by Gindalbie not to mention others and if that was to suddenly disappear it will have a very negative impact on WestNet Rail as an attractive asset going forward.


----------



## banska bystrica (23 March 2009)

WestNet Rail is a rail infrastructure owner and rail access provider operating in Western Australia (WA) with a long-term arrangement to lease track from the WA Government. WestNet Rail operates approximately 5,100 kilometers standard, narrow and dual gauge network in the south-west of WA which serves as a crucial transport link in the region.
WestNet Rail is a *regulated monopoly* with largely stable revenue streams through long term access agreements with its customer base. The below-rail business revenue is derived from access charges paid by above-rail operators or directly by underlying customers. Security of revenue is underpinned by:

• rail transport being a small part of the overall production cost of the commodities transported.
• the fact that resources customers typically seek long term contracts (like those already in place) to ensure adequate access to the supply chain.
• the existence of some take-or-pay arrangements.


----------



## banska bystrica (24 March 2009)

I'll be here every day. Suspended for a month across the road for "profanity" when I used the word "carp" and apparently "someone" also complained that my signature tag was promoting BBI which is not allowed. News to me.

Hope the moderators here are a bit more tolerant.


----------



## awg (24 March 2009)

banska bystrica said:


> I'll be here every day. Suspended for a month across the road for "profanity" when I used the word "carp" and apparently "someone" also complained that my signature tag was promoting BBI which is not allowed. News to me.
> 
> Hope the moderators here are a bit more tolerant.




your analysis is most welcome afaic.

does assist in illuminating various aspects

the fact u r an enthusiastic owner is not really very secretive


----------



## cbrendan (24 March 2009)

banska bystrica said:


> I'll be here every day. Suspended for a month across the road for "profanity" when I used the word "carp" and apparently "someone" also complained that my signature tag was promoting BBI which is not allowed. News to me.
> 
> Hope the moderators here are a bit more tolerant.




Mate,

You've developed a cult following based on your informative posts, its not hard to see why your the biggest target for the down rampers and sh*t stirrers.

I shudder to think about the quality of discussion across the road with dargie and co. at the helm though....


----------



## Viva_Las_Vegas (24 March 2009)

The squeeky wheel gets all the oil, and someone must have had a big whine. Perhaps they don't know the difference between one being passionate and one intentionally up ramping a stock.

Personally I have found your posts informative and they have helped me in my decisions.

I hope common sense prevails.

On a side note, what are the thoughts of everyone re BBI's current SP? Given the news on Friday I thought it would have had a similar run to HFA...well perhaps not 100% gain but maybe ongoing 20% gains.....? My reasoning is that BEPPA shot up quite well over the few days, obviously buyers thinking BBI may be able to pay their debt, i though this confidence would also transfer more strongly to the BBI SP

I'll be watching to see if the US markets continue their rally, now that will make things interesting!!!


----------



## mark_au (24 March 2009)

I had heard that the "Other site" is not up to the quality of this one and BB's comments seem to support that.

We can only hope that this is a sustainable rally of the markets, i was toying with increasing my BEPPA holding , but looks like its a bit late, 
It would be good to see BBI begin to recover as well..

cheers  to all for their informed comments, especially BB who's insightful  analysis is indeed appreciated across the forum

cheers
mark W


----------



## hardyakka (24 March 2009)

banska bystrica said:


> I'll be here every day. Suspended for a month across the road for "profanity" when I used the word "carp" and apparently "someone" also complained that my signature tag was promoting BBI which is not allowed. News to me.
> 
> Hope the moderators here are a bit more tolerant.




Hmmm..carp...very very fishy if you ask me...but then maybe the mods across the way are dux-lix-ic

You are wasted over there BB


----------



## hardyakka (24 March 2009)

mark_au said:


> I had heard that the "Other site" is not up to the quality of this one and BB's comments seem to support that.
> 
> We can only hope that this is a sustainable rally of the markets, i was toying with increasing my BEPPA holding , but looks like its a bit late,
> It would be good to see BBI begin to recover as well..
> ...




Totally agree Mark. I was banned for asking a power mad mod an simple and polite question. I have not missed the other side in the least and consider the posts here of a much higher quality and standard. 

BB, dont you think the other side will be mildly irritated when readers desert that forum to read your posts here.

Mind you I really do miss the occasional laugh I got from the death spirals as the stock price crashed to earth...never did ask what would happen if you jumped with a parachute in the momentum of a death spiral...my life is incomplete.

Cheers


----------



## YELNATS (24 March 2009)

banska bystrica said:


> I'll be here every day. Suspended for a month across the road for "profanity" when I used the word "carp" and apparently "someone" also complained that my signature tag was promoting BBI which is not allowed. News to me.
> 
> Hope the moderators here are a bit more tolerant.




I imagine you're referring to the forum known as the "pre-war, old-fashioned washing tub".

I tried to join there once and was knocked back because my email address was too blue-collar for them.

In retrospect, based on my later experience with ASF, it was their loss and my gain.


----------



## banska bystrica (24 March 2009)

Just looking today at the free cash flow forecasts from ABN Amro who are basically neutral on BBI. They have a value of $1.00 per BBI but target price of 5c??? Go figure that one. Sounds like the analyst has put up the white flag.
Anyway, the following are his conservative Free Cash Flow forecasts for 2009, 2010 and 2011:

2009: $183.5M
2010: $267.2M
2011: $314.5M

Now this includes DBCT with figures of $73.3M, $105.7M and $109.3M respectively.

So, a 100% sale of DBCT would pretty much clear corporate debt and leave the remaining assets with FCF of $161M in 2010 and $205M in 2011.

Interest savings on corporate debt alone would be in the order of $90M per annum. This would add back into the FCF so in 2010 you would have FCF of $251M and 2011 would produce FCF of nearly $300M. A corporate debt free BBI producing $300M per annum of FCF from 2011 would be a very highly sort after company re: instos. That's why this stock is a serious chance of being a 20 bagger by 2011.


----------



## Viva_Las_Vegas (24 March 2009)

Banksa,
Once again great info and sounds very positive indeed. I like your enthusiasm and positivity. Not trying to be a smart @r$e here, but what negatives do you see for BBI. Worse case scenarios? Speculation of course.
Are the figures that you qoute flexible? Could things change for BBI if the "crisis" worsens or prolongs?
It was only a few months ago that Bell & Potter Research were recommending BBI as a buy at 10cents but I have not heard any recommendations since.
2011 seems like a long way away in the unpredictable market place.

Keep up your posts!


----------



## banska bystrica (24 March 2009)

The risk is that BBI cannot sell DBCT and/or PD Ports at prices big enough to eliminate or pay off the majority of corporate debt.
This depends on the GFC to some extent and the flow of credit. If credit loosens up in the next two months, then some of those companies who are currently in the BBI data room will find it easier to access the money to buy the assets.
It was mentioned in the press that Xstrata are a serious contender. If so, they have the cash. No need for borrowings.
It really is hard to imagine BBI would not receive a very good offer for DBCT. It would rank ahead of Powerco and Euroports by a fair margin and those assets were able to be sold during the GFC at prices above book value.
The data room is open for the serious potential buyers of DBCT. They would be getting access to all the relevant documentation and going over it with a fine tooth comb.

DBCT's forecast EBITDA for 2010 is $224M. Remember it is *regulated* so it's pretty well locked in. EBITDA x11 would give a price of $2.5Bn. Debt owing on DBCT is $1.6Bn. That would clear $900M of corporate debt.
Asciano are valuing their ports at EBITDA x12 so DBCT at 11X is cheap. It's probably one of the best coal terminals in the world.
Now if BBI got EBITDA X13, that would clear $1.3Bn of corporate debt. Mouth watering figures.


----------



## Lucky_Country (24 March 2009)

I wonder what BHP would be doing with the $3 billion or so its just raised ?

They may like DBCT for there increased tonnage and be the operator !


----------



## banska bystrica (24 March 2009)

It boils down to this: 

If BBI can sell DBCT for $2.5Bn or better, they are out of the woods. BEPPA are then virtually guaranteed to be worth $1+ accumulated interest in 2012. They will always trade at a discount to face value but I would have thought 60c-70c for BEPPA is a very realistic target so long as corporate debt is all but eliminated.

Maybe the asset sales will be a combination?

1. 100% DBCT and no other sales
2. 100% PD Ports and 50% DBCT


----------



## Malindidzumu (24 March 2009)

Hi banska bystrica,
I just wanted to let you know that I also enjoy reading your posts and I appreciate the time and effort you take to contribute as much as you do. If neither the other forum nor its users appreciate you then don't waste your time with them and just deal with this forum full-time instead where you are obviously highly thought of and valued. 

To add to your post about a combination of asset sales wouldn't BBI consider selling 100% of both PD Ports and DBCT if the price was right? If such an outcome was to be reached what would the likely pay off be re: corporate debt being eliminated vs revenue and future growth?


----------



## banska bystrica (24 March 2009)

Yes I think anything and everything is for sale at the right price. PD Ports however has huge growth potential. Tees Port (PD Ports) is located about 5km to the east of Middlesborough in the North East of England.  

http://www.maplandia.com/united-kingdom/england/north/redcar-and-cleveland/teesport/


----------



## Malindidzumu (24 March 2009)

I would be very interested to see a ranking of BBI's assets from most valuable to least valuable, factoring in future growth, in your opinion, and which assets you would like to see sold down or sold completely and which assets you would like to see remain intact across the entire asset portfolio. 

From a personal viewpoint I would like to see BBI retain its full ownership of PD Ports and WestNet Rail whilst getting rid of DBCT altogether, but I understand the need to sell off assets so either a full sale or a sell-down of these assets to a 25% or 50% ownership level might be on the cards, provided they can find buyers for these assets that is!


----------



## banska bystrica (24 March 2009)

From one of my spreadsheets:

Asset, Asset Ranking, Net equity 

NGPL: 1,  $1.3Bn
DBCT: 2,  $800M 
AETD: 3,  $700M
PD Ports: 4,  $500M
Euroports: 5,  $400M
IEG: 6,  $350M
Westnet: 7,  $300M
Powerco: 8,  $300M
Cross Sound Cable: 9,  $50M

In my opinion the riskiest assets would be Euroports, PD Ports, Westnet Rail. These have the potential to suffer the most in a deep recession.


----------



## Malindidzumu (24 March 2009)

I agree with you re: the riskiest assets being Euroports, PD Ports and WestNet Rail, but just as they have the potential to suffer the most in a deep recession they have the potential to gain the most during a period of strong economic growth, so provided BBI is able to hold onto them, their long-term future looks bright.


----------



## Bolivia (25 March 2009)

Sale process for DBCT was being handled internally? 

From today, Macquarie Cap has been employed by BBI to carry forward the sales process. Does this mean BBI is finding the process more difficult than it first thought? or does this mean a sale is now even more likely?

Source: Street Talk


----------



## Viva_Las_Vegas (25 March 2009)

I would speculate they are having trouble selling. Why else would you want to pay Mac Cap a commision on the sale when you are trying to get every last dollar out of that asset?
Looking at the BBI SP today it appears there is a lot of interest in buying those shares but looks like most of that interest is below the $0.05cent mark.


----------



## banska bystrica (25 March 2009)

Viva_Las_Vegas said:


> I would speculate they are having trouble selling.




You're entitled to speculate on whatever you want to.
There are multiple serious buyers in the BBI Data Room. Xstrata has been in talks with BBI for nearly a year. To those who think BBI are going to have trouble selling DBCT, I suggest you sell your shares because if DBCT cannot be sold, BBI are in trouble.

PS. I'm in the buy queue waiting for your shares.


----------



## Viva_Las_Vegas (25 March 2009)

I foolishly sold some this morning expecting a very RED day........ but i made an odd $500 profit. I'll sit and wait to buy some more on the cheap now. I'll stand in queue with you Banksa


----------



## YELNATS (25 March 2009)

Viva_Las_Vegas said:


> Looking at the BBI SP today it appears there is a lot of interest in buying those shares but looks like most of that interest is below the $0.05cent mark.




I hardly think so. The current price is .068 up 13.33% on a volume of more than 21 million. Maybe this suggests a market re-rating of BBI & BEPPA?


----------



## banska bystrica (25 March 2009)

If people cannot see something is imminent, then I cannot help them. There is a major re-rating about to happen over the next quarter (April, May, June).
I'm set for how many I want in both BBI and BEPPA but I am always willing to buy more if the market decides to sell it down.


----------



## Viva_Las_Vegas (25 March 2009)

BB which rating are you referring to? Is it the A+ credit ratings? I see a lot of demand but below the main price. You think those people are holding out for a small correction prior to a jump?


----------



## banska bystrica (25 March 2009)

Viva_Las_Vegas said:


> BB which rating are you referring to? Is it the A+ credit ratings? I see a lot of demand but below the main price. You think those people are holding out for a small correction prior to a jump?




Not the credit rating,rather the BBI/BEPPA share prices. There are two main catalysts for a major re-rating:

1. Asset sales
2. Management internalization and subsequent name change. ("Prime Infrastructure" sounds good and that is what it used to be called). That would be my choice.

I can't believe you would sell Viva. Unbelievable. Who cares about daily price movements?


----------



## Viva_Las_Vegas (25 March 2009)

I'm constantly doing stupid things, getting spooked. Guess its my inexperience showing.

I guess I'm like any other greedy little pig out there trying to get some profit out before the bear rally is over. But somehow I think we are actually moving sideways as opposed to big up and down swings as we've seen previously.
You seem to know your business with BBI a lot better than I do, guess that contributes to your cool hand


----------



## mark_au (25 March 2009)

Does anybody know why you cant get charting, sale prices/depth etc for BEPPA only for BBI via the comsec web page ???


----------



## Viva_Las_Vegas (25 March 2009)

Geeez I feel like a fool for selling some of my $0.051's today. Admitedly I was trying to recoup some of my losses in another mistake called HFA.

Banksa you are somewhat of a Guru, your talk of something imminent was followed by a huge BBI upshift. What do you speculate the positivity stems from? I tried to research BBI selling DBCT through Mac Cap but could not find anything via the "all knowing google"


----------



## banska bystrica (25 March 2009)

A major re-rating has just started. You can quote me on July 1 and bag me if this does not happen: I fully expect BBI to be at least 20c by end of financial year based on two boxes being ticked off. If it's not, I will be very disappointed.
What is a fair price for BBI under the following scenario?
1. Asset sales over the next few months clear all of or the majority of corporate debt.
2. BBI severs all ties with BNB (re:the management agreement) for a very small sum
3. The name of the company is changed to remove all references to Babcock and Brown.

Thoughts on price???


----------



## banska bystrica (25 March 2009)

banska bystrica said:


> A major re-rating has just started.




What we are seeing is a substantial shift in sentiment. A lot of traders are being taken out by long term holders. Look at the total buy depth and compare to the total sell depth. It will take a while to churn through the volume. Nothing goes up in a straight line. The key for a lot of the nervous nellies is don't panic on the "down days". Nothing goes up every day. Just remember that and also if you are a long term holder, you should be focussed on why you bought the stock and at what point do you start to take some profits. For me, as I said, I am not in this to trade out for a few cents profit. I would envisage selling maybe 30% of my BBI at a minimum of 30c and then keep the remaining BBI and ALL of my BEPPA for the very long term.


----------



## Tysonboss1 (25 March 2009)

Viva_Las_Vegas said:


> I'm constantly doing stupid things, getting spooked. Guess its my inexperience




you live and learn, don't beat yourself up, you did make a profit.

I try not to trade so much as pick a winner and just sit on it, with BBI and Beppa I am just accumulating and waiting for normality to return and the price to recover,

Offcourse it is nice to see the stock go up day to day, but even if it does have a few down days it doesn't bother me, it is perhaps just an opportunity to buy a few more.


----------



## Viva_Las_Vegas (25 March 2009)

Thanks for the reassuring words. I was blown away to see so many units eaten up today. Although I think we still have a few backwards days ahead of us yet, and as you say, that will be the time to top up.
I would like to know where you guys do your research about BBI. I mainly use the news pages, this forum, comsec recommendations, and I get a copy of Bell & Potter Research.
You guys seem to be more "in the know" with all things BBI and BEPPA.

As an aside does anyone know why comsec makes you retain a minimum of $500 of shares if you are not selling all your stock? The manchild at comsec on the phone could not explain it to me apart from "thats the way it is"


----------



## awg (25 March 2009)

mark_au said:


> Does anybody know why you cant get charting, sale prices/depth etc for BEPPA only for BBI via the comsec web page ???





You can get it. just enter code: beppa





Viva_Las_Vegas said:


> Geeez I feel like a fool for selling some of my $0.051's today. Admitedly I was trying to recoup some of my losses in another mistake called HFA.
> 
> :





There have been profit opportunities in this stock if it is traded, due to volatility.

While I have owned it BBI has gone from 4.5 to 14c then 2.5 now 7.5c.

(disclosure hold bbi and beppa, didnt trade it, but wish I had!)


----------



## mark_au (25 March 2009)

awg said:


> You can get it. just enter code: beppa



Interesting, 

if i go from my holdings page and click on the newspaper (research )  for by BEPPA holdings 
im taken to a blank company screen with no actual information, just the fields

but then like you said  if i manually enter beppa into say the depth page then i get data...

thanks for that


----------



## random (25 March 2009)

Yes, the tide is turning.
What does it for me is seeing the large number of buyers of course but more importantly the large parcels wanted in each order by those buyers this morning.
This afternoon they have averaged lower in size but still very encouraging with the higher sp.

Part of me is very pleased, part of me dissapointed but only because i wanted to add to my collection of BBI and BEPPA. 

I guess there is no pleasing me today.


----------



## Viva_Las_Vegas (25 March 2009)

Does anyone feel like there is an announcement pending this afternoon from BBI? All this activity is making me feel like there's something going on but I don't know what it is. Surely this price jump has to reflect something in the wind.....


----------



## random (25 March 2009)

Viva_Las_Vegas said:


> Does anyone feel like there is an announcement pending this afternoon from BBI? All this activity is making me feel like there's something going on but I don't know what it is. Surely this price jump has to reflect something in the wind.....




There may be an announcement forthcoming this afternoon.....i don't know.
As a stab in the dark i am assuming that you are refering to asset sales.

What i have been waiting for for some time is reference to the management fees which BBI has been paying to BNB. Are these now history since BNB has had the administrators moving in?
They have been delisted after all. 
My understanding is that the fees are now finished yet no announcement has been made. This topic should be dealt with asap.


----------



## boff (25 March 2009)

Viva_Las_Vegas said:


> Does anyone feel like there is an announcement pending this afternoon from BBI? All this activity is making me feel like there's something going on but I don't know what it is. Surely this price jump has to reflect something in the wind.....




To me it still feels like noise. I've built up a reasonable number of shares (+100k) at an average price of 5c so a couple of cents move is nice to look at, but until there's a push past 15c I don't think we've broken through the resistance that's been hanging there at about 12c since November '08.

I'd be interested as to where anyone else puts the resistance, although I fully understand that the 'chartists' rules don't really apply to shares at the penny end of the spectrum.


----------



## banska bystrica (25 March 2009)

Viva_Las_Vegas said:


> Does anyone feel like there is an announcement pending this afternoon from BBI? All this activity is making me feel like there's something going on but I don't know what it is. Surely this price jump has to reflect something in the wind.....




Viva and others,
You have obviously not read a word of my posts today. 
Good afternoon,
See you all tomorrow.


----------



## Viva_Las_Vegas (25 March 2009)

Banksa,
First of all Well Done! You're perseverance and belief in the stock looks like it will pay off. I wish I had your cool hand and had not sold part of my holding today. My strategy was to use my BBI cash today to offset my losses from selling HFA, then to pour the money back into BBI. Perhaps illogical, but it made sense to me at the time. 
I just read the announcement. I just wonder what price I will be able to buy back in at tomorrow. I'm confident the market will react positivly to the news.

Good job mate


----------



## dougit (25 March 2009)

Well, i sold half my bbi shares today and bought the same number of beppa today for a premium of .5 of a cent. Seemed like a good move to me. what do you all think?


----------



## Viva_Las_Vegas (25 March 2009)

With the benefit of hindsight, you probably should have kept your BBI, and bought BEPPA. I too sold today, I had a "feeling" something was up but no specifics were available apart from interpreting volumes and demand today, which is something I was not confident in.
For example last week HFA stock which I had purchased at 15cents was down at approx 6 cents, one announcement about refinancing set them up by 100%, now I would never have guessed it would go up by THAT much.
I guess that's why I am kicking myself now, thinking something similar would happen tomorrow. If only I held onto my BBI at 5.1 cents
On a positive I held my BEPPA's.
I will be looking to accumulate BBI tomorrow.....


----------



## nulla nulla (25 March 2009)

Last time they surged off a low it went to $0.15 then retraced when BNB didn't fall over. This time BNB has fallen over and there is rumoured asset sales/gearing reductions in the pipeline. What are the prospects it will go past $0.15?


----------



## dougit (25 March 2009)

Curious as to your thoughts. I can see no other reason for the jump in SP for bbi and bebba other than the announcent re Macquarie. In which case there was clearly insider trading. The appointment of Macquarie in itself is not sufficient as this would imply some difficulty in achieving a good sale. So is there some more information re what Macquarie might be doing or re the progress of negotiations. In any case clearly a well priced sale of these assets is what is required for a long overdue rerating of these stocks. I bought most of my BBI at under 3c apart from the handbrake of a small parcel bought at about a dollar. I had previously traded this stock when it was over 1.50 with success. It is exciting to hold a larger quantity. The Beppa bet is possibly a huge winner if the company survives. Really in a fair world it should. Let's all hope so.


----------



## banska bystrica (25 March 2009)

I am confident today's action was about something other than Macquarie being appointed. Please read my previous posts.


----------



## hardyakka (25 March 2009)

banska bystrica said:


> I am confident today's action was about something other than Macquarie being appointed. Please read my previous posts.




Folks,

There seems to be a lot of concern over the days price movement. Whilst its nice I have to ask the question "Are daily price movements that relevant to the long term view?" 

Personally I think not, except to provide buying opportunities, and even then an order can be placed and simply left on-market at an acceptable buy price.

Regarding the price movement the announcement said it all:
"As previously announced, the price discovery process for DBCT recently concluded and interest was shown at both the minority and 100% level."

That to me indicates that there are likely to be several bids for whole and part of the asset. I have no problems paying a fee of $10s of millions if it adds $100s of millions to the price.

What I do know from today is that it is unlikely my existing open orders will be filled

Being a risk averse wuss I hold a reasonable number of BEPPA.

Cheers

Dargie's death spiral rools ok!!


----------



## snowfree (25 March 2009)

Just being curious, why didn't BBI buy back the BEPPA now with such a huge discount on face value, to eliminate the significant costs (for redemption and accumulated intersts) in 3 years?

I am new to this forum, holding some BEPPA shares.

Cheers.

snowfree


----------



## banska bystrica (25 March 2009)

snowfree said:


> Just being curious, why didn't BBI buy back the BEPPA now with such a huge discount on face value, to eliminate the significant costs (for redemption and accumulated intersts) in 3 years?
> 
> I am new to this forum, holding some BEPPA shares.
> 
> ...




BBI have a sweep facility in place whereby all free cash (except for a $50M float) is swept to the banks to reduce corporate debt. Therefore they are prohibited at this point in time in engaging in any form of BEPPA buyback.


----------



## Malindidzumu (25 March 2009)

> What is a fair price for BBI under the following scenario?
> 1. Asset sales over the next few months clear all of or the majority of corporate debt.
> 2. BBI severs all ties with BNB (re:the management agreement) for a very small sum
> 3. The name of the company is changed to remove all references to Babcock and Brown.
> ...




It's anyone's guess what the share price would do if the above happened over the next few months because we are dealing with something (the Stock Market and all the fear and panic etc surrounding it) that is completely and utterly irrational as recent events have shown. However if I was to put my hat in the ring I would suggest the share price would not so much rise to 20cents a unit but by multiples of 20 cents to 60c or more. Before any of you say that is not going to happen who on earth would have thought this stock would be trading as low as it has been recently and as low as it continues to trade just before the stock fell off the face of the earth as it did last year and so far this year? The answer is no-one. Given a 100% sale of DBCT and 100% of PD Ports and everything else mentioned above there is every chance of a price of 60c at least and quite possibly more if world markets continue their recent upswing as the light at the end of the tunnel becomes brighter and brighter. I think that a price range of 60c to $1 in the second half of the year is not as fanciful as it might have seemed only a short time ago, but then again I am making the most dangerous of assumptions, that people will act rationally in a world full of irrational people, so I could be way off. It is just as well that I am the longest of long-term investors!


----------



## Malindidzumu (25 March 2009)

> Last time they surged off a low it went to $0.15 then retraced when BNB didn't fall over. This time BNB has fallen over and there is rumoured asset sales/gearing reductions in the pipeline. What are the prospects it will go past $0.15?




I would think that the prospects of BBI surpassing $0.15 would be very good, but it'll take a while without announcements of sales, internalisation of management, and the name change just to name three events that would trigger sharp rises (genuine sharp price rises that is) in the share price.


----------



## hardyakka (25 March 2009)

Malindidzumu said:


> Given a 100% sale of DBCT and 100% of PD Ports and everything else mentioned above there is every chance of a price of 60c at least and quite possibly more if world markets continue their recent upswing as the light at the end of the tunnel becomes brighter and brighter.
> 
> I think that a price range of 60c to $1 in the second half of the year is not as fanciful as it might have seemed only a short time ago, but then again I am making the most dangerous of assumptions, that people will act rationally in a world full of irrational people, so I could be way off. It is just as well that I am the longest of long-term investors!




Great post. It would be great if the price was in that range, personally my time horizon is longer but if it does get there I will send you a few slabs 

Cheers


----------



## Malindidzumu (26 March 2009)

> Great post. It would be great if the price was in that range, personally my time horizon is longer but if it does get there I will send you a few slabs




Thanks. The reference to a few slabs sounds great and brought a smile to my face as I haven't heard such terminology for the past year and a half since I left Australia. I am also a long-term investor, and in my case I have no intention of ever selling BBI or any of the other investments I hold in my lifetime, if I can help it, so price isn't such an issue for me either, just as long as BBI survives and remains listed! 

The exception to the rule of not selling shares in my case is not to buy and sell the same stock, but to rather sell out of one stock even at a loss in order to buy units in another stock that I deem to be of a higher quality with a better long-term outlook that has fallen further in value so you end up with more units in the stocks you buy even if you sell out of other stocks at a loss. I hope that makes sense to everyone reading. 

I don't think there is any value in buying and selling the same stocks eg. buying BBI one minute only to sell the next and then buy them back again, but that's just me and each to their own I guess.


----------



## nulla nulla (26 March 2009)

dougit said:


> Curious as to your thoughts. I can see no other reason for the jump in SP for bbi and bebba other than the announcent re Macquarie. In which case there was clearly insider trading. The appointment of Macquarie in itself is not sufficient as this would imply some difficulty in achieving a good sale. So is there some more information re what Macquarie might be doing or re the progress of negotiations. In any case clearly a well priced sale of these assets is what is required for a long overdue rerating of these stocks. I bought most of my BBI at under 3c apart from the handbrake of a small parcel bought at about a dollar. I had previously traded this stock when it was over 1.50 with success. It is exciting to hold a larger quantity. The Beppa bet is possibly a huge winner if the company survives. Really in a fair world it should. Let's all hope so.




I don't know about the insider trading aspect. I think it is more likely a market reaction to the confirmation that professional outside advisors have been formaly engaged to facilitate the sale of specific assets in Europe and Australia. This process would enhance the likelihood of the maximum value being extracted for any resulting assets sales (in full or part) which in turn would have the flow on effect of:
1. Reducing debt;
2. Reducing gearing; and
3. Reducing the amount of finance that will need to be replaced in the forthcomming 12 months.
All the above would enhance their prospect of refinancing as and when necessary without having to pay a premium. All they need to do now is cut the umbilical cord to the BNB carcass and the price should go well past the most recent high of $0.15. We live in hope.


----------



## banska bystrica (26 March 2009)

dougit said:


> Curious as to your thoughts. I can see no other reason for the jump in SP for bbi and bebba other than the announcment re Macquarie. In which case there was clearly insider trading.




The Macquarie appointment was detailed in the Financial Review yesterday before the commencement of trading so it would not be insider trading on that issue.

The buying yesterday (in my opinion only) was about cutting the BNB chord RE: management agreements. Why would it be this? Well, process of elimination. It would not be about asset sales as it is too early for sales unless of course it is a further sale of Euroports but I doubt it. PD Ports and DBCT are some way off yet. Therefore, what else could it be? Look at the previous announcements regarding internalization of management and you will see that the time frame for that fits in right now. They have been working on this issue for some time.
I reckon we will see an announcement on this in the next couple of weeks and a name change is then on the cards. I think it highly unlikely we will see "Babcock and Brown Infrastructure" listed on the ASX for much longer. Perhaps the old name "Prime Infrastructure" will be resurrected or something else?


----------



## banska bystrica (26 March 2009)

banska bystrica said:


> The Macquarie appointment was detailed in the Financial Review yesterday before the commencement of trading so it would not be insider trading on that issue.
> 
> The buying yesterday (in my opinion only) was about cutting the BNB chord RE: management agreements. Why would it be this? Well, process of elimination. It would not be about asset sales as it is too early for sales unless of course it is a further sale of Euroports but I doubt it. PD Ports and DBCT are some way off yet. Therefore, what else could it be? Look at the previous announcements regarding internalization of management and you will see that the time frame for that fits in right now. They have been working on this issue for some time.
> I reckon we will see an announcement on this in the next couple of weeks and a name change is then on the cards. I think it highly unlikely we will see "Babcock and Brown Infrastructure" listed on the ASX for much longer. Perhaps the old name "Prime Infrastructure" will be resurrected or something else?




Announced on Feb 9:

*"The Independent Directors of BBI have been working through the implications of terminating the various management and advisory arrangements with BNB and anticipate progressing discussions with BNB in relation to the full internalisation of these arrangements over the coming weeks."*

Further, this was announced on March 13.

*"BBI confirms that its proposal to internalise management and separate from Babcock & Brown (as announced to the ASX on 9 February 2009) is continuing and further details are expected to be announced as soon as possible."*


----------



## investorpaul (26 March 2009)

I have mucked up my timing on this a bit, I did some research for my Boss who is a long term holder (he bought ages ago) and was looking to get in myself, however I didnt and now I am wondering if we likely to see a dip in the share price as short term traders take profits over the next couple of days


----------



## spottygoose (26 March 2009)

investorpaul said:


> I have mucked up my timing on this a bit, I did some research for my Boss who is a long term holder (he bought ages ago) and was looking to get in myself, however I didnt and now I am wondering if we likely to see a dip in the share price as short term traders take profits over the next couple of days




You may well get your dip this morning. The response to the speeding ticket may disappoint a few of yesterday's punters:




> We refer to your letter dated 25 March 2009 requesting a response to certain questions in
> relation to the Babcock & Brown Infrastructure Group (“BBI” or the “Group”).
> We respond to each of the questions as follows:
> 
> ...


----------



## alphaman (26 March 2009)

investorpaul said:


> I have mucked up my timing on this a bit, I did some research for my Boss who is a long term holder (he bought ages ago) and was looking to get in myself, however I didnt and now I am wondering if we likely to see a dip in the share price as short term traders take profits over the next couple of days



Well, you are betting on BBI to survive, hence BEPPA will go to 100, does it really matter whether you get in at 8c, or 4c? It's going to be a huge win anyway, if you win.


----------



## investorpaul (26 March 2009)

I would be interested to know anyones thoughts on the various put and call options over the european ports division. Does anyone feel BBI could be adversely affected if another party exercises an option forcing BBI to purchase the remaining share?


----------



## banska bystrica (26 March 2009)

investorpaul said:


> I would be interested to know anyones thoughts on the various put and call options over the european ports division. Does anyone feel BBI could be adversely affected if another party exercises an option forcing BBI to purchase the remaining share?




The only assets that could trigger a put option are Manuport, Westerlund and Seehafen Rostock.

BBI has a call option over the remaining 49% interest in Water Container Transport. The call option is exercisable on the earlier of 1 January 2009 to 30 June 2009 or if BBI undergoes a capital reorganisation. The call option’s exercise price is calculated at financial close, based on the capital structure employed by the Minority Investors.

BBI has a call option over the remaining 49% interest in Tarragona Port Services. The call option is exercisable on the earlier of 1 January 2009 to 30 June 2009 or if BBI undergoes a capital reorganization. The call option’s exercise price is calculated at financial close, based on the capital structure employed by the Minority Investors.

BBI and its Minority Investors entered into a put option and call option for Manuport and Westerlund. The put option gives each of the Minority Investors the right, but not the obligation to sell all or part of its shares to Euroports. The put option can be exercised between 18 months and 10 years after the date of signing the Shareholders’ Agreement. The put option’s exercise price is calculated at the time the put is exercised, based on a put pro-rata equity value less the put pro-rata Non Share Equity Interest (NSEI ) value. The call option gives Euroports the right, but not the obligation to purchase all the Minority Investors’ shares at the time of the exercise of the right. The call option may be exercised after 18 months from the date the Shareholders’ Agreement was signed or if there is a change of control within the Minority Investors. The call option price shall be calculated as the higher of the market value before deduction of the call pro-rata NSEI value and the call pro-rata equity value of the shares owned by the Minority Investors less the call pro-rata NSEI value.

On 22 November 2007, BBI, purchased 50% of Seehafen Rostock Umschlagsgesellschaft GmbH (SHRU ). The vendor retained the remaining 50% of the Company. On the same date, the two parties entered into a “Put and Call Option Agreement”. The put options enable the vendor to require BBI to purchase all of the put option shares on the terms stated in the agreement, whilst the call options requires the vendor to allow BBI to purchase all of the call option shares on the terms as stated in the agreement.

Without being privy to the actual contracts, it is difficult to answer your question. In any case, I don't think the amounts would be material. The big picture is selling DBCT. That is the catalyst for a major re-rating of BBI between now and June 30.


----------



## investorpaul (26 March 2009)

my buy order just got hit then at 0.071 now I hold and wait. If the price drops lower over the next few days I may look at picking up some BEPPA. 

It seems with BEPPA at their expiry that its up to BBI to decide whether to pay in shares, cash or roll the agreement over. Can someone confirm if i have interpreted this right?


----------



## banska bystrica (26 March 2009)

investorpaul said:


> It seems with BEPPA at their expiry that its up to BBI to decide whether to pay in shares, cash or roll the agreement over. Can someone confirm if i have interpreted this right?




I can confirm you are wrong and suggest you read the terms and conditions on the BBI website.

I'm glad you thought the details on the put and call options were of some help.


----------



## investorpaul (26 March 2009)

banska bystrica said:


> I can confirm you are wrong and suggest you read the terms and conditions on the BBI website.
> 
> I'm glad you thought the details on the put and call options were of some help.




Hi BB, thanks for the put and call stuff, I was trying to do some figures myself to workout what their potential commitment would be if they were exercised.

As for BEPPA i have only had a quick look at them so far, so i didnt read to much into them yet. I plan to do that over the w/e


----------



## banska bystrica (26 March 2009)

Paul,
If you go to www.bbinfrastructure.com.au you will find the BEPPA documentation icon on the front page. BBI EPS management cannot force BEPPA holders to rollover after 2012 but they can put forward a proposal to amend the terms on more favourable conditions (like a better interest rate etc) and then that proposal will have to go to a BEPPA vote. If the vote is carried, then all BEPPA holders would have to accept whatever the new terms are.


----------



## fuzzie (26 March 2009)

Interesting reading here.

I wonder if the BBI proposal to convert SPARCS to BBI takes into account an expectation that the BBI share price in May will be substantially different to today?


----------



## banska bystrica (26 March 2009)

fuzzie said:


> Interesting reading here.
> 
> I wonder if the BBI proposal to convert SPARCS to BBI takes into account an expectation that the BBI share price in May will be substantially different to today?




fuzzie,

The proposal is to *NOT* convert SPARCS into BBI securities. It will go to a vote  and hopefully, the majority will vote in favour of the proposed rollover conditions expiring 2010 with a 10% interest rate.


----------



## Viva_Las_Vegas (26 March 2009)

Hi Guys,
Amazing what an ASX "speeding ticket"  can do to a SP eh?
I woke up today expecting BBI to keep moving forward thinking the pending announcement yesterday drove the price up, and I "assumed" the actual announcement  would continue up and up and up.

Could all the sellers today just be profit takers? Or did the announcement not amount to what yesterdays buyers anticipated? Any thoughts?


----------



## Tysonboss1 (26 March 2009)

alphaman said:


> Well, you are betting on BBI to survive, hence BEPPA will go to 100, does it really matter whether you get in at 8c, or 4c? It's going to be a huge win anyway, if you win.




yes, big difference, if you got in at 4c then you buy 2x the amount of shares as you would for 8c, so you double you profit by buying at 4c,...


----------



## Tysonboss1 (26 March 2009)

Viva_Las_Vegas said:


> Hi Guys,
> 
> I woke up today expecting BBI to keep moving forward thinking the pending announcement yesterday drove the price up, and I "assumed" the actual announcement  would continue up and up and up.




Patience young sky walker,... 40% in a couple days is alot. 

Remember the bear may fall out the window, but the bull comes up the stairs, it will take time.

you will go crazy if you stress over every up and down, just let things roll along does it really matter if you have to wait a year or two or three to get a 1000% return.


----------



## Viva_Las_Vegas (26 March 2009)

Tysonboss1 said:


> Patience young sky walker,... 40% in a couple days is alot.
> 
> Remember the bear may fall out the window, but the bull comes up the stairs, it will take time.
> 
> you will go crazy if you stress over every up and down, just let things roll along does it really matter if you have to wait a year or two or three to get a 1000% return.




Yoda,

Thanks for the re-assurance. Forgive me for I am new to the Jedi and the force is weak in this one. 
I try to not let the small changes in price bother me, but I sort of look at it from the point of view that I am missing out on more units that i could have got at the cheaper price. But then again I am the same idiot who sold his cheap ones yesterday and jumped in high today. 

Stoopid is a stoopid does = me at the moment.

Disclosure 55000BBI/45000BEPPA


----------



## onshow (26 March 2009)

Viva_Las_Vegas said:


> Yoda,
> 
> Thanks for the re-assurance. Forgive me for I am new to the Jedi and the force is weak in this one.
> I try to not let the small changes in price bother me, but I sort of look at it from the point of view that I am missing out on more units that i could have got at the cheaper price. But then again I am the same idiot who sold his cheap ones yesterday and jumped in high today.
> ...



dont worry im in the same boat sold low and bought a whole lot today in at    .08cents. But im confident it will go back up just got to sit tight, its just a few profit takers bringing it down today! lol
what do others think is a fair price target by mid year and end of year is?


----------



## alphaman (26 March 2009)

Tysonboss1 said:


> yes, big difference, if you got in at 4c then you buy 2x the amount of shares as you would for 8c, so you double you profit by buying at 4c,...



Numerically correct but so irrelevant. Yes price could fall after you buy, but it could also run away from you if you wait. Either way it makes a "big" difference" on your lost profits.  But no one can tell you which way price will definitely go. 

All you know is that at current price, it's at least a ten bagger*. So what do you do when you see a ten bagger? You grab it now! You could go all in, or average in, whatever. But you don't procrastinate over a ten bagger.

*The ten bagger target is based on you guys' optimistic assessment of BBI's long term prospects.


----------



## eMark (26 March 2009)

Re - "*The ten bagger target is based on you guys' optimistic assessment of BBI's long term prospects"

I take your commenting from the outside in? Is that your assessment, or a summary of what you have read of others (or both)?


----------



## Tysonboss1 (26 March 2009)

alphaman said:


> Numerically correct but so irrelevant. Yes price could fall after you buy, but it could also run away from you if you wait. Either way it makes a "big" difference" on your lost profits.  But no one can tell you which way price will definitely go.
> 
> All you know is that at current price, it's at least a ten bagger*. So what do you do when you see a ten bagger? You grab it now! You could go all in, or average in, whatever. But you don't procrastinate over a ten bagger.
> 
> *The ten bagger target is based on you guys' optimistic assessment of BBI's long term prospects.




I aggree,... How ever I am also the guy that has been buying into the market for the past year as it falls lower and lower, So offcourse I have scolded myself for being to eager to enter the market, and I know that I would be in a better position if I had waited.

Atleast now I am sitting on a larger portfolio than I have ever had, and due to recent prices I have averaged down to quite low levels, and when divs return to normal levels ( as I said to viva, I don't mind waiting ) my portfoilo cash flow should be over $50G a year, and if beppa does pay out $1.20 I will clear my home loan.


----------



## YELNATS (26 March 2009)

Tysonboss1 said:


> Atleast now I am sitting on a larger portfolio than I have ever had, and due to recent prices I have averaged down to quite low levels, and when divs return to normal levels ( as I said to viva, I don't mind waiting ) my portfoilo cash flow should be over $50G a year, and if beppa does pay out $1.20 I will clear my home loan.




A few "ifs", "whens" and "shoulds" there, Tyson, but I hope it all comes home for you. (darn 100 chars)


----------



## alphaman (26 March 2009)

eMark said:


> I take your commenting from the outside in? Is that your assessment, or a summary of what you have read of others (or both)?



That's a summary of what I've read of the holders. I mean, holders are saying BBI has great assets, great cash flows, paying off debts is just a matter of time. The sellers have been selling simply out of ignorance, panic or fear. IF true, and therefore BBI does survive, BEPPA has to rise towards face value. In fact it may even trade above 100 because its interest rate has been reset higher hasn't it? So it's easily at least a ten bagger.


----------



## Viva_Las_Vegas (26 March 2009)

Tysonboss1 said:


> Patience young sky walker,... 40% in a couple days is alot.
> 
> Remember the bear may fall out the window, but the bull comes up the stairs, it will take time.
> 
> you will go crazy if you stress over every up and down, just let things roll along does it really matter if you have to wait a year or two or three to get a 1000% return.




I think a 1000% return in 2 to 3 years is a bit optimistic considering BBI was only at $1.50max or something like that. I think you need to back off the throttle there Han Solo. 
My concern is, with all the money printing going on and crazy inflation being a possibility wouldn't that technically devalue our shares should they reach the high milestones we expect, essentially reducing REAL gains?


----------



## fuzzie (26 March 2009)

banska bystrica said:


> fuzzie,
> 
> The proposal is to *NOT* convert SPARCS into BBI securities. It will go to a vote  and hopefully, the majority will vote in favour of the proposed rollover conditions expiring 2010 with a 10% interest rate.




The ASX release on proposed SPARCS reset terms states "_The BBINNZ directors’ current intention  in respect of any Conversion Requests that may be received by 26 March 2009 that relate to the 17 May 2009 conversion, is that those BBI NZ  SPARCS will be exchanged for BBI Stapled Securities. ....17 May - Conversion date for those that elect to convert 50% of holding _"

What's the point of making an election to redeem if it can be overruled by other security holders?


----------



## banska bystrica (26 March 2009)

fuzzie said:


> What's the point of making an election to redeem if it can be overruled by other security holders?




The point being what if the meeting doesn't get the 75% needed to pass? Then you would want to have your "Request for Conversion" form in wouldn't you?
I suspect the majority of SPARCS holders will have requested conversion knowing it is highly unlikely to actually happen.


----------



## banska bystrica (26 March 2009)

Viva_Las_Vegas said:


> I think a 1000% return in 2 to 3 years is a bit optimistic considering BBI was only at $1.50max or something like that.




Viva,
1000% profit for BEPPA from today's price of 8c is 88c. Now the redemption price in 2012 is $1.00 + accrued interest. So I would say so long as BBI survive, a 1000% increase on the BEPPA price is actually a bit conservative.

Regarding BBI: If they are corporate debt free within 12 months, the stock will be around 40c+ in 12 months time. 65c/70c in 3 years time is not unrealistic. There's your 1000%.


----------



## fuzzie (26 March 2009)

There is no meeting mentioned in the release. (I don't hold SPARCS and haven't read the Trust Deed). dates listed are:

Timetable 2009 

26 March - (5pm NZ time) last date that Conversion Requests can be received 
On or about 27 March - BBI announces the number of Conversion Requests received  
20 April – Commencement of VWAP period for 17 May 2009 conversion  
17 May - Conversion date for those that elect to convert 50% of holding


(edit) Oops I just read to the end of that notice. Strike out  this comment


----------



## Viva_Las_Vegas (26 March 2009)

VIVA LAS VEGAS........ ASX MATH 101 - EPIC FAIL!!!


Thanks for setting me straight Banksa. I hope they get a good price for DBCT, we would all be cheering then. I hope the market gets some stability back soon.

If the SPARKS holders convert to BBI do you see BBI SP taking a negative hit?


----------



## eMark (26 March 2009)

alphaman said:


> That's a summary of what I've read of the holders. I mean, holders are saying BBI has great assets, great cash flows, paying off debts is just a matter of time. The sellers have been selling simply out of ignorance, panic or fear. IF true, and therefore BBI does survive, BEPPA has to rise towards face value. In fact it may even trade above 100 because its interest rate has been reset higher hasn't it? So it's easily at least a ten bagger.




Alphaman

What I am asking is, are you a holder?

From what you are writing, you are commentating on other holders.

Disclaimer I hold BBI only.


----------



## onshow (26 March 2009)

banska bystrica said:


> Viva,
> 1000% profit for BEPPA from today's price of 8c is 88c. Now the redemption price in 2012 is $1.00 + accrued interest. So I would say so long as BBI survive, a 1000% increase on the BEPPA price is actually a bit conservative.
> 
> Regarding BBI: If they are corporate debt free within 12 months, the stock will be around 40c+ in 12 months time. 65c/70c in 3 years time is not unrealistic. There's your 1000%.




hi there banska bystrica you seem to know a fair bit about this share so i just got a couple of questions as a bbi share holder.
How much cash in bank does bbi have?
How much debt do they have?
how much annual cash flow do they have?
what is the total value on all there assists?
Sorry for the questions but if you know that would be great to me and other readers. As i said in an earlier post i bought in today at .08c and fairly big amount and am one who is going to sit on them for a while 1-2 years and hopefully reap the rewards! Do you know how much sort term debt they have and is so will the sale of the DBCT cover that? thanks for your help in advance!


----------



## Viva_Las_Vegas (26 March 2009)

OnShow

look back a couple of days in posts Banksa put up some numbers. Very informative. I too plan to hold. One thing that spooks me is the cheap price of BEEPA which I own. It makes me think people don't have much confidence in the BEPPA debt being paid, hence dare I say no faith in the future of bbi???


----------



## onshow (26 March 2009)

Viva_Las_Vegas said:


> OnShow
> 
> look back a couple of days in posts Banksa put up some numbers. Very informative. I too plan to hold. One thing that spooks me is the cheap price of BEEPA which I own. It makes me think people don't have much confidence in the BEPPA debt being paid, hence dare I say no faith in the future of bbi???




ok thanks for that viva ill look at his past posts! As for bbi from what i have researched they have some very good profitable assests around the world and they can only benifit from the recovery of the finacial crisis.


----------



## alphaman (26 March 2009)

eMark said:


> Alphaman
> What I am asking is, are you a holder?



No.  Why? 

*I think a simple question like this should not require 100 characters..................*


----------



## investorpaul (26 March 2009)

Viva_Las_Vegas said:


> OnShow
> 
> look back a couple of days in posts Banksa put up some numbers. Very informative. I too plan to hold. One thing that spooks me is the cheap price of BEEPA which I own. It makes me think people don't have much confidence in the BEPPA debt being paid, hence dare I say no faith in the future of bbi???




The question is really is it being priced at a couple of cents out of ignorance??? Obviously a number of us on here think the answer to that is yes and as Banksia pointed out a few days ago, the code BBI keeps getting associated with Babcock and Brown International. The average investor/trader/mum and dad or whoever hear the words babcock and brown or BBI and they decide to run.

Obviously with any trade there is a risk or failure and sure the company could fail due to unforeseen events (eg failure to sell assets, unable to refinance or whatever) but with the potential to gains that could be made being x10 or x20 (as per previous quotes by other posters) the gains outweigh the potential losses by such a large degree that its a trade I decided to make, along with alot of others.

Now we wait and see


----------



## eMark (26 March 2009)

alphaman said:


> No.  Why?
> 
> *I think a simple question like this should not require 100 characters..................*




It's just that you sound so convinced by what other posters have said (I'm remembering though that you are merely reporting what others have said); when read quickly, it sounds like it's coming from you.

Are you convinced? Why are you not a holder? Or do you prefer to be a bystander?


----------



## hardyakka (26 March 2009)

Folks,

Don't you think that there is a little of "counting your chickens before they hatch?" I would hate to see people either disappointed or start to ride the highs and lows of the daily share price.

I have been buying BEPPA since November and have paid prices ranging from 4 to 12 cents. I try and adopt the view that monies paid out have already been lost and hence written off. The result of this is that anything above zero is good news and makes you smile.

Over the next few years I am of the view BEPPA can easily be in the 75 cents plus range, subject to asset sales etc. So that amount is above zero, yet I will have a bigger smile.

Be patient before counting any chickens.

Cheers


----------



## Tysonboss1 (26 March 2009)

Viva_Las_Vegas said:


> I think a 1000% return in 2 to 3 years is a bit optimistic considering BBI was only at $1.50max or something like that. I think you need to back off the throttle there Han Solo.




Beppa is 8c if it makes it to 80c thats a 1000% return, I didn't say 1000X return, for a 100% return it only has to go to 16c.

with beppa having a good chance of being worth $1.20 1000% return is not unlikly.


----------



## Tysonboss1 (26 March 2009)

Viva_Las_Vegas said:


> My concern is, with all the money printing going on and crazy inflation being a possibility wouldn't that technically devalue our shares should they reach the high milestones we expect, essentially reducing REAL gains?




Inflation increases prices, so values of every thing from property to shares to bread and milk all eventually follow inflation.

in high inflation times it is actually better holding assets than cash. for example some of BBI's revenues would be linked to inflation, meaning regulations would allow price increases with inflation, so their revenues would be increasing, while the debt they owe the banks would stay the same and the higher revenues would make repaying the loan easier.

It actually makes sense to have debt during high inflation times.

to use a real world example, their was a country in eastern europe that at one stage had a daily inflation rate of 36%, meaning what you could buy for $1 on 1st of jan cost $1 billion by the 1st of may, so if in those three months you had tried to save so would have gone broke, however owning an asset would have protected you from inflation, any asset even a loaf of bread stored in your freezer would have held it's value better than cash.


----------



## hardyakka (26 March 2009)

Folks,

I want to have a whinge, so please be aware of that.

Banksia provides the forum with informed and analytical views on BBI and I for one along with many others appreciate these.

But we must never lose sight of the fact that the investor alone is totally and utterly responsible for considering any posts and completing whatever research  considered necessary in making an investment decision. The buck stops with the investor and no one else.

The information flow should be a two way street so we should try and provide input so Banksia gets as much out of the forum as he puts in.

Now I have had my whinge, so I am going to take cover.

Cheers

"The KFC will go into the death spiral without the 11 secret ingredients"


----------



## bellenuit (26 March 2009)

Tysonboss1 said:


> Beppa is 8c if it makes it to 80c thats a 1000% return, ........




I don't want to be pedantic, but that is 900% return, not 1000%. Just as making it to 16 cents is a return of 8 cents on your 8 cents, thus 100%, making it to 80 cents is a 72 cents return on your 8 cents, thus 900%.


----------



## banska bystrica (26 March 2009)

hardyakka said:


> Folks,
> 
> Don't you think that there is a little of "counting your chickens before they hatch?" I would hate to see people either disappointed or start to ride the highs and lows of the daily share price.
> 
> ...




Great post hardyakka. Whilst those of us who have done the hundreds of hours of research can be confident, there are still significant risks with owning BBI/BEPPA.
They have a mountain of debt including $1.4Bn of corporate debt (the type of debt that can kill a company).
Their ICR coverage is tight.
Their cash situation is tight.
They are dependent on the continued support of their bankers.

Having said all that, I think they are a bargain, especially the slightly less riskier BEPPA.


----------



## random (26 March 2009)

I very much enjoy reading the comments of everyone who posts on this forum.
We all have learn't a great deal and voiced our own concerns.
In recent times however many issues and questions have been recycled more than once.
For some of the newer members can i suggest that you go back more than just a couple of pages and read the earlier posts. There is a great deal of information there to be learnt and it is well worth the effort.

Cheers.


----------



## hardyakka (26 March 2009)

banska bystrica said:


> Great post hardyakka. Whilst those of us who have done the hundreds of hours of research can be confident, there are still significant risks with owning BBI/BEPPA.
> They have a mountain of debt including $1.4Bn of corporate debt (the type of debt that can kill a company).
> Their ICR coverage is tight.
> Their cash situation is tight.
> ...




Spot on BB, there are still significant risks, and BBI is taking slow but steady steps to address these. Yet each one of these brings a flurry of activity and speculation regarding price etc, this is unnecessary.

The two things that really only interest me in the next 3 months are a) management agreement and b) DBCT and PD sale (final not speculation). Those will go a long way to addressing the corporate debt issue and if the price moves upward I will be happy.

But then, I would rather the price fall back because a DB is selling down so I can acquire many more cheaply.

Cheers


----------



## alphaman (26 March 2009)

eMark said:


> Are you convinced? Why are you not a holder? Or do you prefer to be a bystander?



If BBI survives, the size of BEPPA's payoff is very big. At least a ten bagger as I said. It does not require convincing, if you understood how hybrids work you would know.

But I'm not convinced BBI will survive. I think the probability is too small to justify a normal sized position. That's why I'm just watching. The experience you get from watching in real-time how distressed companies evolve is very valuable. You get to understand why there were still people buying into bankrupt companies right until the last day (not saying BBI will fail; talking about AFG and others). And it helps explain why price trends occur.


----------



## Malindidzumu (27 March 2009)

> But I'm not convinced BBI will survive. I think the probability is too small to justify a normal sized position. That's why I'm just watching. The experience you get from watching in real-time how distressed companies evolve is very valuable. You get to understand why there were still people buying into bankrupt companies right until the last day (not saying BBI will fail; talking about AFG and others). And it helps explain why price trends occur.




What will it take to convince you that BBI will survive, or have you already made up your mind irrespective of whatever happens or doesn't happen in the future? What is your definition of a 'normal sized' holding? Surely such a thing is in the eye of the beholder and everyone would have a different interpretation of what does or does not constitute a "normal" holding. Also, by introducing the term "bankrupt" into your post you are at least insinuating if not outrightly suggesting that BBI is bankrupt or at least as good as bankrupt. Where is the evidence of this "bankruptcy" that has led you to such a conclusion? It is fine to speculate but when you pass things off as fact you need to back them up with evidence to support your argument.


----------



## Malindidzumu (27 March 2009)

Sorry, the second half of the previous post was cut off and I had to re-type
it and send it separately.



> not saying BBI will fail




It sure reads like you are, but maybe I just misinterpreted what you wanted to say. I am sure you will let me know when you read this. 

In any case I would be interested to know why you remain unconvinced about BBI's future and why you don't think a normal holding (depending on your definition of what a normal holding is) in BBI is justified. Is it just a gut feeling, are you risk averse, or is there some other factor or factors involved in your reasoning? It would be appreciated if you could share your thoughts in a little more detail.


----------



## Viva_Las_Vegas (27 March 2009)

To add to the BBI survival debate check out this site I found

http://www.railexpress.com.au/archi...es/bbi-draws-up-dalrymple-bay-stake-shortlist

The values it qoutes for DBCT sure add weight to Banksa's comments regarding BBI being free of debt if the whole of DBCT is sold.

There seems to be a lot more articles online about this subject.

How does everyone feel about the SPARCS announcement today?


----------



## nulla nulla (27 March 2009)

Viva_Las_Vegas said:


> To add to the BBI survival debate check out this site I found
> 
> http://www.railexpress.com.au/archi...es/bbi-draws-up-dalrymple-bay-stake-shortlist
> 
> ...




My initial impression is that bbi are moving to avoid:
1. The collapse of the market price due to the dilution of share values that would occur if the conversion went through; and 
2. The further collapse of the market price (if the conversion went through) as any of the sparc holders started selling down the shares issued.


----------



## Viva_Las_Vegas (27 March 2009)

nulla nulla......please don't say collapse....otherwise i'll carp myself!

OR I may be pushed to sell off at a stupid price, like I've been know to do in the past.

From what I read in the announcement, BBI will be issuing about 14% of the total shares out there to SPARCS if converted?


----------



## banska bystrica (27 March 2009)

Great result. If I were holding SPARCS, I would have covered all bases and sent in a request for conversion form just in case the vote at the meeting doesn't get the 75% required.

The fact that such a small number have requested conversion means that it is almost a shoe-in that they will get the 75% required to approve the new 2010 date as a reset date and therefore there will be NO dilution. All SPARCS holders have to abide by the vote result, even those who requested conversion. The conversion requests will be voided if 75% vote for the new terms.


----------



## fuzzie (27 March 2009)

So if the SPARCS people approve the change of Trust Deed, which is likely since only ~17% of holders put in conversion requests, that means there is no chance of a cash distribution from BBI or BEPPA until all SPARCS are redeemed i.e. new earliest date will be 17 Nov 2010, even if DBCT is sold.

I'm beginning to see why this is a long term play. And the stock market these days is long term play adverse, especially instos who will be fighting to show some short term positive numbers to advertise their products as being winners?


----------



## banska bystrica (27 March 2009)

fuzzie said:


> So if the SPARCS people approve the change of Trust Deed, which is likely since only ~17% of holders put in conversion requests, that means there is no chance of a cash distribution from BBI or BEPPA until all SPARCS are redeemed i.e. new earliest date will be 17 Nov 2010, even if DBCT is sold.




Hi fuzzie,
You're half right. However, if a 100% DBCT sale and/or PD Ports sale generates enough cash to pay off corporate debt, BBI can then use existing cash plus free cash generated by ongoing business to also pay out SPARCS in full before 17 Nov 2010.


----------



## Mitsimonsta (27 March 2009)

I'm a new member here, specifically signed up to get a feel for BEPPA.
A little upset that I had not bought into it already - especially around the 4c mark when I had the chance, I got some RIO shares at $47 instead.

At this point in time, I'd be happy to get some BEPPA and hold - I am in a buy & hold strategy for now.

Great info in the thread Banksa, will keep an eye on it.

Holding: CBA, FMG, FXJ, MAP, ORG, RIO, SHL if you are wondering


----------



## banska bystrica (27 March 2009)

A poor lost soul over the road wrote this classic:

_"BBI and BEPPA are rowing the same boat. BEPPA turns into BBI ords.

If there is more dilution now, it makes it even worse for BEPPA as BBI share price will be lower upon dilution.

Think about it."_

I think he should have a long hard think about it. The price of BBI at BEPPA conversion date is meaningless to BEPPA holders. The lower the price, the more BBI shares we receive.
If BBI is 5c, we receive 20 BBI shares for every BEPPA.
If BBI is 1c, we receive 100 BBI shares for every BEPPA
If BBI is $1, we receive 1 BBI share for every BEPPA.

I cannot believe a person with 20+ years of finance experience cannot comprehend the simplest of matters. Folks, be careful who you listen to.


----------



## awg (27 March 2009)

banska bystrica said:


> A poor lost soul over the road wrote this classic:
> 
> _"BBI and BEPPA are rowing the same boat. BEPPA turns into BBI ords.
> 
> ...




I agree with what you are saying, but do you think perhaps some of the dilution is likely to take place in the market after the conversion, due to general bearishness, offloading, etc...therefore pushing down the price and effectively diluting your investment cash value?


----------



## banska bystrica (27 March 2009)

It's a hypothetical argument because 2012 is three years away. I expect BBI to be trading at $1 by then assuming corporate debt is cleared, SPARCS and NZ bonds are redeemed and distributions have resumed.

However, if the BBI security price was still in the bathroom in 2012, all the dilution would be happening in the 20 day period prior to conversion. The damage for BBI holders would be happening at that time when they are working out the weighted average price. Sure, maybe for a short time after conversion there would be some pressure but that's a short term problem.

As I say, I think it's all hypothetical anyway.


----------



## Tysonboss1 (27 March 2009)

awg said:


> I agree with what you are saying, but do you think perhaps some of the dilution is likely to take place in the market after the conversion, due to general bearishness, offloading, etc...therefore pushing down the price and effectively diluting your investment cash value?




If after the physical dilution of the issuing of more BBI has occurred, there is alot of selling driving down the price creating a temparary over supply of BBI on the market at a discounted price, I will happily be there to help soak up the excess.

However, beppa is still 3 years away (holy smoke I will be 30), it will be a different world by then BBI may even be over a $1 by then.


----------



## hardyakka (27 March 2009)

banska bystrica said:


> A poor lost soul over the road wrote this classic:
> 
> _"BBI and BEPPA are rowing the same boat. BEPPA turns into BBI ords.
> 
> ...




BB,

Dont forget that you are referring to that place "across the road", the mods there have an IQ of a squashed mozzie.

Cheers


----------



## banska bystrica (27 March 2009)

LOL hardyakka. 

There are lots of ifs and buts over the next three years but it is not unrealistic to see a BBI price in excess of $1 by then. It's current NAV is $1 NOW.
I think the following has to happen between now and 2012 and we will see a 20 bagger from here on BBI: 

1. *A*ssets sales
2. *P*ay out corporate debt and SPARCS (added in SPARCS assuming the new conditions are voted on)
3. *R*esume distributions.

Funny that, it's the APR plan I wrote about in November 2008. It's going to take time but I'm patient.


----------



## Viva_Las_Vegas (27 March 2009)

Banksa I was hoping you could explain this as I am a newbie. And before I continue I understand the market is irrational right now, but this does not make any sense to me.
Wednesday we saw the BBI SP go up nicely with massive volumes being turned over. As it so happended BBI made an announcement about the DBCT sale. At this point I would have thought the SP would continue to climb given the SP rose on the anticipation of that announcement, the next day it lost all of that momentum. I do not get it.....the potential news of them selling assets to clear ALL corporate debt and then we go backwards?
Surely it could not have been due to the SPARCS announcement today as I am sure most experienced players such as yourself would have already known about the pending SPARCS date yesterday etc. So if dilution due to SPARCS was to scare people off, why the hell would so many buy up on Wednesday?
I have taken your advice and an not sweating on 1 & 2 cent shifts. I too am now in the long haul and will top up when prices drop to average out my overall price. But what has happened over the last 2 days with the SP has me baffled. (Not to mention 5 consecutive positive days on the ASX).

Any light you could shed for me would be great!

PS: What are your thoughts re dividends vs dividend reinvestment to get more shares?


----------



## TheAbyss (27 March 2009)

banska bystrica said:


> It's a hypothetical argument because 2012 is three years away. I expect BBI to be trading at $1 by then assuming corporate debt is cleared, SPARCS and NZ bonds are redeemed and distributions have resumed.
> 
> However, if the BBI security price was still in the bathroom in 2012, all the dilution would be happening in the 20 day period prior to conversion. The damage for BBI holders would be happening at that time when they are working out the weighted average price. Sure, maybe for a short time after conversion there would be some pressure but that's a short term problem.
> 
> As I say, I think it's all hypothetical anyway.




How do you come to $1 per share for BBI in 2012? What happens if a hedge fund calls for and gets BBI wound up in the interim? What does BEPPA return if there is no BBI?

Not saying that this can happen however do note that a call for exactly this has been made by TCI for BBW to be wound up and the assets sold.

Just curious.


----------



## investorpaul (27 March 2009)

Viva_Las_Vegas said:


> What are your thoughts re dividends vs dividend reinvestment to get more shares?




I was thinking about the Divs the other day as well, say BBI does go to $1 again and reinstates a div of between 5 and 7 cents pa. Then those that bought for between   2 and 7 cents over the last couple of weeks/months will effectively get 100% div yield on their initial investment (of course its all hypotheticals at the moment).


----------



## banska bystrica (27 March 2009)

The Abyss,

OK, you are talking about the proposal put for forward by a large shareholder in BBW? That is not a "wind up" of BBW but rather a proposal to dispose of assets in an orderly fashion and return the cash to BBW shareholders.

I would LOVE to see BBI do that. Sell every asset at book value or better. That would enable full repayment of BEPPA ($1 face value + 3c in deferred interest payments) and the net result would be BBI holders receiving approximately $1 per BBI.

REMEMBER: BEPPA holders get paid IN FULL before BBI holders receive anything.


----------



## banska bystrica (27 March 2009)

I think all on this forum who are interested in BBI/BEPPA should read the Investor Pack released with the interim result.

I refer to the BBI Consolidated Summary Balance Sheet as at 31/12/2008:

Current Assets: $928.1M
Non-current Assets: $14.519Bn
Total Assets: $15.447Bn

Current Liabilities: $1.998Bn
Non-current Liabilities: $11.084Bn
Total Liabilities: $13.083Bn

*NET ASSETS: $2.364Bn*

Now, included in the interest bearing liabilities is the debt owed to BEPPA holders of $780M.

Think of BEPPA as a 2nd mortgage. We, the BEPPA holders are owed $780M by BBI and in a sell down scenario, the banks get their debt back first, then NZ bond holders, then SPARCS, then BEPPA. BBI get the crumbs after that and right now, the crumbs are worth $2.364Bn which is close enough to $1 per BBI security.


----------



## Viva_Las_Vegas (27 March 2009)

Banksa,
So given the strong possibility of SPRACS holders voting to renew the trust deed or whatever it is, could actually be seen as SPARCS holders having faith in either the long term survival of BBI, faith in the balance sheet you just posted, and faith in the assets fetching book values and above ensuring NZ bond holders, then SPARCS get paid. Essentially if they were panicked they would opt for BBI conversion, sell out to get whatever cash they could...right?


----------



## banska bystrica (27 March 2009)

Viva_Las_Vegas said:


> Banksa,
> So given the strong possibility of SPRACS holders voting to renew the trust deed or whatever it is, could actually be seen as SPARCS holders having faith in either the long term survival of BBI, faith in the balance sheet you just posted, and faith in the assets fetching book values and above ensuring NZ bond holders, then SPARCS get paid. Essentially if they were panicked they would opt for BBI conversion, sell out to get whatever cash they could...right?




Yes. If I were a SPARCS holder and did not think BBI would survive, I would be desperately hoping they voted NO to the new terms, converted all my SPARCS into BBI and then I would sell the new BBI as soon as possible.


----------



## investorpaul (27 March 2009)

banska bystrica said:


> I think all on this forum who are interested in BBI/BEPPA should read the Investor Pack released with the interim result.




The investor pack is a good read. Its provides a great overview of their assets and strategy.

Its only 82 pages, I got through it and analysed it the other weekend after showing interest in this thread over the last couple of weeks. After reading the report, its almost impossible to argue over the quality of their assets and to date they have managed to refinance all of their debt. Previous to that I did some research for my boss who holds BBI who was being told to sell by others.

This weekend I'm putting in some effort to understand BEPPA (thanks BB for your analysis to date on BEPPA, its provided me with good ground knowledge so far and you have a real ability to explain some of the complex parts in easy to understand terms). Hopefully on Monday, once i get my head around it (always a little more cautious with 5 letter codes), ill be able to pick up some BEPPA.

At this point im hedging my bets 50% BBI, 50% BEPPA and obviously a win is not a guarantee but its like poker when the % return is so great compared to your initial outlay it requires further research/thought and if in your mind you feels its the right move to make then you take it.


----------



## banska bystrica (27 March 2009)

Paul,
I'd suggest you give BBI a call and ask for a hard copy of the Investor Pack. It's a lot easier going through it in hard copy.
I receive every report released in hard copy format.
I would be interested in your take on the Net Asset Value once you have digested it all.
Look at the "intangibles" and "goodwill". This is one area where I believe the market does not actually understand the true value.
Are you aware that Dalrymple Bay Coal Terminal (DBCT) is listed as "intangible"?
That is because it is a 99 year lease. A lease is "intangible". Things like this can confuse the average investor and even the professionals.

One broker told me last year that BBI's intangibles and goodwill were worth nothing. Yeah sure! If you rang a bell, that broker would think it's Mr Whippy.


----------



## hardyakka (27 March 2009)

TheAbyss said:


> How do you come to $1 per share for BBI in 2012? What happens if a hedge fund calls for and gets BBI wound up in the interim? What does BEPPA return if there is no BBI?
> 
> Not saying that this can happen however do note that a call for exactly this has been made by TCI for BBW to be wound up and the assets sold.
> 
> Just curious.




It would not matter in the least if a single hedge fund acquired all of BBI, the rights of BEPPA holders are unchanged. They can only be changed by a vote of BEPPA holders (50 or 75% depending upon the type of resolution).

The only thing a BEPPA holder needs be concerned about is,  in a worst possible case situation, if NTA (assuming this translates to the same cash amount) falls below zero. Every $ below zero is a reduction in the amount available to pay out the $700M odd BEPPA liability.

NTA is currently $2.4B and when asset sales occur above book will increase.

Cheers


----------



## investorpaul (27 March 2009)

banska bystrica said:


> Paul,
> I'd suggest you give BBI a call and ask for a hard copy of the Investor Pack. It's a lot easier going through it in hard copy.
> I receive every report released in hard copy format.
> I would be interested in your take on the Net Asset Value once you have digested it all.
> ...




BB - I printed the 82 p report on the work printer, lol. I agree if you try and read PDF on the computer screen you dont digest it all.

I will look further into the Net Asset Value and "intangibles" i think you have picked up on an important point there, i didnt think to consider the implications of DBCT being a 99 yr lease hold and the implication that would have on the balance sheet. Hopefully I get some time to research that on the w/e

As you pointed out 99.99% of people would be confused or gloss over it, but that point is hugely significant. Obviously the general market (and as the broker said) would value the intangibles at 0 in todays market. But a 99 year lease on the DBCT is a basically a license to make money for the 99 yrs and to value it at zero is a huge oversight by the market and the broker.

My bosses broker recommended he sell, because in his words BBI was only going to zero. His accountant agreed and said to sell. I convinced him otherwise, so I hope it works out (he would owe me a pay rise if it does)


----------



## hardyakka (27 March 2009)

banska bystrica said:


> Paul,
> One broker told me last year that BBI's intangibles and goodwill were worth nothing. Yeah sure! If you rang a bell, that broker would think it's Mr Whippy.




That is why the broker got creamed in the GFC...get it..creamed...so much for my intellectual wit..sighs

"Breaking News - Mr Whippy creams the death spiral, market on ice"


----------



## hardyakka (27 March 2009)

investorpaul said:


> BB - I will look further into the Net Asset Value and "intangibles" i think you have picked up on an important point there, i didnt think to consider the implications of DBCT being a 99 yr lease hold and the implication that would have on the balance sheet.




That is a crucial point and it is surprising how many persons look at it and write if off assuming it is a premium paid for the acquisition of a business, ie surplus of cash paid over the value of assets acquired. 

Cheers


----------



## Viva_Las_Vegas (27 March 2009)

My only draw back is not seeing much of a buy recommendation  by brokers for BBI. I've checked a few sources which say to hold which is promising, but considering all the points made by members here regarding asset values etc. I would expect it to have a stronger BUY recommendation. Any thoughts?


----------



## banska bystrica (27 March 2009)

Most brokers have no idea. They will be saying BUY when the risks are low and the share price is 30c. ABN Amro were saying BUY at $1.30, BUY at 80c, BUY at 65c, BUY at 26c, SELL at 17c, HOLD at 5c.
You get the drift of brokers? They are known as "front runners". When the markets humming along, everything's a BUY. When the market turns to garbage, everything is a SELL or HOLD at best.


----------



## nulla nulla (27 March 2009)

banska bystrica said:


> Most brokers have no idea. They will be saying BUY when the risks are low and the share price is 30c. ABN Amro were saying BUY at $1.30, BUY at 80c, BUY at 65c, BUY at 26c, SELL at 17c, HOLD at 5c.
> You get the drift of brokers? They are known as "front runners". When the markets humming along, everything's a BUY. When the market turns to garbage, everything is a SELL or HOLD at best.




Hah hah hah, love the definition of brokers. So, if it gets down to $0.01 does it become a hold? If it holds at $0.033 is it a sell and if it moves back up to the $0.07 - $0.084 range does it become a buy?


----------



## ROE (27 March 2009)

Viva_Las_Vegas said:


> My only draw back is not seeing much of a buy recommendation  by brokers for BBI. I've checked a few sources which say to hold which is promising, but considering all the points made by members here regarding asset values etc. I would expect it to have a stronger BUY recommendation. Any thoughts?




want advice from someone who gone down this road, when he start out and doesn't understand much about stock market and business model 

Stay away from bad business doesn't matter how cheap they look.

Become an independent thinker and ignore all the noise like broker recommendation, newspaper and general headline grabbing article that scare you without proper facts.

Seek out techniques use by some of the world best investors and follow that you will see remarkable return on your investment and you straight away know what business you should put your money into 

Here are some of the name to look up
Lou Simpson
Charlie Munger
Warren Buffett
Walter Schloss
Phil Fisher

if you don't want to lose money you can learn 2 ways

1. From reading 
2. From someone else mistake and 

I think Lou Simpson said that.

The journey to these timeless techniques and advice will not be quick, it require countless hour of reading and research but if you are not willing to do that...a safer place is the index fund.


----------



## Viva_Las_Vegas (27 March 2009)

Thanks ROE. Thats some good advice. And others good point re brokers. 1c or 10c doesn't reflect the quality of the assets in this case.
ROE what is your opinion of BBI or BEPPA?


----------



## eMark (27 March 2009)

ROE said:


> want advice from someone who gone down this road, when he start out and doesn't understand much about stock market and business model
> 
> Stay away from bad business doesn't matter how cheap they look.
> 
> ...




I take it that you don't support BBI as a security and /or comany/business model? This is actualy a serious question.


----------



## investorpaul (27 March 2009)

The other thing to remember with Brokers is, they want to look like they know what their doing.

If every other broker is saying Sell and as a broker you want to recommend buy, you are going to have a hard time covincing the majority of your clients to follow your strategy. Furthermore if your clients see you as "risky" i.e. my broker has recommended buying XYZ for 7 cents when its fallen from $1.50+, or everone says sell yet my broker says Buy. The client will leave, it doesnt matter if they end up being right or wrong it is the clients perception of their broker being right or wrong or Risky with their money.

On a side note one of the reasons my bosses broker recommended selling was that the portfolio must have no more than 30 stocks & each stock must be balanced to a set figure once a year and because the portfolio had more than 30 stocks some had to be cut for the sake of managing the portfolio. Although I agree 30 is more managable, it doesnt mean you need to cut the excess straight away.


----------



## Julia (27 March 2009)

investorpaul said:


> On a side note one of the reasons my bosses broker recommended selling was that the portfolio must have no more than 30 stocks & each stock must be balanced to a set figure once a year and because the portfolio had more than 30 stocks some had to be cut for the sake of managing the portfolio. Although I agree 30 is more managable, it doesnt mean you need to cut the excess straight away.



This philosophy of maintaining proportional balance has never made any sense to me.  Why wouldn't you let your winners run and allocate a greater proportion of the p/f value to them while they are doing that?

A friend of mine sensibly moved his shares to cash well over a year ago, but was castigated by a so called adviser for not maintaining the traditional balance between 'growth' assets and cash.  This despite the fact that the 'growth' assets were falling like a weighted anchor on a daily basis.

No wonder people have little faith in financial advisers.


----------



## investorpaul (27 March 2009)

Julia said:


> This philosophy of maintaining proportional balance has never made any sense to me.  Why wouldn't you let your winners run and allocate a greater proportion of the p/f value to them while they are doing that?
> 
> A friend of mine sensibly moved his shares to cash well over a year ago, but was castigated by a so called adviser for not maintaining the traditional balance between 'growth' assets and cash.  This despite the fact that the 'growth' assets were falling like a weighted anchor on a daily basis.
> 
> No wonder people have little faith in financial advisers.




Ive never sold any shares to rebalance my portfolio either. For my long term stocks I buy with the same inital outlay and if one happens to be worth 3x more than the others after a few years, well so be it.

I think some of the brokers are caught up into wanting to rebalance, because they dont want to been seen as risk taking by clients


----------



## hardyakka (28 March 2009)

Lets not forget that the so called experts were the ones recommending institutional clients such as super funds take exposures to those wonderful instruments we now collectively refer to as toxic debt. Also if I recall one broker discounted the value of DBCT on the basis that property fund valuations were dropping....duh. 

The best advice I have seen is when brokers say buy, sell and vice versa. After all the commission generated pays their bonuses and advising a client to buy and hold longterm does not generate a lot of commission.

Cheers


----------



## select (28 March 2009)

hardyakka said:


> Lets not forget that the so called experts were the ones recommending institutional clients such as super funds take exposures to those wonderful instruments we now collectively refer to as toxic debt. Also if I recall one broker discounted the value of DBCT on the basis that property fund valuations were dropping....duh.
> 
> The best advice I have seen is when brokers say buy, sell and vice versa. After all the commission generated pays their bonuses and advising a client to buy and hold longterm does not generate a lot of commission.
> 
> Cheers




I think we all know that brokers, fund managers and analysts are typically DUDS. Finding a good one is difficult. Heck, watching Your Money Your Call on Sky Business is pretty scary.

We also know that many company managers are DUDS.

We also know that there are other people with a gift of the gab with too much spare time that frequent forums and have been flogging particular stocks from 47c to 2.5c for example.

Sometimes a dud is a dud and a bog is a bog and a bog can't be polished except by an illusionest.

What is real is the share price.


----------



## banska bystrica (28 March 2009)

select said:


> What is real is the share price.




Yep and we will see what the share price is this time next year. I bought 50,000 at 42c for a dip in the water. I bought too early. Guilty. What I did do then was have the courage of my convictions and extensive research to load up the truck below 4c in Nov 2008. I will not die wondering like some hey "select"/"macrae12". Good try old son.

Why did I take a dip at 42c last year? Because NAV was over $1 and a 60% discount seemed cheap to me. I thought the markets had bottomed. I was wrong and I wasn't the only one macrae12.
I have no respect for bit players who procrastinate and if they find  negatives, call a stock a dog. Every dog has his day.
Where is the factual evidence BBI is a dog? Please don't tell me the share price as that would show your complete ignorance of how markets work and assumes markets are efficient at every day of the week. Give me some facts.

PS. You can tell your buddy moderator pals I will not be returning across the road. ASF is a class above.


----------



## nulla nulla (28 March 2009)

banska bystrica said:


> Yep and we will see what the share price is this time next year. I bought 50,000 at 42c for a dip in the water. I bought too early. Guilty. What I did do then was have the courage of my convictions and extensive research to load up the truck below 4c in Nov 2008. I will not die wondering like some hey "select"/"macrae12". Good try old son.
> 
> Why did I take a dip at 42c last year? Because NAV was over $1 and a 60% discount seemed cheap to me. I thought the markets had bottomed. I was wrong and I wasn't the only one macrae12.
> I have no respect for bit players who procrastinate and if they find  negatives, call a stock a dog. Every dog has his day.
> ...





Good post, the asset backing per share is what holds my attention and the quality of those assets, Current prices appear to be significantly discounted to asset value per share. Some of this could be due to the flow over of the parent problems and bbp problems, some of it could be due to the market loss of support for reit's. 
The market having determined that reit's are toxic, has contributed to the refinancing problems of the reit's making it difficult for them to refinance or making it more expensive for them to refinance. Fortunately bbi have distanced themselves from bnb and have appointed outside consultants, such as macquarie, to assist with the sale of assets and restructure of their portfolio to reduce debt, improve gearing and improve their credit rating for when it comes to refinancing for the assets held. 
IMO the management is making all the right noises of a company board that can survive. I may be looking through rose coloured glasses, i hold and have topped up at $0.033 and $0.048 to significantly reduce the average price of my initial entry. The share price has dropped more then 90%, the value of the assets hasn't. No doubt some time in the future we will be able to look back through these posts and see whether or not our confidence was justified or other wise.


----------



## sinner (28 March 2009)

select said:


> What is real is the share price.




While this statement is indeed true, the fallacy which you have exposed is that you assume to know all the motivating factors behind the current price.

But you don't know them all, you probably don't even know the ones which matter. Nor do you acknowledge that supply/demand which influences the price most heavily is dynamic. 

If the price of an asset goes down does this mean we should "hate" it or "love" it. I personally "love" assets which have gone down in price, because in a fiat currency system such as the one we utilise today, this is generally *the only way* said asset will present value to an investor who has done their due diligence (not a speculator who generally buys at the top and sells at the bottom).

Your attitude is similar to that of Tony Blairs, who convinced the BoE to sell off huge chunks of their gold reserves when the price was 200USD/oz. I bet they wish they had hung onto it now...


----------



## Malindidzumu (28 March 2009)

> Current prices appear to be significantly discounted to asset value per share. Some of this could be due to the flow over of the parent problems and bbp problems, some of it could be due to the market loss of support for reit's.




Whilst I think that the problems with BNB have undoubtedly had a negative impact on BBI and its share price, I don't see what relevance BBP has to BBI, nor A-REITS as BBI is not an A-REIT, so I see those two having nothing to do with BBI whatsoever. However what you might be referring to is general market sentiment and that has also had a negative impact on BBI as it has on every other stock out there, but there was a clear change in the sentiment in the market that started two weeks ago and as Stock Markets are forward-looking they are already starting to price in an economic recovery from the second half of the year through next year.

Debt levels, the previously negative market sentiment and the relationship with BNB are the overriding factors in BBI trading at such a significant (massive) discount to NAV in my view. 

Given the quality of the assets, the apparent quality of the management team, the diversification of assets around the world (both in terms of asset class and geographic location), the future growth profiles of these assets and the regulatory nature of the majority of these assets, BBI, still at its current prices, even if it is not as cheap as what it once was, presents the opportunity of a lifetime to those willing and/or able to part with even a relatively small amount of money. It is well worth the risk for the reasons cited above as well as the fact that any investment made now is costing you a pittance for what shares in the company are really worth. Whenever anyone has been challenged on this forum to back up their statements of BBI's inevitable demise, in their own words, with evidence (facts) or even convincing arguments they have so far either fallen silent or failed miserably to provide anything of any worthwhile substance. It doesn't mean that BBI won't go bankrupt in the future of course, but I am still waiting for something of a little more susbtance from those who claim BBI has no future....I won't be holding my breath though!


----------



## select (28 March 2009)

banska bystrica said:


> Great result. If I were holding SPARCS, I would have covered all bases and sent in a request for conversion form just in case the vote at the meeting doesn't get the 75% required.
> 
> The fact that such a small number have requested conversion means that it is almost a shoe-in that they will get the 75% required to approve the new 2010 date as a reset date and therefore there will be NO dilution. All SPARCS holders have to abide by the vote result, even those who requested conversion. The conversion requests will be voided if 75% vote for the new terms.




Hi Sinner.

I would like to respond to you by referring to another posters quote.

34% of SPARKS holders have requested conversion. That's not an insignificant number.

If I was a SPARCS holder I have 2 choices. Convert or don't.

If I converted 50% in May and BBI went belly up I would lose my shirt because as a stapled securities holder I would be too far down the food chain to get anything back from the administrators. And the thought of selling my new shares significantly below the 6.5c "issue price" isn't very appealing.

As it stands, If I was a SPARKS holder I would be very pleased that 34% of SPARCS holders have requested conversion to stapled securities because then I would stand a better chance of getting 100% of my money back from the administrators. Less SPARCS is good if you hold SPARCS.

So, what would I do if I then had to vote on new reset terms? I would vote NO to the new reset terms and allow 34% of the holders to convert 50% of their holdings and in turn keep November 2009 alive and reconsider my options at that time.

I'm not saying BBI will go into admin but it makes sense for a SPARCS holder to let as many convert as possible and keep November 2009 alive.

So it is probably misguided for anyone to suggest that SPARCS holders have given BBI a vote of confidence.

I would vote NO.

But that's just my humble opinion.


----------



## investorpaul (28 March 2009)

I had a look through the BBI interim Results again this morning, there is still more I want to do and analysis. But the attached shows what we were talking about yesterday RE: Intangible assets.

You can see it the accounts that $1.6bn has moved from Property, Plant and Equipment to Intangible assets, this is in related to DBCT operation on a 99 yr lease.

As was pointed out yesterday by other posters a number of people/brokers have given Intangible Assets a value of zero. Obviously removing approx $1.6bn from the asset calculation means these people and/or the market are giving BBI a lower Net Asset value that would be the case if they valued DBCT properly (ie kept in within their calculations for Net Asset Backing, etc).

* I believe this is the correct analysis of the situation but as always do your own research and dont rely on what i have posted.


----------



## banska bystrica (28 March 2009)

select said:


> Hi Sinner.
> 
> I would like to respond to you by referring to another posters quote.
> 
> 34% of SPARKS holders have requested conversion. That's not an insignificant number.




34% is a pitiful number to be honest because of those 34%, the majority will have only forwarded a request for conversion form as "back up" just in case the vote is NO.
I expected over 50% would have sent in forms to cover all bases. The fact that such a low number have requested conversion tells me that the vote will be a resounding YES and no dilution will eventuate.
What would I know though? I have only done hundreds of hours of research into BBI. Maybe I should take the "select/macrae12" approach and just say it's a dog because it's 6c? I'm still waiting with baited breath for some hard evidence it's a dog. How about a bearish analysis of the balance sheet or EBITDA? Just give me something other than "the price is 6c, therefore it's a dog". I thought I left that sort of garbage analysis back at HC.


----------



## banska bystrica (28 March 2009)

select said:


> We also know that there are other people with a gift of the gab with too much spare time that frequent forums and have been flogging particular stocks from 47c to 2.5c for example.




Yes I've got heaps of spare time. As you would know, I play golf, I travel frequently and I invest in the market. That's my life and I make no apologies for "having too much spare time". You should try it one day select. It sure beats getting the 9 to 5 train. 
What gave me this lifestyle? A battered tech stock called Scitec Ltd (SCS) that AMP sold to me at 7c in huge volume which I held for number of years, watched it become VeCommerce and then I sold for over $1. That's right. SCS was considered a dog by every broker in town. The dog had it's day though. Woof woof! I never looked back after that. I expect BBI/BEPPA will provide a similar return.


----------



## Tysonboss1 (28 March 2009)

banska bystrica said:


> Maybe I should take the "select/macrae12" approach and just say it's a dog because it's 6c? I'm still waiting with baited breath for some hard evidence it's a dog. How about a bearish analysis of the balance sheet or EBITDA? Just give me something other than "the price is 6c, therefore it's a dog". I thought I left that sort of garbage analysis back at HC.




Well you see Banska, The stock market can never be wrong, It is a perfect efficiant market place that always prices things accucuratly based on all available infomation, There fore if the market is pricing BBI/Beppa at prices sub 10c, then yes the share must be a dog with no real value attached to it, It's not like the market ever acts based on fear or greed, people never make investments based on emotions or other factors affecting other parts of their personal or business life and every investor understands the company fully emotional news items don't affect anyones investments.

By the way, what I said above was totally in jest.


----------



## banska bystrica (28 March 2009)

select said:


> So, what would I do if I then had to vote on new reset terms? I would vote NO to the new reset terms and allow 34% of the holders to convert 50% of their holdings




Poor old "select" is assuming the 34% who submitted conversion forms will be voting NO.
I know one substantial SPARCS holder who sent in a conversion form but will be voting YES for the new terms. I'm certain there are many like him.


----------



## select (28 March 2009)

banska bystrica said:


> Poor old "select" is assuming the 34% who submitted conversion forms will be voting NO.
> I know one substantial SPARCS holder who sent in a conversion form but will be voting YES for the new terms. I'm certain there are many like him.




BB,

You seem to have missed the message in my post.

The 66% who didn't submit a conversion request would be delighted to vote YES in order to reduce the number of SPARCS which in turn would provide greater insurance of getting a 100% return in the event BBI enters admin.

For SPARCS holders it really makes no difference if there are 2.5 billion securities or 5 billion. Dilution isn't a concern to them. The returns will be the same and reducing the number of SPARCS would be an opportunity too good to refuse. 

If you owned 50% of all SPARCS and one other person had the other 50% i'm sure you would love him to convert and leave you with a greater insurance against your investment in the event admin occured

All the research in the world gives no guarantee against all the variables and it will certainly bring you no mercy from the bankers. This is just another situation that is in the lap of the gods. It could go either way.

For the above reasons and the fact 6 months is a long time in the current climate I think November 2009 will be kept open via a NO vote.

It's just an opinion.


----------



## investorpaul (28 March 2009)

Select 

What reasons do you see for BBI failing?

I am approaching BBI as a longer term spec holding (i agree nothing is certain but the rewards far out weigh the risk)

My reasons for optimism are:

1. To date BBI has been able to refinance their debt.
2. The majority of their debt is non recourse (ie asset specific), and therefore a failure of one asset or ability to finance it will most likely not be sufficient enough to bring the entire company to its knees.
3. Things like the DBCT being classified intangible and therefore people skipping over the fact that its income producing and therefore does have a saleable value.
4. No links or loans to the Parent B&B group
5. No management fees to the parent B&B group
6. High quality assets that you cant create more of easily (ie try building ports all around Europe). Sure they could suffer with a down turn in world trade but they are still needed.
7. Government regulation of some assets, this ensures a move stable cash flow and the government obviously views these of national significance (ie value)

* Disclaimer I hold BBI, please do your own research


----------



## banska bystrica (28 March 2009)

select said:


> All the research in the world gives no guarantee




No it doesn't but it sure beats the hell out of not doing the research. At least if I lose my substantial investment in BBI/BEPPA, I can sleep easily at night knowing I did the research, liked the probabilities and did all I could to justify a large investment in what the market considers a "trashed dog of a stock".
For those who paid $1.50+ for BBI, it is a very bad investment but my average is 7.5c for BBI and less for BEPPA as I've been arbing BBI/BEPPA each time they get to within a cent in price.
I am comfortable with my investment and that's all that matters to me. It might go belly up but I'm yet to see solid evidence that supports that theory.
The doomsayers have yet to present a compelling argument.


----------



## investorpaul (28 March 2009)

BB 

Quick question/thoughts Re: BEPPA, I have been doing a little read over the weekend.

Obviously BEPPA ranks ahead of BBI in regard to a wind up of the company, so If one was to buy BEPPA and BBI even in the event that the company goes belly up you could say afford to lose your $x investment in BBI as long as your BEPPA get paid out for say 15 to 20 cents.

I.E.

I buy one share in BBI for 7 cents
I buy one share in BEPPA for 8 cents

Assume the company goes belly up, I then need BEPPA to be paid out at a minimum 15 cents, to cover my investment for both sets of shares.

So effectively your hedging your potential losses (assuming that you expect BEPPA to get a reasonable payout relative to your entry price)

What are your thoughts on this?


----------



## banska bystrica (28 March 2009)

My thoughts are that IF BBI goes into administration, BEPPA will probably be worthless. If things were that dire for BBI to be liquidated, then it would be optimistic to envisage BEPPA holders getting anything after banks, SPARCS and NZ bond holders are paid.
Even so, BEPPA has a cushion of $2.4BN right now. That's the net equity of BBI as at Dec 31, 2008. So that cushion has got to be worth something.

I am buying BEPPA for two reasons: 

1. They do rank ahead of BBI
2. They are currently owed 3.1c in interest payments and this MUST be paid to BEPPA holders before the company can resume distributions to the BBI holders.

So, BEPPA has to be worth a minimum of 3.1c more than BBI plus whatever the $2.4Bn cushion is worth in a liquidation should that eventuate. You now see why I continue to purchase BEPPA whilst the price differential is so low.
In order for BEPPA to be worth $1 in 2012, BBI must remain strong. A strong BBI in 2012 means BEPPA is worth $1+ accumulated interest. I have a price point and a certain event whereby I would be prepared to sell all my BEPPA and buy BBI with the proceeds. That price is a long way north of 6c though and the "event" is still some way off although perhaps not as far off as most imagine.


----------



## Tysonboss1 (28 March 2009)

Does anyone have an estimate of how much debt BBI has been able to clear each month since they have ceased divs and interest payments.


----------



## Viva_Las_Vegas (28 March 2009)

Well this has turned into one hell of a discussion!!!

This week we saw the price of BBI go skyward for a change with the pending announcement, which ended up being in relation to DBCT.
 So here are my questions which Banksa will probably be able to answer.

1) Since DBCT is intangible, are BBI then selling the 99 year lease rights to it?
2) Is DBCT making money for BBI to date? How much per quarter?
3) Same question as TysonBoss, how much debt has BBI manged to clear since suspending dividends etc?

I think BBI has a great potential IF it survives, and honestly I would be gutted if I lost what I had invested in it.

I just hope we are all not looking at it through rose coloured glasses simply because we have decided to tie our money up in it.
The best analogy I can think of is reading camera reviews online, those people who spend a lot on a new camera are usually unlikely to bag out their purchase.
I enjoy hearing the positives of BBI, but shouldn't we examine worst case scenarios?


----------



## nulla nulla (28 March 2009)

Many many years ago, I bought Burns Philp for under $0.10 and as bpc recovered I took part in the issue of options and convertable preference shares, Graham Hart,in control of the company, steered it out of receivership, bought out Goodman fielder then privatised bpc at over $1.00.  The underlying value of the assets behind the share, combined with the determination of the chairman and Mr hart as MD, gave me great comfort that my investment was not going to be squandered.
In bbi, I see a similar oportunity.


----------



## hardyakka (28 March 2009)

select said:


> I think we all know that brokers, fund managers and analysts are typically DUDS. Finding a good one is difficult. Heck, watching Your Money Your Call on Sky Business is pretty scary.
> 
> We also know that many company managers are DUDS.
> 
> ...




Select,

The fact is that BB has made the price of his purchases known and you are restating old news, to what end? 

Yes he does support BBI for reasons that that have been shared and referenced to supporting documentation. Each person can review this and form their own view.

If you hold an opposite view then I would love to hear it and read any supporting data I assume you have. 

Cheers


----------



## hardyakka (28 March 2009)

Folks,

Do you realise that you are messing up my purchase strategy!!

If everyone was to agree with the "facts" put forward by select/macrae then he may persuade persons at the other forum to offload BEPPA and even BBI and my buy orders will be filled. 

Please help me out, I want an additional mill of BEPPA, so can we please agree:

a) BBI will go bust
b) BEPPA worthless
c) BBI a dog/trash etc etc
d) Only a mug would buy BBI/BEPPA
e) All facts show it will go bust
f) Intangibles worth nothing
g) BBI owes BNB squillions
h) man agree buyout number billions.
i) No one wants BBI assets
j) BBI and BEPPA are in (dare I say it) a DEATH SPIRAL
k) You get 6 months hard labour for saying BBI has any value
l) BBI is like a US REIT with retail exposures in Cleveland
m) Anything else negative you can think of.

Taa in advance

Cheers


----------



## drsmith (29 March 2009)

It's primary objective was to generate a growing stream of fee income for the now deceased BNB mothership.


----------



## mark_au (29 March 2009)

hardyakka said:


> Folks,
> 
> Do you realise that you are messing up my purchase strategy!!
> 
> ...




LoL Nice strategy HY ;-)
I think your window of opportunity may have passed though..
If it works, i'll be in for some more ;-)


----------



## nathanblack (29 March 2009)

thurs and friday saw a bit of downward pressure on beppa/bbi on otherwise positive days. possibly profit takes after the gains made earlier in the week(stock specific and in broad term)

fri the dow fell 150pts so perhaps our market will be off 30pts at opening and there may be some buying oportunity in beppa/bbi. i'll try get some beppa at 7cents


----------



## Tysonboss1 (29 March 2009)

Viva_Las_Vegas said:


> honestly I would be gutted if I lost what I had invested in it.




It's not that bad, The most you can lose is 100%, unlike some other investments, and you stand to gain well in excess of 1000%.

From your posts I can see that your emotions seem to swing with news and daily market results, you need to try and stop this happening.

before you make an investment, decide what it is you want the investment to achieve, conduct as much research as possible to try and find out how likly it is the investment will achieve this outcome. if it is a longterm out come you want, then detach yourself from short term volitilty, and monitor only things that will affect the investment achieveing the goals you set out to achieve.


----------



## prawn_86 (29 March 2009)

eMark said:


> I take it that you don't support BBI as a security and /or comany/business model? This is actualy a serious question.




For me personally (cant speak for ROE) its that I dont fully understand the business model. There are alot of complex 'banking' issues involved and I would rather stick with co's that are clear cut and i know what they are doing financially


----------



## banska bystrica (29 March 2009)

_"You are dreaming if you think the NTA is 88 cents.

What about the $700M of pref share dilution? How do you propose they deal with this? Where is the $700M going to come from to repay these?

Pure fantasy."_

I suggest dargie reads pages 28 and 29 of the 2009 Interim Results released on March 27, 2009. The NTA and NAV figures take into account full repayment of debt, SPARCS, NZ bonds and BEPPA. FULL repayment.
Some posters who give the impression of understanding financial statements are really showing a very basic lack of understanding.


----------



## hardyakka (29 March 2009)

banska bystrica said:


> _"You are dreaming if you think the NTA is 88 cents.
> 
> What about the $700M of pref share dilution? How do you propose they deal with this? Where is the $700M going to come from to repay these?
> 
> ...




BB,

I am speechless, the impression given by the death spiral king aka dargie is the complete opposite.

Cheers


----------



## bellenuit (29 March 2009)

*Interest Bearing Liabilities and Deferred Tax Liabilities*

I have just commenced reading the investor pack, so excuse me if this has been answered later in the pack.

The calculation of Net Assets on page 12, shows that Net Assets have fallen from $3.09B at 12/07 to $2.36B at 12/08, a decline of $0.73B. 

Total Assets have increased by $2.78B in the same period, but Total Liabilities have increased more, by $3.50B.

The two components that have contributed most to the increase in Total Liabilities are *Interest Bearing Liabilities*, which have increased by $2.26B and *Deferred Tax Liabilities*, which have increased by $0.67B.

I assume that the Interest Bearing Liabilities refers to the debt that was taken on to purchase the assets that caused the Total Assets to increase, but what are Deferred Tax Liabilities all about.

The decrease in Net Assets of $0.73B is comparable to the increase in Deferred Tax Liabilities of $0.67. Are Deferred Tax Liabilities something that will continue to rise, eroding the value of Net Assets over time?


----------



## Viva_Las_Vegas (30 March 2009)

Tysonboss1 said:


> It's not that bad, The most you can lose is 100%, unlike some other investments, and you stand to gain well in excess of 1000%.
> 
> From your posts I can see that your emotions seem to swing with news and daily market results, you need to try and stop this happening.
> 
> before you make an investment, decide what it is you want the investment to achieve, conduct as much research as possible to try and find out how likly it is the investment will achieve this outcome. if it is a longterm out come you want, then detach yourself from short term volitilty, and monitor only things that will affect the investment achieveing the goals you set out to achieve.




Tysonboss you've hit the nail on the head with me pal. I do swing too much with daily market results etc. It does nothing but cause me frustration, and it shows how new I am to the markets. I hope to reign in my emotions and treat this as a long term investment and maybe top up if it gets cheaper. 

There is one thing though relative to daily markets which I would like to get all of your opinions on, particularly Banksa. Say hypothetically BBI drops to 1 cent. Would this panic anyone or would you buy more?

What I saw last week with the sharp spike in SP....FOLLOWED by an announcement also led me to think there was some insider trading going on. So my point is IF BBI hit 1 cent, could it be for good reason and not just the overall market trend? 

Like I said in another post sometimes it is difficult for us to see the negatives in something we have invested sizeable amounts of money in, so perhaps we do not discuss the negatives. That is a trap I wish not to fall into.

Good luck out there today all you battlers.

PS I have added myself to the loser thread!


----------



## banska bystrica (30 March 2009)

bellenuit,
Good post and I'll deal with those questions later.

Some people are suggesting that the threat of massive dilution from BEPPA in 2012 is the reason for the price of BBI being trashed to 6c.

Personally, I think the threat of BEPPA dilution in 2012 has very little to do with the BBI price in 2009. I speak with four brokers, a hedge fund manager and two insto dealers. When I have mentioned the BEPPA issue in 2012, the response has been the same from all parties. It's not an issue right now. The market is flat out looking three weeks ahead let alone three years.
Unanonymously, they all say the share price being in the bathroom is due to the GFC and it's effect on all stocks but primarily those stocks with excessive debt, the complex nature of  BNB, its satellites and the structures, the management agreement between BNB and BBI and a flight to cash globally.
It has very very little to do with BEPPA. In fact, BEPPA's effect on BBI doesn't rate on the radar of the market participants I speak to.
This "death spiral" talk we constantly hear of from certain posters is just nonsense. Sure, BBI has to deal with BEPPA in three years time but to be honest, if assets sales eventuate in the manner I envisage, BBI will be a very different company and its share price in 2012 will be a big multiple of what it is today.
Therefore, I expect the BEPPA issue to be handled with ease as a conversion of BEPPA to BBI at parity is at worst "neutral" to BBI. If a company can swap a debt (BEPPA) for equity at an equivalent price, then that's not dilutionary to existing BBI holders because whilst you may see 800M new BBI shares issued, BBI will have also extinguished an $800M liability from the balance sheet.
BEPPA will be taken care of in 2012.


----------



## banska bystrica (30 March 2009)

banska bystrica said:


> What's BNB going under got to do with BBI. BBI own quality monopolistic infrastructure assets, do not have any debt relationship with BNB, and are not under a forced selling program. They have decided to sell assets only at book value or above to reduce corporate debt.
> I cannot see what the panic is all about. Stepped in and bought 800,000 at 2.5c today. Put in the drawer and wait for the credit markets to thaw.




Viva,
That's how I approached the situation last November when the stock hit a low of 2.4c. Maybe that will give you an idea of how I would approach matters if BBI weakened to 1c?
Of course if it weakened to 1c for justifiable reasons I would have to re-evaluate but if nothing fundamentally has changed from when the price was 6c to 1c, of course I would buy as many as I could afford. I actually sold some blue chip shares to buy BBI under 4c and it has been a very wise decision, even at today's pitiful price of 6c.


----------



## Mitsimonsta (30 March 2009)

banska bystrica said:


> Of course if it weakened to 1c for justifiable reasons I would have to re-evaluate but if nothing fundamentally has changed from when the price was 6c to 1c, of course I would buy as many as I could afford. I actually sold some blue chip shares to buy BBI under 4c and it has been a very wise decision, even at today's pitiful price of 6c.




BB;

This of course is the wisest action in a bear market. Bring your cost average down, as long as the fundamentals are still sound. I have done it with FXJ which was issued to me at $5.09 after the RUP merger. I now have it a $3.16 and will come down to $1.80-ish depending on how many shares I am given in the rights issue.

I realise that FXJ is not the soundest of stocks, but I desperately need to bring the average down to something I believe it can hit in the medium term.... say 2 years once we have a recovery.

If I am not granted all the FXJ I applied for, the refunded cash is going into BEPPA, along with my Happy-Rudd-payment. I see BEPPA as a excellent capital growth potential for my portfolio, where I have mainly bluechips for dividend purposes.

I would be well pleased to see the BEPPA price come down to under 5c again.


----------



## Viva_Las_Vegas (30 March 2009)

BB,

Further to your compelling arguements re BBI's asset worth members should have a read of this article

http://steelguru.com/news/index/200...nts_Macquarie_for_sale_of_flagship_asset.html

In particular one qoute "The company's situation has been worsened by the slump in its share price, which now values BBI at only USD 154 million. That is far below the value of its individual assets such as Dalrymple Bay and has ruled out any prospect of BBI raising new capital to pay back its USD 10 billion debt."

AND

"Analysts have estimated that Dalrymple Bay could be worth USD 1 billion if its own debt of USD 1.7 billion is excluded. But potential buyers will have to take on those borrowings as part of any sale of the whole facility."

My only question being, what has happened to companies in the past where their worth has been less than the total value of their assets?


----------



## deano9801 (30 March 2009)

I'm going to invest around $1000 in either BBI or BEPPA. I am new to trading and I'm confused as to which to buy? Do you think the Complexities of BEPPA would just confuse me and I'm better to stick to buying BBI? Any advice appreciated. Thanks.


----------



## Mitsimonsta (30 March 2009)

deano9801 said:


> I'm going to invest around $1000 in either BBI or BEPPA. I am new to trading and I'm confused as to which to buy?




I would go for BEPPA, only because they are higher up the creditor ladder than standard BBI as they are a preference share.


----------



## fuzzie (30 March 2009)

I've been watching the BBI trades today and a number of times I have seen buy orders go through with a very low number of shares - as little as 1 share.

Who or why would place an order for one share at 5.6c? These trades do not seem to be the left over scraps of some other larger order and they don't seem to be 'hidden' trades that are moving larger undisclosed size parcels.


----------



## fuzzie (30 March 2009)

After reading the press release about IEG selling GASGEN for an 'accounting' loss of €13 million, I went looking through the investor packs to see what they had valued it at, but can't find any mention of asset value. So what price did they sell for?


----------



## fuzzie (30 March 2009)

And now there has been a whole trailer load of after market trades during the 'adjust' period at the lowest price of the day. I understand these are probably accounting for the off market trades reported during the day, but it seems a big coincidence they would all be at the same price. I wish I understood more of the mechanics going on here!


----------



## random (30 March 2009)

Fuzzie this is something that has bothered me many times over.
Altogether there were 3,180,000 odd shares traded after close at .055. 
17% of todays trades in total. Not an insignificant number.

I also would love to know how this works!!!???


----------



## select (30 March 2009)

deano9801 said:


> I'm going to invest around $1000 in either BBI or BEPPA. I am new to trading and I'm confused as to which to buy? Do you think the Complexities of BEPPA would just confuse me and I'm better to stick to buying BBI? Any advice appreciated. Thanks.




Deano,

If a gun is at your head and you must buy into BBI here are my thoughts. 

It may be best for you to wait until the SPARCS vote.

If the vote is YES i would buy BEPPA.

If the vote is NO i would buy nothing.

Reason being that if the vote is YES then BEPPA stand a better chance of getting more than they currently would in the event admin occurs.

If the vote is NO then BEPPA holders are in the same boat they are currently in because they will have the same number of SPARCS that rank ahead of them and security (bbi) holders will more than likely get nothing.

Maybe BBI in all forms is a case of transfering stock from the smart to the wishful.

But if it's the punt you want it is important to be as far up the food chain as possible. 

Or of you don't care, just throw some money at BBI and keep your fingers crossed that that "once in a lifetime" opportunity occurs.


----------



## banska bystrica (30 March 2009)

select/macrae12,
Still waiting for some factual evidence that BBI is a dog of a stock with no future. Waiting with baited breath......still waiting.


----------



## hardyakka (30 March 2009)

deano9801 said:


> I'm going to invest around $1000 in either BBI or BEPPA. I am new to trading and I'm confused as to which to buy? Do you think the Complexities of BEPPA would just confuse me and I'm better to stick to buying BBI? Any advice appreciated. Thanks.




Deano,
BBI has world class quality infrastructure assets and a small investment has the potential to earn 5 to 10 time sthe amount invested.

In summary BBI has NTA of $2.4B, or about a $ per unit. If assets are realised at book or above and debt paid down then BBI has the potential to increase to 50 cents or more over the next few years. BBI is the code for the equity of BBI, it retains all the risks and rewards of equity ownership.

BEPPA is a preference share and is basically a liability in the BBI balance sheet. The BBI NTA of $2.4B is AFTER deducting the amount payable for the BEPPA, about 0.8B. In addition BEPPA is earning interest, which in 2012 will amount to about 20 cents per BEPPA. So if BEPPA are repaid in 2012 you will receive $1.20 for each BEPPA ($1 for the BEPPA and 20 cents accrued interest).

The beauty of the BEPPA is that the BBI NTA is like a safety cushion. Any further charges to the BBI accounts get deducted first from the BBI NTA of $2.4B before anything affects BEPPA. So you could write $2B off of the assets and BBI total NTA would be 0.4B (2.4-2) and the value of BEPPA is unchanged. BBI will not receive a cent until BEPPA is paid in full. Personally I expect BBI NTA to increase, not reduce.

I have invested solely in BEPPA, it safer than BBI because of its priority in payment, but still is high risk but very high possible reward. They will come good so long as BBI can manage its way out of its current position which in my opinion and by their actions to date they will be able to do so.

You must form your own view and opinion, however let facts influence you. Anyone can make statements like "its trash", "BBI will go bust/into admin/will enter a death spiral" and other such comments. 

Cheers


----------



## Viva_Las_Vegas (30 March 2009)

Hi fellow death spiral investors!

What is everyone's opinion regarding BBI's announcement relating to the 100% sale of GASCAN? Does this write off some of their debt? Or does it write off the debt of its subsidiary? 

Note: There is a thread on this site called best and worst stocks of 2008, BBI rates an honourable mention as the worst.

Good for all those who wish to buy cheap!


----------



## bellenuit (30 March 2009)

Viva_Las_Vegas said:


> Does this write off some of their debt? Or does it write off the debt of its subsidiary?




As I understand it, it writes off all the asset level (non-recourse) debt for that asset. How much cash was left over after that was not disclosed.


----------



## hardyakka (30 March 2009)

Viva_Las_Vegas said:


> Hi fellow death spiral investors!




Warning....warning...warning...do not take the DEATH SPIRAL in vain...we know where you live

The Dalek death spiral overlord will pay you a visit..your only chance of survival is a healthy dose of beans and beer.

Now where did I put my tablets...


----------



## investorpaul (30 March 2009)

Viva_Las_Vegas said:


> Hi fellow death spiral investors!
> 
> What is everyone's opinion regarding BBI's announcement relating to the 100% sale of GASCAN? Does this write off some of their debt? Or does it write off the debt of its subsidiary?
> 
> ...




By todays market activity it looks like this annoucement was pretty insignificant in the scheme of things.

What it does detail however is the ability for transactions to continue to take place even with the financial crisis still in full swing.

In my opinion the announcement did not shed much light on the price achieved or its ability to pay down additional company debt. I believe this may highlight that the transaction merely paided off debt associated with that particular asset. (perhaps someone else has additional info)

Any debt reduction is good in my opinion (even if it is asset specific), furthermore by reducing holdings in smaller or non core assets, greater focus can be given to the big picture.

* disclaimer - I hold BBI and hope to pick up some BEPPA this week


----------



## select (30 March 2009)

banska bystrica said:


> bellenuit,
> Good post and I'll deal with those questions later.
> 
> 
> ...


----------



## banska bystrica (30 March 2009)

select/macrae12,

I will deal with bellenuit's post in a private PM tomorrow. What are your motives on this forum other than to bag BBI without factual evidence? I am still waiting for your factual evidence that justifies a 95% discount to NAV.
If you don't provide evidence by close of trade tomorrow, any future posts by you will be ignored by myself.
As for your reference to my "desperation", I sleep very easy at night Mr macrae12/select. I am a cool head and look upon these prices as golden opportunities to buy BEPPA at give away prices. Once DBCT is sold, you will not be able to buy BEPPA anywhere near 6.6c.
I bought 300,000 BEPPA today at 6.9c and happy to do so.


----------



## dhukka (30 March 2009)

From today's announcement:



> Explorer has agreed to acquire a 100% interest in Gascan and its subsidiary. The net transaction proceeds will be applied to repayment of IEG asset level debt and repays the debt associated with Gascan in full. The transaction results in an *accounting loss on sale of approximately €13 million*.




Interesting, I seem to remember quite a few BBI cheerleaders claiming that none of their assets need to be written down because they didn't overpay.


----------



## banska bystrica (31 March 2009)

dhukka said:


> From today's announcement:
> 
> 
> 
> Interesting, I seem to remember quite a few BBI cheerleaders claiming that none of their assets need to be written down because they didn't overpay.




_The Fundamental Analyst_???

Your signature is very questionable dhukka. That asset is so insignificant it doesn't even register on the radar. Do you understand the difference between an accounting loss and a cash loss? When you work that out, please rejoin the debate. Until then, please do some financial analysis homework. It is very frustrating trying to debate facts with people who are have such limited knowledge. That is one problem with share forums. Every poster has a different level of knowledge and for those that have done hundreds of hours of research it is a source of much frustration.

Would anyone be interested if I started a BBI blog? *All* views welcome so long as there is factual supporting evidence.


----------



## nomore4s (31 March 2009)

banska bystrica said:


> _The Fundamental Analyst_???
> 
> Your signature is very questionable dhukka. That asset is so insignificant it doesn't even register on the radar. Do you understand the difference between an accounting loss and a cash loss? When you work that out, please rejoin the debate. Until then, please do some financial analysis homework. It is very frustrating trying to debate facts with people who are have such limited knowledge. That is one problem with share forums. Every poster has a different level of knowledge and for those that have done hundreds of hours of research it is a source of much frustration.
> 
> Would anyone be interested if I started a BBI blog? *All* views welcome so long as there is factual supporting evidence.




lol, I can't wait to see Dhukka's reply to that.



banska bystrica said:


> select/macrae12,
> Still waiting for some factual evidence that BBI is a dog of a stock with no future. Waiting with baited breath......still waiting.




Well I have factual evidence BBI is a dog - see attached weekly chart says it all I think. But I won't say it doesn't have a future because that I don't know. It could make new all time highs one day or it might just trade between 2c-20c forever.
The good news for holders is from a T/A point of view it is building a solid base with volume coming in at the right places - one to watch for now.


----------



## banska bystrica (31 March 2009)

The chart indicates the share price performance is a dog. The question remains: Is the company fundamentally a dog and is it a buy or sell at 5c? The chart is evidence of misery for long term holders to date but it's the future we are interested in.

The facts as per the balance sheet support the notion it's a screaming BUY. That's the opinion I have formed through careful analysis of the assets, the debt, the future cash flows. My average is now 5.8c for BBI and that is lowering every time I arb between BBI and BEPPA. Not yet a dog for this investor. BBI and BEPPA have huge upside upon asset sales. BEPPA to me is almost a "lay down misere". Absolutely outstanding value at sub 7c and I continue to buy them.


----------



## investorpaul (31 March 2009)

BB i for one would definately be interested in reading a blog on BBI, its evident you have done a huge amount of research and anything you are willing to share is very much appreciated


----------



## Viva_Las_Vegas (31 March 2009)

Banksa,

I'm sure we would all agree that we enjoy your analysis and comments, But everytime someone questions the future of BBI or BEPPA payouts you seem to take it personally.

Most of us (I for one) are inexperienced when it comes to the stock market, and although BBI looks like it has good assets etc we all have our doubts at times. The volatility of the markets doesn't help either, and to give an example if GM motors in the USA can be on the brink of bankruptcy then no company is safe(I do realise they are totally different comanies).

 Although as you have mentioned and I agree.....the reward vs risk in this one is appealing.

Yesterday I posted some qoutes from an article where DBCT is estimated to be worth $1b far greater than the $250b you stated earlier, this sounds promising if correct.

I urge you to keep up your posts and keep forwarding both positive and negative info regarding BBI and BEPPA and don't lose your patience. We are all here to share and learn.


----------



## alphaman (31 March 2009)

nomore4s said:


> The good news for holders is from a T/A point of view it is building a solid base with volume coming in at the right places - one to watch for now.



A base normally offers a chance of upside breakout, but it's not very meaningful when the base is sitting above the zero line. Price cannot go negative, so any dog (or hidden gem) has to pause above zero.


----------



## Viva_Las_Vegas (31 March 2009)

Sorry my bad, 2.5bn then. I was going off memory. Regardless if you look through yesterdays posts you will find the article I am referring to where they say DBCT COULD be worth $1bn if the buyer was willing to take on the debt that comes with it.
Have a read and share your thoughts. There is obviously a difference is projected values. Did you get your value from the BBI investor pack or some other source BB?


----------



## investorpaul (31 March 2009)

Viva_Las_Vegas said:


> Banksa,
> 
> I'm sure we would all agree that we enjoy your analysis and comments, But everytime someone questions the future of BBI or BEPPA payouts you seem to take it personally.
> 
> ...




Do you mean 2.5bn??? I think you missed the full stop ???

All up i read it as saying DBCT is worth 2.5bn however BBI will recieve $1bn as the company that buys DBCT will take over the debt of approx $1.5bn (1.5 + 1 = 2.5bn)

Maybe someone can shed more light on this

*disclaimer I hold BBI


----------



## nomore4s (31 March 2009)

alphaman said:


> A base normally offers a chance of upside breakout, but it's not very meaningful when the base is sitting above the zero line. Price cannot go negative, so any dog (or hidden gem) has to pause above zero.




lol, there appears to be some support around 2.5c-3.5c and prices can still halve from those levels. It is more the volume that has me most interested atm.


----------



## Viva_Las_Vegas (31 March 2009)

Viva_Las_Vegas said:


> BB,
> 
> Further to your compelling arguements re BBI's asset worth members should have a read of this article
> 
> ...


----------



## banska bystrica (31 March 2009)

I said DBCT is worth EV $2.5Bn minimum which equates to $800M after debt. That is only $200M less than your quoted source of $1Bn which implies an enterprize value of $2.7Bn. We are both pretty much in the same ballpark.


----------



## Viva_Las_Vegas (31 March 2009)

banska bystrica said:


> I said DBCT is worth EV $2.5Bn minimum which equates to $800M after debt. That is only $200M less than your quoted source of $1Bn which implies an enterprize value of $2.7Bn. We are both pretty much in the same ballpark.




Ok, last time you referred to the $800m as corporate debt, running from memory that was the debt owed to BEPPA NZ and SPARCS right? The way I read the qoute from the article is that DBCT comes with debt. Either we have our wires crossed or perhaps my dyslexia is kicking in, but I am confused as to which debt belongs to who. I do realise that since BBI owns DBCT it has debt, but surely BBI's corporate debt is different to the debt of DBCT?????

Set me straight BB


----------



## investorpaul (31 March 2009)

I have just reviewed some previous posts on this whole debt issue and checked in the investor pack.

Below is a quote from BB



> From one of my spreadsheets:
> 
> Asset, Asset Ranking, Net equity
> 
> ...




So if DBCT sells for $2.7bn (comprising of $1bn net proceeds and $1.7bn debt being taken over by the purchasing entity) BBI will have $1bn cash.

The investor pack states debt as being AUD $10.3 bn (excluding the westnet rail mezzanine debt). 14% of this debt is corporate debt (approx 1.4bn) Therefore the net proceeds from DBCT of $1bn (which are quoted in USD as per las vegas post) will pretty much cover the corporate debt.

*disclaimer I own BBI


----------



## Mitsimonsta (31 March 2009)

Great post Paul... very clear information contained therein.

I am just waiting for cash to buy BEPPA.


----------



## dogby (31 March 2009)

nomore4s said:


> The good news for holders is from a T/A point of view it is building a solid base with volume




I dont know very much about T/A, and would appreciate any input from those with more experience, but is that a double bottom forming on the BBI chart ?


----------



## dhukka (31 March 2009)

banska bystrica said:


> _The Fundamental Analyst_???
> 
> Your signature is very questionable dhukka. That asset is so insignificant it doesn't even register on the radar. Do you understand the difference between an accounting loss and a cash loss? When you work that out, please rejoin the debate. Until then, please do some financial analysis homework. It is very frustrating trying to debate facts with people who are have such limited knowledge. That is one problem with share forums. Every poster has a different level of knowledge and for those that have done hundreds of hours of research it is a source of much frustration.
> 
> Would anyone be interested if I started a BBI blog? *All* views welcome so long as there is factual supporting evidence.




It's always interesting to watch the emotionally crippled come apart when reality intrudes on their delusions. Trying to change the subject by referring to accounting losses and the size of the assets to deflect from your errors is sad. The 'fact' is, you have stated numerous times that BBI did not overpay for their assets and here they are, unable to get what they paid for the Gascan asset.

You don't get to decide who joins the debate, the BBI thread is not just for mindless backslapping between BBI cheerleaders. You still haven't worked out how accounting losses impair the equity of a company, that's too bad, seems a few hundred of those hours of 'research' were wasted. This is not the first time you've been wrong on BBI and it won't be last, get used to it.


----------



## banska bystrica (31 March 2009)

Viva,
This is frustrating. Read investorpaul's post where he quotes my speadsheet with NET EQUITY figures.
You see a figure of $800M for DBCT? That is NET EQUITY. That implies an Enterprise Value (EV) of $2.5Bn because DBCT has $1.7Bn of non-recourse debt attached to it. This is a completely different issue to corporate debt.
If DBCT sells for $2.5Bn, that will pay off the *NON-RECOURSE* debt of $1.7Bn attached to DBCT and free up an additional $800M to pay down corporate debt (*RECOURSE* DEBT).


----------



## banska bystrica (31 March 2009)

dhukka said:


> You don't get to decide who joins the debate




I'm setting up a BBI blog so yes I do decide good buddy. ALL views welcome, positive and negative so long as they are backed up by facts.
Why even the "emotionally crippled" (dhukka's words) can join.LOL The bell is ringing  dhukka and you know what? It ain't Mr Whippy. Good luck all.


----------



## dhukka (31 March 2009)

banska bystrica said:


> The chart indicates the share price performance is a dog. The question remains: Is the company fundamentally a dog and is it a buy or sell at 5c? The chart is evidence of misery for long term holders to date but it's the future we are interested in.




The 'facts' are overwhelmingly that the company is fundamentally a dog. The extremely poor returns this business generates on it's assets and equity show that clearly. 

*Return on Capital* - 2003 *5%* 2004 *6%* 2005 *2%* 2006 *4%*  2007 *5%* 2008 *3%*

*Return on Equity* - 2003 *5.3%* 2004 *5.8%* 2005 *-0.5%* 2006 *4.5%* 2007 *4.6%* 2008 *-1.7%*

On whether the stock is worth more than 5c, if it survives, it may well be and speculators may pocket some nice returns if buying in at the lows. Still, it is a mediocre business at best on a fundamental basis.


----------



## investorpaul (31 March 2009)

dhukka said:


> It's always interesting to watch the emotionally crippled come apart when reality intrudes on their delusions. Trying to change the subject by referring to accounting losses and the size of the assets to deflect from your errors is sad. The 'fact' is, you have stated numerous times that BBI did not overpay for their assets and here they are, unable to get what they paid for the Gascan asset.
> 
> You still haven't worked out how accounting losses impair the equity of a company, that's too bad, seems a few hundred of those hours of 'research' were wasted. This is not the first time you've been wrong on BBI and it won't be last, get used to it.




i believe you may be incorrect. take for example a company purchases an asset for 10 million. 
The asset is depreciated by 1 million a year. After one year the company decides to sell the asset, they achieve a price of 10 million. 
Therefore the company has sold it for the exact same price they paid for it. However they would show an accounting loss of 1 million, from depreciation because it is considered an expense


----------



## dhukka (31 March 2009)

banska bystrica said:


> I'm setting up a BBI blog so yes I do decide good buddy. ALL views welcome, positive and negative so long as they are backed up by facts.
> Why even the "emotionally crippled" (dhukka's words) can join.LOL The bell is ringing  dhukka and you know what? It ain't Mr Whippy. Good luck all.




Still deflecting I see, being unable to admit you were wrong is a dangerous condition to have when investing. Here are some 'facts' for the first post of your blog:

You said BBI would did not overpay for any of their assets - you were wrong
You said you couldn't see directors choosing to convert SPARCS into BBI units - wrong again


----------



## dhukka (31 March 2009)

investorpaul said:


> i believe you may be incorrect. take for example a company purchases an asset for 10 million.
> The asset is depreciated by 1 million a year. After one year the company decides to sell the asset, they achieve a price of 10 million.
> Therefore the company has sold it for the exact same price they paid for it. However they would show an accounting loss of 1 million, from depreciation because it is considered an expense




I believe you don't know what you're talking about, accounting losses include depreciation. An accounting loss occurs on the sale of an asset when the proceeds are less than the book value of the assets, book value is after depreciation.


----------



## Viva_Las_Vegas (31 March 2009)

People quit your cat fighting and be a bit more constructive.
For starters you call BBI a dog, to me that's a good thing. I rate my dog above pretty much all humans. Dogs are fabulous creatures, loyal and just plain old tops.  You wanna call BBI something make it more creative.

Now there was a question raised the other day which has not been answered, this could shed some light on BBI's current performance and status.

1) How much is BBI turning over at present from all of its assets/businesses. Basically despite the GFC how much money is coming IN?
2) To date (given that dividends were suspended) how much debt has BBI been able to clear?

I think these two questions would add to the debt, rather than going around in circles arguing about SP and debt/sale of assets DBCT.


----------



## awg (31 March 2009)

banska bystrica said:


> Viva,
> This is frustrating. Read investorpaul's post where he quotes my speadsheet with NET EQUITY figures.
> You see a figure of $800M for DBCT? That is NET EQUITY. That implies an Enterprise Value (EV) of $2.5Bn because DBCT has $1.7Bn of non-recourse debt attached to it. This is a completely different issue to corporate debt.
> If DBCT sells for $2.5Bn, that will pay off the *NON-RECOURSE* debt of $1.7Bn attached to DBCT and free up an additional $800M to pay down corporate debt (*RECOURSE* DEBT).





Hi BB,

thx for all yr input...perhaps u should regard posts that challenge yr analysis as opportunities to test & reinforce..it would not help u to be surrounded by yes men

i look at them that way, probably most other posters are able to see depth of analysis, also make out u have skin in the game. DYOR!!

due to the nature of this investment, it is probably better that some posters draw attention to the risk, and no surprise, vigorous disagreement.

A simple question if I may: 

Can u see any reason at all why not to hold BEPPA in preference BBI, if one believes that BBI will survive, but NOT be over $1.32 in 2012? 

disclose: hold both


----------



## skc (31 March 2009)

investorpaul said:


> i believe you may be incorrect. take for example a company purchases an asset for 10 million.
> The asset is depreciated by 1 million a year. After one year the company decides to sell the asset, they achieve a price of 10 million.
> Therefore the company has sold it for the exact same price they paid for it. However they would show an accounting loss of 1 million, from depreciation because it is considered an expense




The $1m depreciation would be accounted as an expense for the year as you mentioned. But the sale price of $10m is $1m over book value (now marked down to $9m after depreciation) and therefore the firm will account for a one-off gain of $1m from this asset disposal.


----------



## Viva_Las_Vegas (31 March 2009)

dhukka said:


> I believe you don't know what you're talking about, accounting losses include depreciation. An accounting loss occurs on the sale of an asset when the proceeds are less than the book value of the assets, book value is after depreciation.




If i work from home I can claim depreciation on my home office. It is a deprecition of my asset = my home.
But when it comes to sell my home I am not going to sell it at a cheaper price because i claimed its depreciation over the years.
The asset still holds its value and still brings in income, but just because it technically depreciates as per our tax laws doesnt mean it is worth zero after 20 yrs.
I believe this to be the same for assets such as ports etc.

My  worth


----------



## prawn_86 (31 March 2009)

*puts mod hat on*

Just stepping in early here people. Lets please try and be civil. A vigourous debate is what ASF is all about, but there is no need to resort to calling names or insulting others. Simply present the faccts as you see them and then *be open to constructive critisicm and others opinions*.


----------



## dhukka (31 March 2009)

Viva_Las_Vegas said:


> If i work from home I can claim depreciation on my home office. It is a deprecition of my asset = my home.
> But when it comes to sell my home I am not going to sell it at a cheaper price because i claimed its depreciation over the years.
> The asset still holds its value and still brings in income, but just because it technically depreciates as per our tax laws doesnt mean it is worth zero after 20 yrs.
> I believe this to be the same for assets such as ports etc.
> ...




And your point is? Your home may well hold it's value, it will in all probability be worth more when you come to sell it.  Clearly Gascan didn't hold its value.


----------



## fuzzie (31 March 2009)

dhukka said:


> And your point is? Your home may well hold it's value, it will in all probability be worth more when you come to sell it.  Clearly Gascan didn't hold its value.




A question is, was Gascan a legacy holding that came along with the rest of IEG when it was acquired by BBI? Has divesting Gascan made IEG a better holding now for BBI? I don't know anything about Gascan, but it appears to have only had 60000 customers which doesn't seem a lot for Europe. Cleaning out poor debt at this point of the cycle doesn't seem to be unwarranted, but I'd still like to see what that €13 mill loss was compared to it's sale price.


----------



## Viva_Las_Vegas (31 March 2009)

dhukka said:


> And your point is? Your home may well hold it's value, it will in all probability be worth more when you come to sell it.  Clearly Gascan didn't hold its value.




Correct. My point is that despite depreciation my home will most likely sell more than what i paid for it, BUT when there is a dud house market or in this case GFC then the old rule of buy cheap sell cheap comes into play.

Things are only worth as much as people are willing to pay for them. And BBI being in financial difficulty will play in the buyers favour who knows they need to sell these assets.

 Obviously GASCAN was not one of those hot assets.

To set the record straight, I hold BBI and BEPPA and I am no dilusionist I think there is a possibility they will fail, but the reward out weighs the risk for me. i HOPE they can sell DBCT, I HOPE they can clear their debts. 

I have also looked at other stocks that were once good but now not doing well HFA, MDT to name a couple, probably all bad but they hold some good assets.

I go into this investment looking to the future hoping to have something to retire on in 30 years, and not the measly Australian Govt pension.

If you want a sure thing I know this Nigerian prince that wants to hand out his fortune.


----------



## banska bystrica (31 March 2009)

BBI did not pay over the odds for their assets:

Gascan was part of IEG. They did not over pay for IEG. Gascan came with IEG. It is but a single part of the entire IEG group. IEG was a bargain. 

I stated BBI did not pay too much for it's assets. Go to the BBI webcast of the Interim Result. Listen to Jonothan Sellar and his reference to BBI not buying the majority of their assets at the peak of the cycle.
The most recent asset purchased was NGPL. They paid a very conservative *10.7 times EBITDA*. That is a bargain in fact when you look at its performance.
I will concede that perhaps BBI paid top odds (but not over the odds) for the Alinta assets (courtesy of the pillaging parent BNB) but all other assets were bought well.
I am not interested in what one small asset within a large asset sold for.
I am interested in the main assets as accounted for:

DBCT
PD Ports
Euroports
Westnet Rail
Powerco
IEG
Cross Sound Cable
NGPL
AET&D (comprising Dampier to Bunbury pipeline, WA Gas, Multinet Gas, Tasmanian Gas Pipeline, Westnet Energy)

If people like dhukka want to be pedantic and break up every large group into smaller subsets and apply a valuation test on every single asset, go ahead.
Do the same with BHP or Rio Tinto. Can you assure me that every single asset in BHP's portfolio would make a profit if sold today? I think any reasonable person knows the answer to that. Some here are jumping at shadows or clutching at straws trying to find ways that justify BBI being a dog with no future in their minds. I say apply your asset stress tests to every ASX listed company and see what the result is. If the best you can come up with for BBI is "Gascan sold at a loss", then that convinces me even more BBI/BEPPA is a steal. The bell is ringing and it's the BBI/BEPPA train about to the leave the station.


----------



## banska bystrica (31 March 2009)

Ok, this is the guts of it from an analyst who is actually not very bullish on BBI.
It's from Wilson HTM.
NET EQUITY VALUE of the BBI assets:

TRANSPORT DIVISION:

DBCT $772M
PD Ports $460M
Westnet Rail $215M
Euroports $405M

Total net equity for Transport assets: $1.852Bn

ENERGY DIVISION:

Powerco $291M
*IEG $530M* (for you dhukka )
CSC $1M
Tasmanian Gas Pipeline $254M
WA Gas $209M
AlintaGas Networks $111M
Multinet $30M
Dampier to Bunbury Pipeline $349M
NGPL $953M

Total net equity for Energy Division: $2.728Bn

Total net equity $4.58Bn

Strip out Corporate debt $1.4Bn
Strip out NZ bonds, SPARCS and BEPPA $1.1Bn

NET ASSET VALUE $2.08Bn

No of shares on issue 2.375Bn

*Net equity per BBI security* = 2.08Bn divided by 2.375Bn = *87c*

That's from a fairly neutral to negative analyst.


----------



## banska bystrica (31 March 2009)

I cannot see net asset impairment of $2Bn to justify a BBI price of 6c.
I am open to anyone that can justify that impairment and please specify the asset and the reasons for impairment. The most likely assets for impairment would be the unregulated transport assets ie. Euroports, PD Ports. In the midst of the greatest global financial crisis in our lives, these two assets held up very well. What people forget is Great Britain is an island and the only way to get bulk cargo in and out is by sea. For PD Ports and Euroports to be impaired to a degree whereby it killed off the net equity in those assets, we would have to have a global situation where ships no longer came to and from the UK and Europe. It would be like a depression for years. That may be a possibility and is certainly one of the risks for BBI.... that the GFC continues for years and worsens. That can kill BBI. I accept that. It will also kill RIO and other major companies if things got that bad.
6c for BBI and 7c for BEPPA is worth the risk/reward... in my opinion. Maybe I'm wrong? Time will tell.


----------



## dhukka (31 March 2009)

banska bystrica said:


> BBI did not pay over the odds for their assets:
> 
> Gascan was part of IEG. They did not over pay for IEG. Gascan came with IEG. It is but a single part of the entire IEG group. IEG was a bargain.
> 
> ...




This business is mediocre because of the extremely poor returns it generates on it's assets, a fact which is indisputable looking at their historical returns over the past 5 years. This has been mentioned numerous times and noone has disputed it. Until those returns improve significantly it will continue to be a dog of a business.  

The share price on the other hand whilst it has been a dog, may do extremely well for those who bought in at the lows, if the company is able to survive and ekes out the the paltry returns projected by the likes of Wilson HTM.


----------



## banska bystrica (31 March 2009)

dhukka said:


> The share price on the other hand whilst it has been a dog, may do extremely well for those who bought in at the lows, if the company is able to survive and ekes out the the paltry returns projected by the likes of Wilson HTM.




Clap hands. You have finally agreed this is a risk/reward situation and my large  position at low prices MAY in fact be a very good investment. BBI is not for everyone but it tickles my fancy.


----------



## dhukka (31 March 2009)

banska bystrica said:


> Clap hands. You have finally agreed this is a risk/reward situation and my large  position at low prices MAY in fact be a very good investment. BBI is not for everyone but it tickles my fancy.




Banska, look back through the thread, I have consistently acknowledged that if BBI survives and ekes out the kind of profits Wilson HTM is forecasting, then it is probably worth significantly more than 5c. I have not changed my thinking on that at all. Given the large amounts of intangibles on the balance sheet due to acquisitions and the extremely low returns the business generates, I think it is reasonable to question whether book value can be realised for some of these assets.


----------



## banska bystrica (31 March 2009)

dhukka said:


> Banska, look back through the thread, I have consistently acknowledged that if BBI survives and ekes out the kind of profits Wilson HTM is forecasting, then it is probably worth significantly more than 5c. I have not changed my thinking on that at all. Given the large amounts of intangibles on the balance sheet due to acquisitions and the extremely low returns the business generates, I think it is reasonable to question whether book value can be realised for some of these assets.




Yes I agree it is reasonable to question whether book value can be achieved but I think it all boils down to the sale of DBCT and/or PD Ports and what prices they achieve for those.
The major reason the stock is 6c is because the overall market also questions the book value and in fact doubts whether book value can be achieved.


----------



## Tysonboss1 (31 March 2009)

Viva_Las_Vegas said:


> Correct. My point is that despite depreciation my home will most likely sell more than what i paid for it,




Sorry to pull you up on a technical point, But buildings and plant equipment do suffer depreciation, and require maintainance and replacement over the years to hold value.

You many sell your house for more than you bought it, but that is because the land it is sitting on has risen in value.

The building itself, including carpets, curtains, paint work, bathrooms and kitchen fittings, plumbing, wiring, fencing, driveways etc.etc all constantly go down in value over the years.


----------



## investorpaul (31 March 2009)

i have just picked up some beppa, my holding is now 50/50 split between bbi and beppa.

Now we wait


----------



## hardyakka (31 March 2009)

Interesting thread so far, but it has degenerated a bit, so i am going to try and distil a few valid points.

a) If you run a business from your house and claim part of it as an office yes you get deductions for expenses. but be aware that if you sell the property and make a capital gain part of that gain will be attributed to the business and will be assessable. This is always the problem with claiming for a home office.

b) I think it is generally accepted I am positive about BBI. However what I notice is that many persons have negative views on BBI yet minimal argument or facts are put forward to support this view. How can you expect an investor to consider such views if they are are not substantiated with reasonable facts or at least facts that can be interpreted.

c) There seems to be a lot place on the Euro 25M loss of Gascon. My view is so what? It is only one small component of a large group, as has been pointed out already you can pick any blue chip miner and find loss makers that have been significantly written down.

d) Regarding any potential impairement, why not assume a pending impairment charge of $1B. Even on this basis BEPPA and SPARCS are fully paid out (including accrued interest) and BBI would be worth say 75% of remaining NTA ie 44 cents (NTA $2.4B-$1B x 75%). So what is the relevance of $50M? Step back and look at the big picture, overall assets sold should realise book. That means there will be a few ups and downs but will average out to book. (IMO it will be significantly above this, but lets be cautious).

So a return of 44cents on BBI and full payment of BEPPA and SPARCS is pretty good in my books.

e) We forget, we are in the worst possible financial conditions possible, unimagined in anyones books a year ago and I ask the question, is BBI surving? Yes it is and conditions will gradually improve. In fact with the massive amount of money literally printed and injected into the system money will start to lose its value and asset prices may increase accordingly. This will be reflected in an increase in BBI NTA

f) Debt & financing-It is common knowledge that regulated infrastructure assets are highly geared because of their consistent cashflows. I expect this to continue. the banking industry may be tightening money supply now, but in time it has no choice but to lend to earn returns for shereholders. Yes they will be more prudent and cautious, wanting secure cashflows etc to service debt and quality security. The type of cashflow and security offered by blue chip infrastructure assets.

g) As a qualified accountant with decades of experience in the REIT and infrastructure industry all I have to say about the accounting arguments are that they are red herrings, detracting fom the big picture.

h) I do not rely on charts because they assume the future will follow past trends, I know many will swear by its reliability. However in the current climate all I can say is how can you rely on a chart when we have never had this set of circumstances before, hence there are no previous similar trends.

I know many will disagree with this post, but all I am interested in is facts or a reasoned opinion. 

Cheers


----------



## banska bystrica (31 March 2009)

The MCG announcement has just made BB a very happy lad indeed and is very bullish for BBI and like stocks (quality assets smashed well below NAV and high debt). $2.50 offer for my shares bought at sub $1. I'm not waiting around though, took the $2.30 average. You see, there are buyers for quality assets. The model of MCG is very similar to BBI.

I will be ploughing the MCG profits into BEPPA. I just cleaned out the seller at 7.4c with a 150,000 buy order.

MCG's NAV is $5.00 so the takeover is at 50% of NAV. 
50% of NAV for BBI is 50c. You see what's possible? No guarantees of course but plenty of upside.


----------



## Mitsimonsta (31 March 2009)

Well done BB. I was considering some MCG last month, but got some SHL instead.

Will drink a beer to your profit after work.


----------



## banska bystrica (31 March 2009)

Mitsimonsta said:


> Well done BB. I was considering some MCG last month, but got some SHL instead.
> 
> Will drink a beer to your profit after work.




Thanks Mitsimonsta. It validates my research on these sorts of stocks. The instos couldn't smash MCG down quick enough through 90c. That was an over-reaction just like BBI is an over-reaction at 6c.
It gives the market some idea about infrastructure stocks and their true value. I am not saying BBI should trade at NAV in a bear market but 50% of NAV is the sort of area I am looking at for BBI, not 5% of NAV that it is trading at now.

I had about 10% of what I've got in BBI/BEPPA in MCG but it was still very nice indeed. Gives me more ammunition to keep buying BEPPA. I might be wrong but I'm willing to be there to find out.


----------



## Mitsimonsta (31 March 2009)

You are most welcome BB. Oh, and Mits or Mitsi is fine by me too.

Sold my RIO & FMG to go into BEPPA for about $250 profit on those with two $500 parcels.

Unfortunately, there's not much BEPPA going at 7.2c now, cleaned out the last seller at the price.... 

EDIT: got my first $1300 parcel - 17,777 units @ $0.07200


----------



## banska bystrica (31 March 2009)

Well dome Mitsimonsta. You will do well. Be patient.
I bought another 100K at 7.2c and it closed 7c. That's fine. It's been a really fruitful day buying at 6.6c, 7.4c and 7.2c. Slowly chipping away at BEPPA and waiting for asset sales by June 30.


----------



## investorpaul (31 March 2009)

banska bystrica said:


> Well dome Mitsimonsta. You will do well. Be patient.
> I bought another 100K at 7.2c and it closed 7c. That's fine. It's been a really fruitful day buying at 6.6c, 7.4c and 7.2c. Slowly chipping away at BEPPA and waiting for asset sales by June 30.




Well done on MCG

You have built quiet a holding in BBI and BEPPA. 

The difference between BBI and  BEPPA got down to 0.9cents at one stage today, just before I bought.


----------



## banska bystrica (31 March 2009)

investorpaul said:


> Well done on MCG
> 
> You have built quiet a holding in BBI and BEPPA.
> 
> The difference between BBI and  BEPPA got down to 0.9cents at one stage today, just before I bought.




Paul,
BEPPA holders are currently owed 3.1c in deferred interest payments by BBI. To be buying BEPPA at less than a cent more than BBI is value. You just have to do the sums. BEPPA must be paid this interest before even a single cent can be paid in distributions to BBI holders plus you have the added security of being higher up the food chain in the case of liquidation. Not that I think for one minute liquidation is happening but BEPPA has to be worth something extra for that added security.


----------



## hardyakka (31 March 2009)

Mitsimonsta said:


> Well done BB. I was considering some MCG last month, but got some SHL instead.
> 
> Will drink a beer to your profit after work.




Geesh guys, you could have told me about MCG so I could have at least looked at it...now I am going to sulk.:

If you dont do so next time I'll set the death spiral onto you!!

Cheers


----------



## Mitsimonsta (31 March 2009)

banska bystrica said:


> I bought another 100K at 7.2c and it closed 7c. That's fine. It's been a really fruitful day buying at 6.6c, 7.4c and 7.2c. Slowly chipping away at BEPPA and waiting for asset sales by June 30.




PM sent.

I will be looking to add another $1700 or so to my BEPPA holding in the next couple of months. I don't earn a big pay packet, so money goes into stocks when I have it, and when something dips significantly. I usually have $500-$600 to spend each month.

I wish I had the cash to grab another lazy '100K' units.


----------



## Viva_Las_Vegas (31 March 2009)

Hardyakka,

If you are feeling down and feel like doing something reckless I could always sell you 20,000 of my remaining HFA shares at 16cents lol

Let me know if you want em!


----------



## Mitsimonsta (31 March 2009)

Viva... you need to lay off the coffee and stop selling stocks at the first sign of trouble. HFA is another undervalued stock.

If you have a margin loan account, stuff them away in there and come back in 12 months time.


----------



## hardyakka (31 March 2009)

Viva_Las_Vegas said:


> Hardyakka,
> 
> If you are feeling down and feel like doing something reckless I could always sell you 20,000 of my remaining HFA shares at 16cents lol
> 
> Let me know if you want em!




Viva,

HFA, is that the company called "Have Faith Always"?? Somehow something tells me that you want to flog me a stock in a DEATH SPIRAL. Methinks I will have to decline your generous offer....but I do know a forum where they will be snapped up...for a small fee I will tell you.

Cheers


----------



## hardyakka (31 March 2009)

Mitsimonsta said:


> Viva... you need to lay off the coffee and stop selling stocks at the firt sign of trouble. HFA is another undervalued stock.
> 
> If you have a margin loan account, stuff them away in there and come back in 12 months time.




Hmmm..seems I may have spoken too soon. I will have a look at HFA and let you know my thoughts.

Cheers


----------



## Mitsimonsta (31 March 2009)

They closed at 13c Yakka... not like he or the stock is on a death spiral at all.

If they come back to only half what they were, he's be on an easy 3-bagger, possible 5-bagger.

You don't get the EDE's of this world often, you cannot make 100% overnight. It is simply unrealistic.


Anyway, we are miles OT here.... Back to the discussion at hand: BBI and BEPPA.


----------



## drsmith (31 March 2009)

banska bystrica said:


> I bought another 100K at 7.2c and it closed 7c. That's fine. It's been a really fruitful day buying at 6.6c, 7.4c and 7.2c. Slowly chipping away at BEPPA and waiting for asset sales by June 30.



There's nothing fruitful about buying shares. The fruitful part only comes when the dividends are recieved and/or the shares are sold for profit.

I do hope you are not putting too many of your eggs into this speculative stock.


----------



## Viva_Las_Vegas (31 March 2009)

Ha ha ha great posts guys.

For the record I drink DECAF! LOL!

To be honest I purchased HFA as a day trade, I got side tracked took my eye off the ball, and the next day they tanked to 6 cent levels. So I never really looked into them as a company in long term views.

Since you have a high opinion of HFA (which I have it referred to as "HAS f*** ALL) I will look into them closer and see what they have got going for them.

Anyway back to bagging out BBI and what a rubbish stock it is


----------



## drsmith (31 March 2009)

hardyakka said:


> f) Debt & financing-It is common knowledge that regulated infrastructure assets are highly geared because of their consistent cashflows. I expect this to continue. the banking industry may be tightening money supply now, but in time it has no choice but to lend to earn returns for shereholders. Yes they will be more prudent and cautious, wanting secure cashflows etc to service debt and quality security. The type of cashflow and security offered by blue chip infrastructure assets.



They have been highly geared due to fee hungry bankers and a credit boom. Depending on how the bust plays out there is also a real possibility that the assets heavily leveraged REIT's and infrastructure funds finish up in alternative hands at firesale prices with nothing left over for existing shareholders.


----------



## Mitsimonsta (31 March 2009)

Ah, a day trader. No wonder! That explains everything. 

Since you obviously missed the boat, might as well go on a leisurely cruise for a while, see some sights, smell the roses. I can see a solid bottom being formed in both HFA and BBI and I think there will be some movement upwards soon, depending on general market conditions etc.


----------



## banska bystrica (31 March 2009)

drsmith said:


> There's nothing fruitful about buying shares. The fruitful part only comes when the dividends are recieved and/or the shares are sold for profit.
> 
> I do hope you are not putting too many of your eggs into this speculative stock.




I've got a few eggs in BBI/BEPPA. 
Why? Because at the price I don't see it as speculative. In fact I see it as the opposite.


----------



## drsmith (31 March 2009)

banska bystrica said:


> I've got a few eggs in BBI/BEPPA.
> Why? Because at the price I don't see it as speculative. In fact I see it as the opposite.



As an observer (and occasional contributer) to this thread though I do wonder why you are so passionate about defending BBI. In the end it's fate will rest not on what is said here but on what happens economically and on decisions taken by BBI itself.


----------



## banska bystrica (31 March 2009)

drsmith said:


> From the perspective of diversification that's fine if you have enough eggs to fill every house in the street.
> As an observer (and occasional contributer) to this thread though I do wonder why you are so passionate about defending BBI. In the end it's fate will rest not on what is said here but on what happens economically and on decisions taken by BBI itself.




Diversification is a hedge for the ignorant. I rarely own more than four stocks at any one time.
Nothing said on here will determine where BBI ends up. That is true.
I'm passionate because I see a gem where others see a dog. When the tide goes out like this bear market has done, the sand will reveal many sparkling gems. At 5c, BBI is one of them. I like to share the joy and get people to look into stocks that the market has already decided is trash. I research many stocks but not often do they pass my own stringent guidelines.


----------



## banska bystrica (31 March 2009)

For those that may be interested, I got put in the sin bin for one month over the road. The moderators here are firm but fair..... the way it should be.


----------



## cpsharky (31 March 2009)

banska bystrica said:


> For those that may be interested, I got put in the sin bin for one month over the road. The moderators here are firm but fair..... the way it should be.




BB, you are actually listed as active over there. Here is good though, HardYakka seems to be having a hard time staying over there also... he should know better than to say hello to a moderator.


----------



## hardyakka (1 April 2009)

cpsharky said:


> BB, you are actually listed as active over there. Here is good though, HardYakka seems to be having a hard time staying over there also... he should know better than to say hello to a moderator.




I think I am banned for life for saying hello to the mod bluedog, the name says it all for me. I stilll accessed it for a little while under another nick, but to be honest got nothing out of it, informed analysis simply does not exist there.

Cheers


----------



## hardyakka (1 April 2009)

drsmith said:


> They have been highly geared due to fee hungry bankers and a credit boom. Depending on how the bust plays out there is also a real possibility that the assets heavily leveraged REIT's and infrastructure funds finish up in alternative hands at firesale prices with nothing left over for existing shareholders.




REITS are a separate asset class and cannot be compared with infrastructure assets due to their differing characteristics, at the top level retail, industrial and commercial are affected by totally different economic factors.

Cheap credit was not a major contributory factor to the GFC, it was more the mis-pricing of risk. In simple terms yes there was cheap credit, but the risk premium attaching to the borrowers did not reflect their circumstances and business ie the quality of the lending risk. Lets not get into an irrelevant discussion on leverage, securitisation, governance and risk pricing. However I am happy to send you links to heaps of material ranging from ASIC and APRA to representations before senate hearings and OECD papers..but be aware they can be boring.

By its very nature a regulated asset is guaranteed a profit, normally by regulation/legislation. The steady boring guaranteed cashflows are why life companies love such investments, very simply they enable a life company to match policy liabilities against an income stream over the long term, ie 25 years plus.

So when you consider infrastructure assets are highly capital intensive and generally are monopolies with a steady legislated income flow you start to understand why they can be highly geared.

In my opinion I consider the chances of BBI going under are very remote. Whilst the B&B business was previously set up to generate fee income this is no more, but one thing BBI did well, they acquired superb assets.

So you may start to appreciate why I consider BBI will pull through the current mess it is in, slowly and step by step, which is their progress to date, and BBI/BEPPA will IMO start to reflect their true value. The first major trigger point I see as being the DBCT sale announcement, after which it would not surprise me if instos started taking holdings and the days of BBI/BEPPA below 20 plus cents will be a thing of the past, gone never to return.

Cheers


----------



## doctorj (1 April 2009)

Interesting post.  I’m not sure I agree with your logic that could be loosely paraphrased as – it’s a good buy because life insurance companies like infrastructure (I suspect they like them because they’re treating them as some kind of low risk/high return pseudo bond), but I wanted to highlight a couple of points.



hardyakka said:


> Cheap credit was not a major contributory factor to the GFC, it was more the mis-pricing of risk. In simple terms yes there was cheap credit, but the risk premium attaching to the borrowers did not reflect their circumstances and business ie the quality of the lending risk.



I think cheap credit and mispricing of risk is one and the same issue and certainly played a massive part in where we are today.  At it’s most basic, credit is priced at a base rate such as LIBOR, plus a margin that is derived based on the ‘risk’ the loan represents.   This is off topic – feel free to start another thread on this.



> By its very nature a regulated asset is guaranteed a profit, normally by regulation/legislation.



Is this really fair?  Sure, the regulated asset may have an inflation component built into the agreed pricing, but what if people don’t use it? For example, people may take a slower route to the airport or take public transport instead of paying for the use of a toll way.  Then there is the issue that you don’t own a share of the asset, but a share in a company or trust that owns/administers an asset.  

For me, the biggest issue with any company that is highly levered right now is their ability to roll the debt.  Banks have ever shrinking capital to employ in making loans (each loan they retain risk on ‘consumes’ some of their capital) so they’re being forced to delever.  A declining pool of capital means banks can and are being more selective in what they finance.  A highly leveraged infrastructure project with optimistic revenue forecasts may not be on top of the pile.  Even if these projects can access capital, it will be relatively more costly.  Ultimately, more expensive capital will impact the economies of more marginal projects.


----------



## Tysonboss1 (1 April 2009)

doctorj said:


> Is this really fair?  Sure, the regulated asset may have an inflation component built into the agreed pricing, but what if people don’t use it? For example, people may take a slower route to the airport or take public transport instead of paying for the use of a toll way.  Then there is the issue that you don’t own a share of the asset, but a share in a company or trust that owns/administers an asset.
> 
> .




BBI's assets are not toll roads, and are not subject to as much descreationary spending as you claim.

their assets are seaports, rail way lines, gas pipelines, electricity and gas distribution etc etc.

I customer may be able to choose which retail gas company they purchase their gas through, but the can't choose which pipline it runs through to get to their house, 

If I mining company wants to rail their ore to the port in WA, then they must use west net rail, there is not a selection of railways all competing for business,

same with seaports, how easy would it be for a competiter to buy some coastal land and set up a rival sea port, nearly impossible.


----------



## doctorj (1 April 2009)

Tysonboss1 said:


> BBI's assets are not toll roads, and are not subject to as much descreationary spending as you claim.
> 
> their assets are seaports, rail way lines, gas pipelines, electricity and gas distribution etc etc.
> 
> ...



Sorry, I was speaking in general terms in response to hardyakka's general comments.

But I guess the same concept applies to the assets you discuss:-
- Reduced global demand for iron ore = less iron ore exported = less income for sea ports and rail
- People can use less gas by changing their behaviours, such as by wearing warm clothing instead of turning up the heat

Both of which will have flow on effects to the profitability of the underlying infrastructure


----------



## Viva_Las_Vegas (1 April 2009)

Looking for some explanation of todays announcement by BBI and BNB re change in holding, is it referring to this BBI or is it the BB International Limited?


----------



## nathanblack (1 April 2009)

not sure either viva. perhaps BB can shed some light.

but looking at the relevant changes in holding its an increase and not part of a sell off by BNB administrators. also the dates of the changes are quite old so not too releveant to the current situation, infact they overpaid quite a bit per share.

will there be downward pressure when administrators of BNB sell there holding? what is there current holding?


----------



## nulla nulla (1 April 2009)

nathanblack said:


> not sure either viva. perhaps BB can shed some light.
> 
> but looking at the relevant changes in holding its an increase and not part of a sell off by BNB administrators. also the dates of the changes are quite old so not too releveant to the current situation, infact they overpaid quite a bit per share.
> 
> will there be downward pressure when administrators of BNB sell there holding? what is there current holding?




Personaly, i hope so. An opportunity to top up. Reality is the Administrators will probably find a buyer off market.


----------



## nathanblack (1 April 2009)

do you think BNB administrators are in a rush and would accept the current discount of 5c in the dollar or perhaps hold off for asset sales and hope to achieve 20cents.

if they sell off market it will still be at a discount and will be fully disclosed to the market and have a negative impact although maybe not so much. could even be a positive sign if the buyer is well known insto that is in it longterm. a sign of faith and could open doors to other instos. much to contemplate now.


----------



## banska bystrica (1 April 2009)

bellenuit said:


> *Interest Bearing Liabilities and Deferred Tax Liabilities*
> 
> I have just commenced reading the investor pack, so excuse me if this has been answered later in the pack.
> 
> ...




1. Most of the fall in net assets are decreases in the value of derivative instruments ($453m) and depreciation ($86m) and 

2. Deferred tax liabilities are one-off. They relate to acquisitions made in FY08.


----------



## jonkey1995 (1 April 2009)

Hi BB,

just on tax deferred liabilities.

Tax deferred liabilities are a result of tax effect accounting.

If you held BBI when they were paying distributions they paid dividends that were not taxable due to the tax deferred component.

It would be difficult to explain how the total arises due to the complex interaction of international tax regimes throughout the portfolio.

Maybe the examples below can shed some light on how they arise:

In Australian Tax Law certain capital structural improvements are allowed special write-off (depreciation) allowances.  These are usually not in the accounts as such but a tax adjustment.  Therefore, you have received a deduction for tax.  However, these allowances reduce the cost base of an asset, so when you eventually sell the asset you will make an increased capital gain.  What the defered tax liability entry tries to do is allocate the income tax to the period it was incurred, except for the timing difference.  Essentially you book the income tax expense in the current period and raise a liability (for a future period when the tax is payable)under the double entry book keeping system.

Other examples are where tax depreciation is greater than book depreciation.  The tax law allows accelerated depreciation methods, where book values are more likely to reflect effective life.

Put simply, tax deferred liabilities and their opposite future tax benefits arise where accounting treatment differs from tax treatment and timing differences occurr.

With infrastructure investment, part of the lure, was the receipt of tax deferred income through accelerated depreciation.  Essentally, income was either not taxable or become capital gains (once you received more tax deffered income than the cost base of your shares) therefore minimising shareholder taxation.

Over time you would expect tax deferred liabilities to increase until all accelerated write-offs were depleted over time.  Probably clear as mud, but made it as simple as I could.

Cheers


----------



## hardyakka (1 April 2009)

doctorj said:


> Interesting post.  I’m not sure I agree with your logic that could be loosely paraphrased as – it’s a good buy because life insurance companies like infrastructure (I suspect they like them because they’re treating them as some kind of low risk/high return pseudo bond), but I wanted to highlight a couple of points.




You will find that life companies like regulated infrastructure investments because of the steady and reasonably predictable cashflows which can be matched against policy liabilities. These are such because gas, power, water etc are fundamental necesssities and defensive in nature.  You pay for the right to be "connected", with an additional charge based upon usage. 


"_I think cheap credit and mispricing of risk is one and the same issue and certainly played a massive part in where we are today.  At it’s most basic, credit is priced at a base rate such as LIBOR, plus a margin that is derived based on the ‘risk’ the loan represents.   This is off topic – feel free to start another thread on this."_

We can discuss this until the cows come home, but agreed this is off topic. 

_Is this really fair?  Sure, the regulated asset may have an inflation component built into the agreed pricing, but what if people don’t use it? For example, people may take a slower route to the airport or take public transport instead of paying for the use of a toll way.  Then there is the issue that you don’t own a share of the asset, but a share in a company or trust that owns/administers an asset._

Agreed that this applies to infrastructure assets where usage etc is discretionary, such as a toll road. 

However the bulk of BBIs assets are of a non-discretionary nature, ie DBCT, NGPL, gas and power. The pricing for these assets is set by economic regulators which recognise a pricing structure which takes account of all capital and revenue items and allows for a profit margin over the life of the asset. The issue is that a key component of the consumer price is non-discretionary and regulated by the economic regulator. In the UK electricty and gas is regulated by Ofgem, water by Ofwat.     
_
For me, the biggest issue with any company that is highly levered right now is their ability to roll the debt.  Banks have ever shrinking capital to employ in making loans (each loan they retain risk on ‘consumes’ some of their capital) so they’re being forced to delever.  A declining pool of capital means banks can and are being more selective in what they finance.  A highly leveraged infrastructure project with optimistic revenue forecasts may not be on top of the pile.  Even if these projects can access capital, it will be relatively more costly.  Ultimately, more expensive capital will impact the economies of more marginal projects._

I think that your comments do not reflect the following applicable to BBI:
a) A regulated infrastructure asset cannot be compared with an entity where shareholders take the full benefits of risk/reward. A normal company can set its own prices, whilst those of a regulated infrastructure business cannot. 
b) With vital infrastructure assets the operating business itself is normally "ring fenced", ie protected. A bank cannot just take control of and shut down a necessary service such as gas in the same way it can an ordinary business, this again is an attribute of the nature of the service provided and the regulatory environment.
c) Economic regulators take account of the costs, including the cost of capital in setting pricing structures.
d) The declining pool of capital argument is applicable amongst normal companies competing for that capital. It is not valid when an infrastructure asset is subject to a regulatory environment where effectively the capital risk is ultimately effectively subject to supervision and in some cases guarantee by an economic regulator. This obviously varies depending upon the jurisdiction (ie UK, US, Australia & NZ -state and federal as applicable). 

Cheers


----------



## bellenuit (1 April 2009)

banska bystrica said:


> 1. Most of the fall in net assets are decreases in the value of derivative instruments ($453m) and depreciation ($86m) and
> 
> 2. Deferred tax liabilities are one-off. They relate to acquisitions made in FY08.




BB. Thanks for pursuing this.  It has allayed my concern on this item. Jonkey, thank you for your explanation.


----------



## bellenuit (1 April 2009)

nathanblack said:


> not sure either viva. perhaps BB can shed some light.
> 
> but looking at the relevant changes in holding its an increase and not part of a sell off by BNB administrators. also the dates of the changes are quite old so not too releveant to the current situation, infact they overpaid quite a bit per share.
> 
> will there be downward pressure when administrators of BNB sell there holding? what is there current holding?




It actually reflects a recent sale of 42,554,665 BBI on 24/3/09 for $0.041. Although the overall holding reflects an increase, from 121,378,441 (8.24%) to 141,208.025 (5.94%) since the previous notice, if you look at the detail you will see that the previous notice was made on 11/8/06, nearly 3 years ago. Within that period there were many purchases and sales made and these are listed under "3. Changes in relevant interests". Prior to the 24/3/09 sale of 42.5+M, the previous transaction was made 11 months ago on 22/4/08.

So since we are only concerned with recent transactions, it is a sale of 42.5+M.

I assume the reason there is a % decrease in ownership (8.24% to 5.94%) over the 3 year period, even though the quantity owned increased, is because there were additional shares issued in that period, so the current figure is a smaller % of the current number of shares on issue, compared to the previous figure as a % of the previous number on issue.

What I am not sure of is whether this sale is a reduction of BNB (BBIPL's) own holding in BBI or someone else's, as there are a few names involved with the transaction: BNB (BBIPL), ANZ Nominees, AGSO Property P/L and Deutsche Bank AG.


----------



## bellenuit (1 April 2009)

bellenuit said:


> It actually reflects a recent sale of 42,554,665 BBI on 24/3/09 for $0.041. Although the overall holding reflects an increase, from 121,378,441 (8.24%) to 141,208.025 (5.94%) since the previous notice,




This is in fact a reduction in BNB's holding, not the other companies that I mentioned.

I've been trying to find BNB's holding in BBI and several sources have indicated that it is 8.24%, which is the first of the two % figures above. They were obviously working off the previous report.

Ignore the previous figure which is now 3 years old, this is saying that BNB has sold down its holding in BBI from 183,762,690 just prior to 24/3, to 141,208,025 by 24/3. So just prior to 24/3, BNB held 7.73% of BBI and now just holds 5.94%. 

The figure tallies. If 141,208,025 is 5.94% of issued stapled securieties, then that would imply 100% is 2,377,239,478. According to the investor pack, BBI had 2,375,741,000 shares on issue on 31/12/08.

Looking at it another way, of the 183,762,690 shares BNB held in BBI just prior to 24/3, they have sold down 23% of these.


----------



## banska bystrica (2 April 2009)

We have an interesting situation where there are two forced volume sellers yet the price is holding up. To me, that indicates there is very solid buying pressure for BBI and once the sellers are done, the buyers will find it harder to pick up stock at these low prices. For buyers, it is a great opportunity right now to pick up stock cheap.
I bought BEPPA again today. Trying to value BEPPA is difficult. So long as BBI survive, BEPPA should technically trade at face value less a discount for the poor return of 115 points over bank bill. If BEPPA were to reset tomorrow, the margin would more likely be 500 basis points more than bank bill. BEPPA is a very cheap form of financing for BBI.
So what's a fair discount to face value of $1 for BEPPA? Well it depends on whether you think BBI will survive.
I think it's an emphatic YES for BBI's survival.
In that case a fair discount to face value (in my opinion) would be 40c in the dollar given the length of time to maturity and the relatively poor interest rate payable.
So, if BBI sell DBCT and pay off the bulk of corporate debt, then sell PD Ports and pay out the NZ bonds, SPARCS and any left over corporate debt, BEPPA has an intrinsic value of 60c. This is derived by applying a 40% discount to face value. That's more than reasonable. What's been happening in the market is that the forced sellers of BBI are also dumping BEPPA, without regard to fundamental value. They have a need to be out full stop and long term value plays no part in the decision to liquidate BEPPA. The market is dysfunctional and very inefficient due to factors mentioned. For buyers, that represents an opportunity. For those who think BBI is finished/kaput, it would be wise to avoid both BBI and BEPPA.


----------



## Viva_Las_Vegas (2 April 2009)

Banksa,

Are these millions of BBI shares being sold off market? I do not see the millions of units popping up in the buy/sell depth daily. Same with BEPPA.

Secondly you mentioned "forced sellers" are you referring to those with margin loans or the creditors of BNB? I do not quite understand how the voluntary administration of BBI operates or how it must go about its business but it leads me to think of these sales in either one or two ways.

1) BNB's administrators MUST sell all their holdings in BBI, BBW etc to get some money back to pay debt.
OR
2) BNB's administrators do not see any future for BBI or BEPPA hence do not see any point in keeping it. (I'm sure they have some good analysts telling them what to do)

Your thoughts would be  much appreciated. I continue to hold BBI and BEPPA, but the two above points are playing on my mind.


----------



## investorpaul (2 April 2009)

With these forced sellers (assuming they are BNB/BB international) what time period would they normally look to sell their stake over? 

If there stake is between 5 and 8% would it be realistic to expect a 3 month period? or would they look to get out quicker?


----------



## Viva_Las_Vegas (2 April 2009)

Looks like dividends are being rolled again. I suppose this is nothing unexpected given the current climate.
I just wish someone could come up with some figures on how much debt bbi has been able to wipe off since dividends were put on hold.


----------



## Mitsimonsta (2 April 2009)

Viva - I cannot see dividends happening again until assets are sold.

Just as an aside, does anybody have an exact figure of unpaid interest on BEPPA? As many decimal places as you have please!

EDIT: SP seems strong today... weird. Waiting for the coming crash, this rally has gotten way ahead of itself (market-wide).


----------



## Viva_Las_Vegas (2 April 2009)

Yeah waiting for the crash too. Perhaps post G20.

Lucky you told me to hold those 20k HFA!!! WOOT WOOT


----------



## Mitsimonsta (2 April 2009)

Haven't really been watching it, but I just looked.

/cue Mits dancing around Viva singing 'I told you so'

I'd be looking to take a profit on that at 20c myself, but that's me and my opinion, and does not constitute financial advice to you.

You've got some losses this financial year I am led to believe, so tax shouldn't be too much of an issue.....


----------



## Viva_Las_Vegas (2 April 2009)

I have a sell order at 19c, so capital plus my profit will be going straight into BEPPA. Just wondering WHEN is the right time to jump on BEPPA with this cash as I want as much bang for my buck as possible.

I'm not a financial advisor either, but ...... MA MUMMA TOLD ME MY  MAGIC LEGS COULD TAKE ME ANYWHERE!!!!


----------



## investorpaul (2 April 2009)

Interesting how strong the price has been, obviously the deferred Div on BEPPA is expected. Could just be traders though, instead of those holding for long term.


----------



## Mitsimonsta (2 April 2009)

investorpaul said:


> Interesting how strong the price has been, obviously the deferred Div on BEPPA is expected. Could just be traders though, instead of those holding for long term.




I tend to think if the market dips and BEPPA sees a price of <6.5 cents, I think there will be a fairly serious selldown by the traders.

I will be buying then. :


----------



## Mitsimonsta (2 April 2009)

Viva, did your HFA sell? I think some trades have gone through at 19c in the last 10 mins or so...

If so, you'd be cheering I suspect.

Oh, looks like they are dropping back a bit now too.


----------



## Viva_Las_Vegas (2 April 2009)

No mine didn't sell, it touched 19 but i was too far back in the queue. I suspect they will rally before the close as ppl might be expecting them to go up again tomorrow. Frankly I don't have the nerve, and need money for another batch of beppa. FINGERS CROSSED.

Reading the latest news from the G20, they are talking of whole nations collapsing due to the GFC. The markets sure are not sharing that sentiment.
What is their motivation behind all this talk of doom and gloom?


----------



## investorpaul (2 April 2009)

Viva_Las_Vegas said:


> No mine didn't sell, it touched 19 but i was too far back in the queue. I suspect they will rally before the close as ppl might be expecting them to go up again tomorrow. Frankly I don't have the nerve, and need money for another batch of beppa. FINGERS CROSSED.
> 
> Reading the latest news from the G20, they are talking of whole nations collapsing due to the GFC. The markets sure are not sharing that sentiment.
> What is their motivation behind all this talk of doom and gloom?




I read that news from the G20 about whole nations failing. It seems to me that its just another talk fest and the markets have come to a realisation that the governments have NFI what is going on, so they may as well rally and make some money from trading while they can. 

It will hit the fan again soon (GM and Chrysler going under could be the trigger)


----------



## Viva_Las_Vegas (2 April 2009)

That is one thing I cannot get my head around with this GFC.
GMC and Chrysler collapsing? Surely they were making BILLIONS prior to the GFC....what happened to the profits? Did they evaporate? Disappear?
Something tells me a lot of these "institutions" are making things look worse than what they are so they can all get some of this free money being printed out.
I refuse to believe company directors could be so stupid and incompetent that things could go full 360 in the scope of 5 months.

But I agree with you, I think we need to see some sort of correction following all these GREEN days.


----------



## investorpaul (2 April 2009)

Viva_Las_Vegas said:


> That is one thing I cannot get my head around with this GFC.
> GMC and Chrysler collapsing? Surely they were making BILLIONS prior to the GFC....what happened to the profits? Did they evaporate? Disappear?
> Something tells me a lot of these "institutions" are making things look worse than what they are so they can all get some of this free money being printed out.
> I refuse to believe company directors could be so stupid and incompetent that things could go full 360 in the scope of 5 months.
> ...




My understanding of GM and Chrysler is that they have had it "tough" (not sure if thats the right word for the situation) for a while. As a large number of their factories are in America they face higher costs of business (as opposed to Asian countries). In the years prior to the GFC they still managed to do ok, because everyone was living the "dream" and spending money left, right and centre (most of it on credit). 

Some problems started emerging when petrol prices rocketed and people started seeking out smaller more efficient cars (again usually from Asia). American car makers have traditionally made larger, family cars, trucks, 4wds, etc. They then had to play catch up by making cars that consumers wanted. Then the GFC hit and they could no longer rely on the buyers who were only buying because of cheap credit.

Eventually it was hard to get car financing which meant less new cars were sold, they started restructing and laying off workers but because of their size it takes them too long and the cost of doing so is also high. 

Chyslers now have 30 days to merge with Fiat and GM 60 days to present a restructure plan otherwise the gov my stop propping them up and will move towards an "orderly" bankruptcy.


----------



## Viva_Las_Vegas (2 April 2009)

That still doesn't account for where all the money went from boom times. Petrol prices in the US were still cheap compared to the rest of the world.

Like i said, i think it's a bit of ...cry poor and get free $$$$$


----------



## nomore4s (2 April 2009)

Viva_Las_Vegas said:


> That still doesn't account for where all the money went from boom times. Petrol prices in the US were still cheap compared to the rest of the world.
> 
> Like i said, i think it's a bit of ...cry poor and get free $$$$$




There's a bit more to it than that Viva.

These companies are in real trouble and have been losing money for awhile. CEO's are losing their jobs so I don't think it is just crying poor for hand out money.

Alot of it is to do with how these companies (inc the banks) were making profits in the boom but that discussion isn't for this thread.


----------



## investorpaul (2 April 2009)

Viva_Las_Vegas said:


> That still doesn't account for where all the money went from boom times. Petrol prices in the US were still cheap compared to the rest of the world.
> 
> Like i said, i think it's a bit of ...cry poor and get free $$$$$




My summary is a huge simplification of the whole thing, there are structural problems within the company and the American economy in general


----------



## Mitsimonsta (2 April 2009)

If only we knew as much about BBI as we do about the problems in the US economy.

I notice that BEPPA has started to fall back a little in later trade.


----------



## investorpaul (2 April 2009)

Mitsimonsta said:


> If only we knew as much about BBI as we do about the problems in the US economy.
> 
> I notice that BEPPA has started to fall back a little in later trade.




It has fallen back a little towards the end of the day for a day or two now. It could be that there are people who dont want to hold overnight (ie they just trade it during the day?) But i have also noticed parcels that go through after close at a significant reduction to the last price so perhaps people sell down the stock in anticipation of that.


----------



## Tysonboss1 (2 April 2009)

investorpaul said:


> Some problems started emerging when petrol prices rocketed and people started seeking out smaller more efficient cars (again usually from Asia). American car makers have traditionally made larger, family cars, trucks, 4wds, etc. They then had to play catch up by making cars that consumers wanted. Then the GFC hit and they could no longer rely on the buyers who were only buying because of cheap credit.




Yeah, GM completely misread the market, they were releasing over size pick up trucks and they bought the rights to manufacture the hummer right before oil prices peaked and global warming became big news.


----------



## Jez (2 April 2009)

dhukka said:


> The company is paying out more in distributions than it makes.
> 
> Since the company is paying out all profits and thus does not reinvest anything back in the business.




Funny that!

Now tell us something new. Why on earth would company directors not own Gazilions of shares and pay themselves good money? We all know that when a company goes belly-up and there is no money left to pay creditors, the share holders get zilch, so those directors have to get that money into their family trusts before belly-up day comes!

Just telling it like it is!


----------



## investorpaul (2 April 2009)

Jez said:


> Funny that!
> 
> Now tell us something new. Why on earth would company directors not own Gazilions of shares and pay themselves good money? We all know that when a company goes belly-up and there is no money left to pay creditors, the share holders get zilch, so those directors have to get that money into their family trusts before belly-up day comes!
> 
> Just telling it like it is!




In the investor info pack BBI will only pay out future distributions from free cash flow. So while it was an issue in the past, it wont be in the future (assuming they get to a position where they can pay distributions again).


----------



## banska bystrica (2 April 2009)

From The Intelligent Investor:

_"The asset for which there is significant demand is the jewel in BBI's crown: Dalrymple Bay Coal Terminal (DBCT). Serving as a gateway to the Bowen Basin Coal region, the largest known coal deposit in Australia, this infrastructure is as essential as essential infrastructure gets.
The asset is fully regulated by the Queensland Competition Authority and the contracts with mining companies are "take or pay". With demand apparently double DBCT's current capacity, it's irrelevant at the moment, but the mining companies need to pay the same amount whether they use the terminal or not.
It's an extremely attractive asset to infrastructure funds and potentially, the mining companies themselves. Frustrated by the lack of investment in additional capacity, Rio Tinto and BHP Billiton would love to get their hands on it."_


----------



## wesleysnipesjr (2 April 2009)

http://www.abc.net.au/news/stories/2009/04/02/2532836.htm

Dalrymple Bay coal shipments spike. Interesting....


----------



## Viva_Las_Vegas (2 April 2009)

Banksa

When DBCT is shown in that light, it's almost a shame to sell it.
Perhaps a 50%sale of DBCT and some bits and pieces of other assets would be better for BBI's long term future?


----------



## investorpaul (2 April 2009)

Viva_Las_Vegas said:


> Banksa
> 
> When DBCT is shown in that light, it's almost a shame to sell it.
> Perhaps a 50%sale of DBCT and some bits and pieces of other assets would be better for BBI's long term future?




I recall from memory that their preferred option is to sell a minority stake, but if necessary they would sell more (maybe BB can confirm)


----------



## banska bystrica (2 April 2009)

Yes, the preferred option is to sell 49% but since then the banks have implemented a sweep facility to pay off corporate debt so if the price is right, they would probably sell 100%.
I think a minimum price for 100% would be 11.5X EBITDA = $2.6Bn
A ripper of a price would be 13X EBITDA or $3Bn.


----------



## bellenuit (3 April 2009)

banska bystrica said:


> The asset is fully regulated by the Queensland Competition Authority and the contracts with mining companies are "take or pay". With demand apparently double DBCT's current capacity, it's irrelevant at the moment, but the mining companies need to pay the same amount whether they use the terminal or not.[/I]




How exactly does "take or pay" work?  

In the "*Dalrymple Bay coal shipments spike*" article it stated that: "_The month of March saw a jump in the amount of coal being shipped out of one of Australia's largest coal terminals_." Does BBI still only get the same amount if more coal is shipped through the terminal. What incentive does BBI have to increase capacity to meet demand if they still only get the same fee?


----------



## banska bystrica (3 April 2009)

BBI are paid on total capacity, not usage. Therefore, if they invest in expanding capacity they will receive more revenue. DBCT could be doubled and usage would still be close to 100%. This is a problem for the mining companies that use the port....ship delays etc. Time is money. They would love to own it.


----------



## skc (3 April 2009)

bellenuit said:


> How exactly does "take or pay" work?




One of the most confusing jargon imo. It means "take the service/product and pay" or "just pay".

It's like your gym membership. Pay them a certain amount, use as infrequently as you like. Doesn't worry the gym one bit.


----------



## Mitsimonsta (3 April 2009)

Big jump in BEPPA on open.... 

Buy now, or wait for a fall - THAT is the biggest question that is facing my mind right now.


----------



## Viva_Las_Vegas (3 April 2009)

Bear or Bull for BEPPA guys?

Looks like I'm going to have some cash to buy BEPPA with, just wanted people's opinions. Do we see a correction on the horizon? Or is this the new bottom. I see BEPPA is around 8c today!


----------



## Mitsimonsta (3 April 2009)

It tends to fall a bit in the afternoon Viva.... just something I have noticed.

I have also tended to notice that there has been quite a bit of profit-taking on Fridays of late. While it is a nice opening jump, the ASX200 tend to wander back to about half of opening jump on a Friday as people close out their positions for the weekend.


----------



## Viva_Las_Vegas (3 April 2009)

LOL

Mitsimonsta looks like you and I are thinking alike today hahahah

GL.....................


----------



## investorpaul (3 April 2009)

yer last few days it has really fallen away in the afternoon. Although it is a positive to see it open strong today. If it can get a bit of momentum going that would be good


----------



## Mitsimonsta (3 April 2009)

Viva - I can't give you advice, but that is an observation only. Do what you will with the info.

Paul - NOOOOOOO!!! I want it to crash and burn!! I need to buy another parcel, and I want it at 4c


----------



## Viva_Las_Vegas (3 April 2009)

SHOOOOSH man LOL who care bout the momentum. I want in and I want in CHEAP for max volume. Call me a hoarder...I don't care lol


----------



## investorpaul (3 April 2009)

Mitsimonsta said:


> Viva - I can't give you advice, but that is an observation only. Do what you will with the info.
> 
> Paul - NOOOOOOO!!! I want it to crash and burn!! I need to buy another parcel, and I want it at 4c




If i had spare cash i would be with you, but im all out of cash and now all I want to see is the price rise


----------



## Mitsimonsta (3 April 2009)

I am all out of cash (for now) too, but I'd really love to see it crash back to 4c after Easter.

Do we have an answer yet on our "Big Kev's my best mate $900 free money" offer?

EDIT: Phew, it's back to 7.8c now


----------



## investorpaul (3 April 2009)

Mitsimonsta said:


> I am all out of cash (for now) too, but I'd really love to see it crash back to 4c after Easter.
> 
> Do we have an answer yet on our "Big Kev's my best mate $900 free money" offer?




Thats what im waiting for as well, i was working out the other day how many BEPPA i could buy with Rudds handout.


----------



## Viva_Las_Vegas (3 April 2009)

That's what I am wondering. Should I take profits where I can now as there has to be a correction soon.

But then an email I got is talking of a new bull market. Go figure. I can't make sense of what to do.


----------



## Mitsimonsta (3 April 2009)

Bloomberg is reporting that Mark-to-market accounting rules have been eased in the US. I now believe that it is _*virtually*_ impossible to get back to the low that we hit previously, although we might yet give it a good try.

Article: http://www.bloomberg.com/apps/news?pid=20601110&sid=aJ92Wm1EOlCs


----------



## investorpaul (3 April 2009)

Viva_Las_Vegas said:


> That's what I am wondering. Should I take profits where I can now as there has to be a correction soon.
> 
> But then an email I got is talking of a new bull market. Go figure. I can't make sense of what to do.




Viva I think you need to ask the question - do you believe BBI and BEPPA will survive?

If you do believe it will survive you have to work out what price you think it will reach and in what time frame? some figures that have been thrown around on the form are 20c, 50c, $1 (obviously no one knows the outcome, that is for you to decide)

Then if you agree they will survive and agree on a price target, you have to ask why are you selling for small profit if YOU believe a higher price is achievable?

You could sell now and then be forced to buy in higher (of course no one knows the answer to this either)


----------



## Viva_Las_Vegas (3 April 2009)

Paul,
Sorry you misunderstood me.
I have confidence in BBI, and I hold both BEPPA and BBI, not selling those for a quick profit.

I am considering selling other stocks to free up cash in order to buy more beppa/bbi. My questions being bear or bull market, I understand these are all personal opinions but I appreciate them nonetheless.

cheers


----------



## investorpaul (3 April 2009)

Viva_Las_Vegas said:


> Paul,
> Sorry you misunderstood me.
> I have confidence in BBI, and I hold both BEPPA and BBI, not selling those for a quick profit.
> 
> ...




Sorry Vegas, I get what you mean now. I wish i was in your position to sell other stocks. Its interesting times the market has rallied quiet a bit off its lows, i think it happened a bit too quick to be sustained but i guess only time will tell


----------



## Viva_Las_Vegas (3 April 2009)

I just got an email from a mate who subscribes to some newletter etc which he pays for. It talks about "the bottom" and how we are yet to reach it. It has rattled my cage ...a little.
I cannot post it here, but can email to anyone who wants a read.
PM me your email add's and I will forward to those interested.

Cheers


----------



## banska bystrica (3 April 2009)

Viva,
You are wasting time and energy worrying about things you cannot control.
Spend the time doing research on stocks rather than worrying about who is saying what. Whether we have reached the bottom is irrelevant as you have stated you are a long term investor. You seem to be always jumping at shadows. Chill out and let give your stocks a chance to perform. People who continually question things they have no control over and sell out when the slightest setbacks appear will never make a lot of money in the market. There are thousands of market traders who try and pinch a cent here and there. That's fine but very very few of those types of traders ever make enough money to change their life.


----------



## Mitsimonsta (3 April 2009)

I will agree with BB. I told you to hold HFA and it went up....

Give things a chance to happen. If you sell out when something heads down for a while, you will crystallise a paper loss into a real financial loss.

Almost every stock out there is at historical lows. Give it time and everything will come back up. Could be two years, but you must be patient.

If you want to daytrade, then get 20K aside and put it all on a sure winner for the day and sell out before market close.


----------



## hardyakka (3 April 2009)

Mitsimonsta said:


> If you want to daytrade, then get 20K aside and put it all on a sure winner for the day and sell out before market close.




Mitsimonsta,

I have already started mortgaging the house, selling the wife and kids etc to raise the cash for the "sure winner". Problem is wife and kids a liability...any takers??

Now all I need is the "sure winner" ASX code and a visit to those friendly underwriters at AIG so I can take out a policy negating downside risk (isnt that what they did for CDS products). ;-)

Cheers


----------



## Viva_Las_Vegas (3 April 2009)

Hi Guys,

I'm not jumping at shadows BB just trying to get a feel for things to come. It's not jumping if I have a strategy of buying BEPPA at lowest SP possible, that's why I was asking for opinions as to whether or not we will have a correction.

Anyway I've been "over the road" and managed to get myself sin binned after 1 day membership for writing f**& (exactly like that) sheesh.

"Over there" the question has arisen re the sale of DBCT and who will be representing the buyers side? There is some concern that Macq group will also represent the buyer hence effecting final price. Any thoughts or relevant info?

All info accepted...just NOOOO shadows lol


----------



## Tysonboss1 (4 April 2009)

Viva_Las_Vegas said:


> Hi Guys,
> 
> I'm not jumping at shadows BB just trying to get a feel for things to come. It's not jumping if I have a strategy of buying BEPPA at lowest SP possible, that's why I was asking for opinions as to whether or not we will have a correction.
> 
> ...




Maybe try dollar cost averaging method of buying shares, It is a good way of building a position if you are unsure in a stock may drop back a bit, but you also don't want to miss a run up completely.

_*Dollar cost averaging is the practice of investing a fixed dollar amount at regular intervals (such as monthly) in a particular investment or portfolio, regardless of its share price. In this way, more shares are purchased when prices are low and fewer shares are bought when prices are high*_

you could make a pact with yourself that you will invest say $500 a f/night for three months,


----------



## Viva_Las_Vegas (6 April 2009)

Thanks T, I am aware of averaging and have used it on occasion.

Not much debate re BBI BEEPA happening anymore? Anyone have any goss on the DBCT sale process? Any idea how long this "due diligence process" goes on for (on average)?


----------



## Mitsimonsta (6 April 2009)

Due Dilligence means to research and give that research the amount of time that it deserves.

It's a multi-billion dollar asset, therefore I don't expect it to happen overnight. I would expect that MQG would go into serious talks with interested parties around the first week of May, and an announcement would be made regarding a sale winner around the end of May, in time for the sale to complete before EOFY.


----------



## banska bystrica (6 April 2009)

DBCT tenders are open until June 30. Decision in July/August I would imagine.
The leaks would come out pretty quickly though once Macquarie had a fair idea on what the price will be.
AIO's ports are not as A Grade as DBCT and I see they are expecting 13X EBITDA.
The same multiple for DBCT would result in a price of $2.9Bn which would just about clear all corporate debt. Under that scenario, BBI are out of danger and BEPPA are certainly worth $1 in 2012 (either cash, BBI shares or a combination of both). Either way, $1 is $1 and 1200% on today's price.

Don't be surprised to see a sale of PD Ports before DBCT.


----------



## Mitsimonsta (6 April 2009)

Price just went mental on BEPPA, up to 8.5c now on the last trade. No similar movement on BBI however.

I am up $260 across my portfolio now, an excellent day. Wish I had the cash to keep buying, will have to wait for the correction now.



banska bystrica said:


> AIO's ports are not as A Grade as DBCT and I see they are expecting 13X EBITDA.



What could you see being achieved BB? 15x? More?


----------



## investorpaul (6 April 2009)

Mitsimonsta said:


> Price just went mental on BEPPA, up to 8.5c now on the last trade. No similar movement on BBI however.
> 
> I am up $260 across my portfolio now, an excellent day. Wish I had the cash to keep buying, will have to wait for the correction now.
> 
> ...




Price jumped pretty quick, doesnt seem to be any reason though???

It will be interesting to see how well it holds the gains because it has been dropping back in the afternoon most days

Edit: the difference between the two is now 2 cents and it doesnt look like BBI is going to move inline with BEPPA


----------



## Viva_Las_Vegas (6 April 2009)

Not sure why BEPPA has jumped so much today, but i hope it closes around  8c. I am now in a position to buy more. 
How is everyone feeling about BBI/BEPPA haven't felt much back slapping on here lately ;-)


----------



## sinner (6 April 2009)

Viva_Las_Vegas said:


> Not sure why BEPPA has jumped so much today, but i hope it closes around  8c. I am now in a position to buy more.
> How is everyone feeling about BBI/BEPPA haven't felt much back slapping on here lately ;-)




Because we aren't all constantly seeking validation for our actions? I think you might be hooked on watching your bet ride!


----------



## Mitsimonsta (6 April 2009)

I am not going to be in a position to buy until at least Thursday (Payday is Wednedsay next week), but if Kev's handout gets here Wednesday then I expect to jump on with some more a tiny bit quicker.


----------



## Tysonboss1 (6 April 2009)

I have been buying lots of 20,000 or 25,000 units three times a week.

I purchased 15,000 today at 8.7c just to round off my holding at a nice even number, Beppa is about 10% of my total portfolio now, so I should really sit back and watch for a while now.


----------



## investorpaul (6 April 2009)

Mitsimonsta said:


> I am not going to be in a position to buy until at least Thursday (Payday is Wednedsay next week), but if Kev's handout gets here Wednesday then I expect to jump on with some more a tiny bit quicker.




I'm waiting for KRudds hand out too. Ive got a ton of stuff to pay for (mainly o/s travel) that im still undecided whether to buy more BEPPA. 

I'm happy with my current holding, but im not sure if greed is getting to me a little (ie that 1000% return potential).

It will be interesting to see how much they rise before any announcement is made Re: sale of assets or reduction of debt


----------



## nomore4s (6 April 2009)

This thread is fast deteriorating into a backslapping ramping festival.

Before people get sucked in to the euphoria especially newbies, have a bit of a read through the whole thread and you will see that people have been calling this a screaming buy since well over 80c.

I don't know if this will eventually return 1000% or go back down to 3c but I do know there are risks envolved with this stock - so make sure your risks are adequately managed if you do buy into the hype.

I personally think there are better options around atm with similar rewards but a hell of a lot less risk.

Good luck to holders.

My.


----------



## banska bystrica (6 April 2009)

I am heavily loaded on all bases with BEPPA and also BBI. I added 150K BEPPA today and was happy to pay 8.5c.
nomore4s is right. There are still significant risks and people should be taking those risks into account.

With BBI, there is still the risk of significant dilution and whilst corporate debt remains, there is a risk of administration.

BEPPA's risk is that corporate debt remains unpaid due to assets not being sold.
I personally cannot see how DBCT doesn't get sold. We know there are multiple parties in the data room doing due diligence, the coal terminal is fully regulated and "take or pay" so earnings are as guaranteed as you will ever get. We know Macarthur Coal, Xstrata, BHP and Rio Tinto are interested as well as infrastructure funds. Yes there are risks, but at 8.5c for BEPPA, the downside is 100% to zero and the upside is $1 on maturity (2012). That's potential upside of in excess of 1000% profit from today's prices.

BEPPA is basically a 10/1 bet that DBCT gets sold. That's a tremendous investment in my book.

It's all about risk/reward and everyone has a different risk tolerance.


----------



## Viva_Las_Vegas (6 April 2009)

Thanks for buying up today Banksa, lol I think you drove the price up a bit for the rest of us Schmucks.
Missed by buy order today for 50k units, but hoping to get an opportunity tomorrow. I guess we are a long ways off from the DBCT announcements but in this tumoltuous market who know what when or where


----------



## skc (6 April 2009)

nomore4s said:


> This thread is fast deteriorating into a backslapping ramping festival.
> 
> Before people get sucked in to the euphoria especially newbies, have a bit of a read through the whole thread and you will see that people have been calling this a screaming buy since well over 80c.
> 
> ...




Totally agree. So many people with no capital or experience "DYOR" on this thread alone. The risk / reward of this trade may be favourable, but one must always remeber what the risk/reward of an individual trade means: good R/R ratio works for you over time, over many trades.



investorpaul said:


> I'm waiting for KRudds hand out too. Ive got a ton of stuff to pay for (mainly o/s travel) that im still undecided whether to buy more BEPPA.




Paul, consider this as borrowing money (probably at a v.high rate) to invest/gamble on a high risk opportunity, and ask yourself if it complies with your trading / investment plan.

Good luck.


----------



## banska bystrica (6 April 2009)

skc said:


> Paul, consider this as borrowing money (probably at a v.high rate) to invest/gamble on a high risk opportunity, and ask yourself if it complies with your trading / investment plan.




If you think it's high risk, that's your opinion. A sale of DBCT at a reasonable EBITDA multiple is hardly high risk. People are looking at the share price (sub 10c) and assuming it's high risk because of this.
I think BEPPA is very low risk. That's my opinion after hundreds of hours of research.


----------



## hardyakka (6 April 2009)

nomore4s said:


> I don't know if this will eventually return 1000% or go back down to 3c but I do know there are risks envolved with this stock - so make sure your risks are adequately managed if you do buy into the hype.
> 
> I personally think there are better options around atm with similar rewards but a hell of a lot less risk.




I also added to my holding today, picking up another 100k at 8.4 cents and  now hold a reasonable number of BEPPA.

Nomore is perfectly correct, we must never lose sight of the fact that this is a high risk/high reward investment. If you assume the worst and plan to lose whatever you have invested then there can only be upside in your investment.

The removal of the management agreement and certainty about the sale of DBCT will have a reasonable impact on the BBI and BEPPA prices. DYOR as to which direction it will head ;-)

Cheers


----------



## cbrendan (6 April 2009)

nomore4s said:


> I personally think there are better options around atm with similar rewards but a hell of a lot less risk.
> 
> Good luck to holders.
> 
> My.




Genuinely interested to hear what you believe has similar rewards with considerably less risk then BEPPA.

Cheers


----------



## nomore4s (6 April 2009)

cbrendan said:


> Genuinely interested to hear what you believe has similar rewards with considerably less risk then BEPPA.
> 
> Cheers




Won't go into it in this thread but just have a look around atm, small caps are flying some have doubled & tripled in price in the last few months. Stocks like SSM are moving up while still paying high d/e's. Even MQG has doubled in price in the last 6 weeks or so. All with substantially less risk imo.

What happens to this stock if the sale doesn't go through?


----------



## Family_Guy (6 April 2009)

Noobie question.....
Whats the diff between BBI and BEPPA? Thread seems to have changed from one stock to the other so i got confused. And if this sale goes thru of DBCT, then why is BEPPA the better one to own?


----------



## cbrendan (6 April 2009)

nomore4s said:


> Won't go into it in this thread but just have a look around atm, small caps are flying some have doubled & tripled in price in the last few months. Stocks like SSM are moving up while still paying high d/e's. Even MQG has doubled in price in the last 6 weeks or so. All with substantially less risk imo.
> 
> What happens to this stock if the sale doesn't go through?




Hey mate,

Thanks for the quick reply.

From my own point of view, i believe the sale will go through and wouldn't be in the stock if i didn't. I accept that if they can't sell for a decent price my investment will be close to a write off.

That being said i'm not talking about doubling or tripling my money, i'm talking about a 1000% return on my average price.

I can weigh up the risk and invest MY money knowing that if the stars align i've made my fortune, and if it turns to s*****t that i'm just gonna have to work a bit harder for a while.

100% agree that less riskier options exist wherein to double your money 

Only doubling your moneys for suckers though


----------



## nomore4s (6 April 2009)

cbrendan said:


> That being said i'm not talking about doubling or tripling my money, i'm talking about a 1000% return on my average price.
> 
> I can weigh up the risk and invest MY money knowing that if the stars align i've made my fortune, and if it turns to s*****t that i'm just gonna have to work a bit harder for a while.
> 
> ...




lol, they haven't finished moving up yet, and how do you know none of them will return 1000%?

I've got no problems with people investing in this stock and if the chart triggers a buy for a trade I will buy. The main reason for my post was just to bring a bit of reality about the risks back to this thread so newbies don't get sucked in without knowing the risks involved.

Have you read through the start of the thread lately? Makes for interesting reading, people have been calling for these massive gains for a while.

I hope you do get your 1000% gain, while I happily stick to my trading plan.

Good luck.


----------



## hardyakka (7 April 2009)

Family_Guy said:


> Noobie question.....
> Whats the diff between BBI and BEPPA? Thread seems to have changed from one stock to the other so i got confused. And if this sale goes thru of DBCT, then why is BEPPA the better one to own?




BBI is basically an interest in a registered scheme (ie BBI) and it carries the full equity risks and rewards of ownership. BBI distributions vary depending upon the profitability of the fund.

BEPPA is basically a preference share and it receives income in the form of interest income. For each $1 BEPPA bought in the original float you would receive interest income for several years, and in 2012 can get your $1 back or covert into BBI securities noted above. The key difference is BEPPA do not participate in the equity risks and rewards and are safer. As a result they are safer because in the event of a wind up they must be paid out first before the BBI holders receive a cent.

BBI has liquidity problems because it has too much debt, the sale of DBCT will realise a profit and allow senior debt (ie bank debt) at the corporate level to be paid down. If the sale does not go through BBI may not be able to meet its funding obligations. Under the Corps Act a company cannot trade whilst insolvent (directors can be held personally liable for debts incurred whilst it does so).

Hope that helps and read some of the earlier posts as it is explained in detail in those.

Cheers


----------



## Family_Guy (7 April 2009)

hardyakka said:


> BBI is basically an interest in a registered scheme (ie BBI) and it carries the full equity risks and rewards of ownership. BBI distributions vary depending upon the profitability of the fund.
> 
> BEPPA is basically a preference share and it receives income in the form of interest income. For each $1 BEPPA bought in the original float you would receive interest income for several years, and in 2012 can get your $1 back or covert into BBI securities noted above. The key difference is BEPPA do not participate in the equity risks and rewards and are safer. As a result they are safer because in the event of a wind up they must be paid out first before the BBI holders receive a cent.
> 
> ...




Right. The first post that i have actually understood (not really, but it is).
Thanks for that, understood completely now. I bought BBI understanding the risks but the BEPPA just threw me a little. I read quite a few pages but skipped a few and maybe also skimmed over some crucial posts. Cheers for the reply.


----------



## hardyakka (7 April 2009)

nomore4s said:


> lol, they haven't finished moving up yet, and how do you know none of them will return 1000%?
> 
> I've got no problems with people investing in this stock and if the chart triggers a buy for a trade I will buy. The main reason for my post was just to bring a bit of reality about the risks back to this thread so newbies don't get sucked in without knowing the risks involved.
> 
> ...




Nomore,

I agree with you that there has been a lot of counting your chickens before they hatched. If BEPPA goes to 20 cents by June I will be happy (that represents a gain of about 150% plus)l

Regarding looking at other stocks, well I have gone from the bluest of blue chips to some quite good midcaps which, if I had held them, would be showing even healthier profits. These include TRY, AGO, IGO, PLA, SDG, MAH, ABP, NOD and ACL to name a few. I have had a few non-performers which I think have potential such as AGS and ACR. 

Researching BBI and BEPPA the potential risks and rewards became clear. With the exception of PLA, ACL, NOD and a couple of large blue chips I have decided to go with my judgement and instinct and replace the midcaps with BEPPA.

Most of those midcaps are showing great profits now, maybe they will be 200% plus in 12 months time. However IMO the price, risk and reward equation of BEPPA, especially considering it has the NTA of BBI as a "safety cushion" in a worst possible case scenario, is warranted

I am pretty sure that somewhere there is method to my madness.

Cheers


----------



## banska bystrica (7 April 2009)

nomore4s said:


> Have you read through the start of the thread lately? Makes for interesting reading, people have been calling for these massive gains for a while.




Well I bought my first parcel at 42c. I then bought another small parcel in the mid 20's.
I then waited and started buying around 6c and then really loaded up the truck below 4c and even snagged 800,000 at 2.5c if you read one of my first posts on BBI in November 2008. 

Regarding the risks: I know there are risks but in my mind, the risks are so low they do not justify a share price trading at a 94% discount to NAV and the prefs at a discount of 92%. Pure madness but that's why I'm still buying.

There is a risk DBCT doesn't sell for an acceptable price. *LOW RISK* in my opionion.
If BBI cannot sell assets, there is a risk that eventually they may breach their debt covenants. *LOW RISK* if you look at the earnings for each asset.

There is a risk that credit will freeze further. *LOW/MEDIUM RISK*.

So yes, there are risks, but as I said before, a lot of people think there is a correlation with the share price and risk. There are no market cap debt covenants on BBI. So long as they are paying their interest when it falls due and they are not in breach of the ICR's, then the share price is irrelevant.
I feel sorry for those investors who have paid very high prices for BBI but that is history and what we need to focus on is the future. The current price is 6.5c. Therefore, all our analysis should be on that basis, rather that people's perception of how poor management were when controlled by BNB management.
BNB actually did a great job buying assets of the highest quality and in the case of BBI, they did not pay high prices. BNB and the satellites were a victim of a credit freeze, simple as that. They were not the only directors who failed to see the gravity of what was coming. Forget about prejudices and concentrate on the present and future.


----------



## mark_au (7 April 2009)

banska bystrica said:


> Well I bought my first parcel at 42c. I then bought another small parcel in the mid 20's.
> I then waited and started buying around 6c and then really loaded up the truck below 4c and even snagged 800,000 at 2.5c if you read one of my first posts on BBI in November 2008.
> 
> Regarding the risks: I know there are risks but in my mind, the risks are so low they do not justify a share price trading at a 94% discount to NAV and the prefs at a discount of 92%. Pure madness but that's why I'm still buying.
> ...




800000 at 2.5 cents, thats an awesome buy, gotta be happy with that one BB.
 i have "only" 250,000 bbi varying between 4 c and 24 (ithink) and 120000 of bebba at around 6 c., id like to get more, but my line of credit is starting to max out and i dont want to be too overweight on just one stock


----------



## investorpaul (7 April 2009)

skc said:


> Paul, consider this as borrowing money (probably at a v.high rate) to invest/gamble on a high risk opportunity, and ask yourself if it complies with your trading / investment plan.
> 
> Good luck.




Hi SKC,

I have a long term portfolio and BBI and BEPPA represents my spec stock, I normally hold one or two at a time. I have not invested the full amount I normally do into BBI and BEPPA, but I still have a significant holding.

To me the $900 handout is like money I shouldnt have and I am happy to put that down on BBI/BEPPA. If this 900 was spent of a tv (like Rudd wants us to) then after i take it out of the shop that TV is prob only worth $200, so i can lose my money either way.

Originally I followed this thread as an onlooker and after a while started doing some research into the history/current financial situation/potential future of BBI. Although I doubt i have done as much as Banska I am happy with the amount I have done and the potential risk/reward fits comfortably within my strategy for the amount I have invested.

Would I go and invest another 10x what I have? probably not because then I would be putting too much of my capital into a trade that may or may not work out.


----------



## banska bystrica (7 April 2009)

banska bystrica said:


> What's BNB going under got to do with BBI. BBI own quality monopolistic infrastructure assets, do not have any debt relationship with BNB, and are not under a forced selling program. They have decided to sell assets only at book value or above to reduce corporate debt.
> I cannot see what the panic is all about. Stepped in and bought 800,000 at 2.5c today. Put in the drawer and wait for the credit markets to thaw.




Mark,
What I said in this post in November is still valid. Put them in the drawer. We know that Phil Green was selling out (forced) via Deutche Bank. That gave us the opportunity to acquire very cheap stock in a bit of volume.


----------



## skc (7 April 2009)

investorpaul said:


> To me the $900 handout is like money I shouldnt have and I am happy to put that down on BBI/BEPPA. If this 900 was spent of a tv (like Rudd wants us to) then after i take it out of the shop that TV is prob only worth $200, so i can lose my money either way.




What I meant was, because you have other debt (e.g. travel), your $900 could have gone towards paying that off. So what you have effectively done is using debt to fund the purchase. Think about it as paying $900 to reduce the debt, then draw on it again to fund the purchase of the shares. Financially that's the same. 

I am definitely not advocating you to buy a TV... consumerism is the root of all evil and the whole stimulus solution is like using MacDonalds as the cure for obesity.


----------



## investorpaul (7 April 2009)

skc said:


> What I meant was, because you have other debt (e.g. travel), your $900 could have gone towards paying that off. So what you have effectively done is using debt to fund the purchase. Think about it as paying $900 to reduce the debt, then draw on it again to fund the purchase of the shares. Financially that's the same.
> 
> I am definitely not advocating you to buy a TV... consumerism is the root of all evil and the whole stimulus solution is like using MacDonalds as the cure for obesity.




Sorry SKC, i must have read your inital post wrong. While the o/s travel will be put on the credit card, I have the cash to pay it off within the 55 interest free days


----------



## Mitsimonsta (7 April 2009)

skc said:


> I am definitely not advocating you to buy a TV... consumerism is the root of all evil and the whole stimulus solution is like using MacDonalds as the cure for obesity.



I love this post skc, absolutely true. Do you mind if I use it elsewhere?

My portfolio has dropped a little today (FXJ down as the retail SPP shares hit CHESS and people sell them off for 50% profit) but BEPPA is cushioning the fall nicely.


----------



## skc (7 April 2009)

Mitsimonsta said:


> I love this post skc, absolutely true. Do you mind if I use it elsewhere?




Use it all you want, but if you ever get famous because of this I will come after you for my 8.5% royalty + GST.


----------



## Mitsimonsta (7 April 2009)

skc said:


> Use it all you want, but if you ever get famous because of this I will come after you for my 8.5% royalty + GST.




Cheers. It certainly made me laugh.

Seems that BEPPA is on a slow march upwards. I really want my K-Rudd cheque right nao.


----------



## Viva_Las_Vegas (7 April 2009)

Topped up some BEPPA at 8.7c today. The negative day surely did not see them suffer price wise. They seem to be climbing.. slow and steady wins the race.

There also seems to be someone wanting to offload about 1 million BEPPA at 9c.

Profit taking? OR Loss on confidence?

Althought I have decided to hold BBI/BEPPA I have a question for those in the know....

There has been a lot of discussion about BBI and the strong value of its essential infrastructure assets which will be sold to cover debt. Banksa you have done hundreds of hours of research into BBI and have invested substantially. 
Now despite our optimism in the survival of BBI and the positives pointed out by Banksa I count us as the few investors in a sea of many. So my main question is, WHY haven't analysts, insto's etc identified BBI/BEPPA as a solid risk/reward investment? Surely they have people working on these things looking for opportunities to make big money. And lets face it there is big money to be made here. So why hasn't BBI popped up on their radar with the sale process of DBCT in motion? I find this strange.


----------



## nulla nulla (7 April 2009)

skc said:


> What I meant was, because you have other debt (e.g. travel), your $900 could have gone towards paying that off. So what you have effectively done is using debt to fund the purchase. Think about it as paying $900 to reduce the debt, then draw on it again to fund the purchase of the shares. Financially that's the same.
> 
> I am definitely not advocating you to buy a TV... consumerism is the root of all evil and the whole stimulus solution is like using MacDonalds as the cure for obesity.




I prefer the analagy from the Vietnam conflict era, "Fighting for Peace, is like F@&$ing for Chastity".


----------



## fuzzie (7 April 2009)

Viva_Las_Vegas said:


> So my main question is, WHY haven't analysts, insto's etc identified BBI/BEPPA as a solid risk/reward investment? Surely they have people working on these things looking for opportunities to make big money.




Is this true? The analysis from my online broker has had BBI as a buy for a long time with a target of 30 cents, but with the caveat it's not for investors without a high tolerance for risk.

Their consensus view from 9 brokers has an average recommendation as buy, with no sells and only 1 under perform.


----------



## hardyakka (7 April 2009)

Viva_Las_Vegas said:


> WHY haven't analysts, insto's etc identified BBI/BEPPA as a solid risk/reward investment? Surely they have people working on these things looking for opportunities to make big money. And lets face it there is big money to be made here. So why hasn't BBI popped up on their radar with the sale process of DBCT in motion? I find this strange.




I will try and add a few points which may answer your question:

a) If you look back at some old investment reports you will see that heaps of so called professional analysts had BBI as a buy above $1.

b) Instos. are restricted as to the type of securities they can buy with a small allocation to opportunist/spec. These asset allocation criteria are normally PDS or investment mandate restrictions. 

c) Instos as investors do not like to buy when a stock is still regarded as spec, generally they like to see reasonable certainty of upward movement before piling in (ie post DBCT sale IMO).

d) Analysts have the same access to information that you and I do (in theory), ie data in the public domain. Its the navel and crystal ball gazing that separates them from the rest of us.

e) Dont forget it is not that long ago that brokers issued buy and sell  recommendations to generate transactions and hence fee income, whilst they took opposite house views. That is one reason ASIC issued RG 181-Conflicts of interest & separate guidelines for research report writers.


Trust your own instincts and research.

Cheers


----------



## Viva_Las_Vegas (8 April 2009)

Understood. I too saw recommendations back in Oct Nov Dec to buy BBI, but haven't seen one in a long time.
As you say analysts etc have access to the same information as we do in the public domain, however how is it that a small pool of forum folk can be interested in this potential golden goose whilst the vast pool of investors is missing it? 
Hardyakka, your explanation is great, I just can't get my head around this gem being missed by the rest of the market. I find this particularly strange.


----------



## Bolivia (8 April 2009)

Just wondering whether anyone can clear up a concern I have WRT the valuations being talked about for the DBCT.

Please correct me if I am wrong with the following numbers:

When BBI originally announced the sale of 50% of Powerco, This gave an Enterprise value of NZ$2.05 Billion, this meant that an EV/EBITDA basis it was sold for approx 9.3 times. The later adjustment to 58% meant the end figure was even less. Approx 9 times.

I was going through the investment pack and found that EBITDA for DBCT for the 6 months to end Dec08 was approx 70.1 Mill. It is my understanding that the Phase 1 upgrade was completed in March 08, so for the entire period to Dec08 it was operating on 68 mill tonnes. The first part of Phase 2/3 was completed in Dec08 taking the facilities tonnage to 72 Mill. Phase 2/3 will be completed, according to BBI, by June09 which will take tonnage to 85Mill.

Now, I know there is not a direct linear correlation between EBITDA and tonnes, but according to my caculations, if in the 2nd Half of FY09 tonnage is running at 72 Mill then EBITDA for the second half will be approx 6% more than the first half - $74.25Mill. Therefore EBITDA for FY2009 will be approx $144-145 Mill.

What I would like to know is how does one get to a valuation of anywhere near $3 Bill if EBITDA is approx $145 Mill? That implies a multiple of 20 times. Double that of Powerco. 

Lets assume that we use the figures for the expanded capacity i.e 85Million tonnes. Back of the envelope calculations would mean EBITDA of approx $175 Mill. Still way short of the $226Mill Banksa Bystrica is using?

I am not trying to put any doubt out there, I am just simply trying to clarify the value picture for DBCT, and if it really is achievable to get that price.


----------



## nomore4s (8 April 2009)

Viva_Las_Vegas said:


> Hardyakka, your explanation is great, I just can't get my head around this gem being missed by the rest of the market. I find this particularly strange.




Because maybe some of the posters here are wrong? *But* this is what makes the market - differing opinions, which is why you will get undervalued shares. The market atm is very savage on anything with excessive debt or anything deemed high risk but the shares that survive and manage the debt will eventually be re-priced by the market.



Bolivia said:


> I am not trying to put any doubt out there, I am just simply trying to clarify the value picture for DBCT, and if it really is achievable to get that price.




The market would seem to think that it isn't achievable.


----------



## skc (8 April 2009)

Bolivia said:


> Just wondering whether anyone can clear up a concern I have WRT the valuations being talked about for the DBCT.
> 
> Please correct me if I am wrong with the following numbers:
> 
> ...




Power companies and ports should have fairly different multiples, given their different business risk etc. See here on the 2005 BBI purchase of PD ports. The price paid was 12.6 times next year's EBITDA. It also contained some industry comparables. Note the multiples for Patrick (now AIO) is definitely not quite where they used to be in 2005.

Also note, the DCBT is a 50 year asset (how many year is left?), so check for yourself about PD ports. Clearly the multiple you pay for the income over next 50 years will be slightly different to if you own something outright forever.  

http://www.bbinfrastructure.com.au/media/86595/121205 bbi presentation - pd ports.pdf

On your EBITDA number. I think the buyer will look for the EBITDA operating at the fully expanded capacity. Also, there will be signficant fixed costs in a port, so you are right that EBITDA will not be totally linear with capacity. You will need to work back base on BBI's numbers, but you will be surprised by how much of the increased capacity could potentially drop straight into EBITDA.

E.g. on purely made up numbers...

On 70m tonnes, revenue = $1000m, fixed costs = $200m, variable costs = $700m (or $10/tonne). EBITDA = $100m

On 85 tonnes, revenue = $1215m, fixed costs = $200m, variable costs = $850m (same $10/tonne). EBITDA = $165m. 

So a 20% increase in capacity has led to 65% increase in EBITDA.


----------



## banska bystrica (8 April 2009)

When buying an asset like a coal terminal that is not operating at full capacity, one must do the numbers on full capacity figures because we know DBCT could easily process double the number of ships it is doing now if the capacity was there.
I have full confidence in my EBITDA numbers on FULL capacity.

ABN are forecasting 2011 EBITDA at $241M. I think that might be conservative but even if we take that figure and apply a 12.5X EBITDA multiple we get $3B.
If we conservatively use the 2010 figure of $224M, we get $2.8Bn.
If AIO are expecting 12.5X, then DBCT will get this in a flash. It's income is fully regulated.
I would be disappointed in anything less than $2.7Bn.

The MCG takeover at $2.50 is pcing in EBITDA of 15+. The world is waking up, the penny is dropping. Infrastructure assets will outperform once inflation kicks in around 2011.


----------



## banska bystrica (8 April 2009)

nomore4s said:


> Because maybe some of the posters here are wrong?




Spot on. Maybe we are wrong in which case we will get slaughtered.
However, if we are correct and the market is wrong, we will make a fortune.


----------



## banska bystrica (8 April 2009)

Viva_Las_Vegas said:


> I just can't get my head around this gem being missed by the rest of the market. I find this particularly strange.




There are plenty of people buying BBI other than forum readers. Look at the volumes going through the last month. I can assure you it's not just forum users. Instos will only start buying when the risk is gone. That's why I believe the sale of DBCT will be the catalyst for BBI to be re-rated substantially in the following quarter after the sale of DBCT.


----------



## hardyakka (8 April 2009)

Viva_Las_Vegas said:


> Understood. I too saw recommendations back in Oct Nov Dec to buy BBI, but haven't seen one in a long time.
> As you say analysts etc have access to the same information as we do in the public domain, however how is it that a small pool of forum folk can be interested in this potential golden goose whilst the vast pool of investors is missing it?
> Hardyakka, your explanation is great, I just can't get my head around this gem being missed by the rest of the market. I find this particularly strange.




The only thing I would like to add to the explanations already given is that it is an imperfect market and the majority of investors are running scared, hence the flight to cash and lack of risk capital.

Without meaning to thrash a dead horse the W Buffett saying sums it up for me, this is along the lines of "When everyone is greedy be scared, when everyone is scared be greedy".

But then at the same time there is no certainty of return at this stage, there is only that when the cash is in the bank. Nothing is guaranteed.

IMO I consider BBI will recover, allbeit slowly and their actions over the past 4/5 months are demonstrating this to me. But then maybe I am naive and will lose a lot of money, alternatively if my judgement and instincts are correct I also stand to make a heck of a lot.

Never forget that many of the blue chips, ie Santos, CSL, Cochlear etc started life as penny dreadfuls or midcaps. Those who took a risk rode their price accordingly.

Cheers


----------



## hardyakka (8 April 2009)

banska bystrica said:


> There are plenty of people buying BBI other than forum readers. Look at the volumes going through the last month. I can assure you it's not just forum users. Instos will only start buying when the risk is gone. That's why I believe the sale of DBCT will be the catalyst for BBI to be re-rated substantially in the following quarter after the sale of DBCT.




BB,

Totally agree, when the sale is announced then I see instos moving into the BBI register.

Cheers


----------



## skc (8 April 2009)

hardyakka said:


> Never forget that many of the blue chips, ie Santos, CSL, Cochlear etc started life as penny dreadfuls or midcaps. Those who took a risk rode their price accordingly.




Also don't forget many penny dreadfuls these days started life as blue chips! 

Sorry couldn't resist...


----------



## hardyakka (8 April 2009)

skc said:


> Also don't forget many penny dreadfuls these days started life as blue chips!
> 
> Sorry couldn't resist...




 yes I agree, but the opposite also applies and that is why research and instincts are vital

I could not resist either


----------



## Tysonboss1 (8 April 2009)

skc said:


> Also don't forget many penny dreadfuls these days started life as blue chips!
> 
> Sorry couldn't resist...




HaHaHA,... 

But finding out which ones just have penny dreadful window dressing could be profitable.


----------



## Bolivia (9 April 2009)

I have done alot more homework on the value of Dalrymple Bay and believe 2009/10 EBITDA could be in the 200-240 Mill area. Which means a price of around 2.5-3.0 Bill is entirely feasible. They just have to find a willing buyer!

This leads me to my next question. If the sale goes ahead and a considerable amount of corporate debt is paid off, it is easy to see how the market will react favourably to this news. Will this then become an opportunity for BNB to unload the stock it has, due to being in administration, keeping a lid on potential gains for BBI? Also, do BNB hold any BEPPA's? On a comparative basis wouldn't BEPPA do alot better, share price wise, than BBI if they announced the sale? Why then should you buy BBI?


----------



## nomore4s (9 April 2009)

Bolivia said:


> They just have to find a willing buyer!




This is the sticking point atm, which is why the market is currently cautious on the pricing of BBI.

There will not be too many companies willing to pay a premium on any asset in the current climate especially if it envolves having to take on a lot of debt themselves to do it. Most companies are busy trying to reduce debt and/or shore up balance sheets.


----------



## Tysonboss1 (9 April 2009)

Bolivia said:


> On a comparative basis wouldn't BEPPA do alot better, share price wise, than BBI if they announced the sale? Why then should you buy BBI?




Yes you would expect that Beppa would recover faster than BBI and strengthed towards face value, Beppa will also receive a distribution before BBI.

However Beppa Maxium gain is pretty much capped at it's $1 face value + interest, So any extra value generated by the operation or sale of BBI assets will flow to BBI share holders which have no such cap on their value or distributions.

BBI and BEPPA are different animals, and thought needs to be put into the longterm pros and cons of each.

I hold both currently at a 80/20 ratio with Beppa being the larger portion.


----------



## banska bystrica (9 April 2009)

Bolivia said:


> I have done alot more homework on the value of Dalrymple Bay and believe 2009/10 EBITDA could be in the 200-240 Mill area. Which means a price of around 2.5-3.0 Bill is entirely feasible.




You are now in the same ball park as me. 
Once DBCT sells, corporate debt can be wiped out (or just about wiped out depending on DBCT sale price) and  BEPPA will race away from BBI in price (in my opinion). If BBI are left with only non-recourse debt, the risk is all but eliminated. That ensures BEPPA holders will get $1+ worth of something. Either BBI shares, cash or a combination of both. The reason BEPPA is trading so low at 8c, is because there is still a risk that BBI goes under because of the corporate debt.

This is the price history of BBI/BEPPA last October.

31-Oct-08 $0.190 $0.310 $0.120
30-Oct-08 $0.195 $0.290 $0.095
29-Oct-08 $0.180 $0.275 $0.095
28-Oct-08 $0.170 $0.259 $0.089
27-Oct-08 $0.180 $0.230 $0.050
24-Oct-08 $0.200 $0.270 $0.070
23-Oct-08 $0.205 $0.271 $0.066
22-Oct-08 $0.230 $0.301 $0.071
21-Oct-08 $0.240 $0.355 $0.115
20-Oct-08 $0.220 $0.325 $0.105
17-Oct-08 $0.225 $0.350 $0.125
16-Oct-08 $0.235 $0.316 $0.081
15-Oct-08 $0.255 $0.348 $0.093
14-Oct-08 $0.260 $0.400 $0.140
13-Oct-08 $0.225 $0.370 $0.145
10-Oct-08 $0.205 $0.330 $0.125
09-Oct-08 $0.255 $0.400 $0.145
08-Oct-08 $0.260 $0.385 $0.125
07-Oct-08 $0.285 $0.410 $0.125
06-Oct-08 $0.290 $0.410 $0.120
03-Oct-08 $0.305 $0.460 $0.155
02-Oct-08 $0.315 $0.470 $0.155
01-Oct-08 $0.330 $0.500 $0.170

The gap on Oct 1 was 17c. I see a similar gap on the way back up.


----------



## Viva_Las_Vegas (9 April 2009)

You may all find this podcast interesting, and importantly the reference to asset values.

http://boardroom-pc.streamguys.us/files/ASX/ASX20090406/


----------



## w.m.buch@bigpond (11 April 2009)

I thought it was more interesting that a recommendation was to build a portfolio of bonds of senior debt(slide 35 I think), although better interest rate than Beppa suggested. Gives me even more confidence for Beppa.
Hold BBI and Beppa 
Both LT Buy


----------



## jeffTH (11 April 2009)

Hello All
Just spent 3 hours reading all the posts since page 12 to try and get up to speed.  Researched the BBI website on Friday last and bought 25k BEPPA and considering another 100k.

However, I have 2 queries -
1.  Accrued interest quoted at 3.1c sofar in a BB post and I assume this is Dec 08 and Mar 09 payments deferred and another 1.06c to accrue in Jun 09.  Will not these payments be made to those on the register at the time the interest payments became due rather than the holder at the time the payments are re-instated?  Thus a $1.20 payment in 2012 would only arise if you held the shares from the first deferral to the last!
2.  What is the danger of the "Responsible Entity" falling out of the B & B Group thus triggering a 'Change of Control' event?  Could the Directors engineer such an event to minimize the Reset on BEPPA?

Cheers....


----------



## banska bystrica (11 April 2009)

jeffTH said:


> Will not these payments be made to those on the register at the time the interest payments became due rather than the holder at the time the payments are re-instated?




No, the opposite will happen. 

With regards to a Change of Control event, read the announcement BBI made about this on Dec 1, 2008. 

http://imagesignal.comsec.com.au/asxdata/20081201/pdf/00909456.pdf


----------



## hardyakka (11 April 2009)

*BBI - Another Issue*

IMO if the management agreement is sorted out, name changed and DBCT and Euroports sold for good prices we will start to see the light at the end of the tunnel regarding unlocking the true value in BBI and BEPPA.

However there is one additional risk applicable to the BBI securities that does not apply to BEPPA and will affect the value of the BBI securities. Once there is reasonable value unlocked from BBI I would not be in the least surprised if there was a capital raising, at a discount of course.

Mind you the very fact that this may be a risk means that BBI would be out of the quagmire and its value re-established, which of course would be a very nice position to be in.

At this point in time I will be happy if BBI sell 100% of DBCT, and hence receive a premium for control over and above the value of the asset itself. One step at a time.

Sorry BB I forgot the name of the simple but practical name you gave your plan.

Cheers

NB/ My estimate of DBCT if 100% is sold to one of the majors is $3B, this including a control premium. 

Disclaimer-If you believe any of my ramblings you are as crazy as I am and should be tossed into the death spiral.


----------



## banska bystrica (12 April 2009)

There is also some risk of SPARCS dilution depending on the vote in May. The catalysts I see for BBI to get back to 30c+ are:

1. A "YES" vote in May for SPARCS 12 month delayed reset. 

2. Management internalization finalized.

3. PD Ports sale or partial sale

4. Further Euroports sell down

5. DBCT sale or part sale

6. Name change


----------



## investorpaul (14 April 2009)

What are the implications of this:

BB sued by partner

It has something to do with transferring assets to avoid payment. Does anyone know any further info about this?


----------



## banska bystrica (14 April 2009)

BBI is NOT a defendant in this case. I understand it involves the BNB subsidiary, BBIPL. Another case of journalist confusion.


----------



## investorpaul (14 April 2009)

banska bystrica said:


> BBI is NOT a defendant in this case. I understand it involves the BNB subsidiary, BBIPL. Another case of journalist confusion.




Hi BB,

I thought that was the case when I first read the article and then I re-read it any saw that it mentioned BBI remaining unchanged at 6.5cents (last weeks close) and thought I better doubt check.

I guess this just shows how easy it is for people to tie BBI up with the mess that has consumed other BB satellites and lose track of who does what.


----------



## banska bystrica (14 April 2009)

investorpaul said:


> Hi BB,
> 
> I thought that was the case when I first read the article and then I re-read it any saw that it mentioned BBI remaining unchanged at 6.5cents (last weeks close) and thought I better doubt check.
> 
> I guess this just shows how easy it is for people to tie BBI up with the mess that has consumed other BB satellites and lose track of who does what.




Paul,
It's this sort of confusion that creates opportunities for those that have done their homework. The confusion in Nov 2008 provided the opportunity for me to buy BBI at 2.5c.
There is also mass confusion on whether BBI's assets are overvalued in the books. The market does not believe the book values. The assets for BBI are in the books at COST price plus cap ex minus depreciation. They are valued very conservatively and have never been revised upwards even in the bull market. For example, PD Ports was bought very cheaply in my opinion. See the following article from International Freighting Weekly (IFW) which backs up my view:

_"On the subject of acquisitions, the disquiet surrounding a possible sale of PD Ports by BBI serves to highlight the frenzy with which investment houses were drawn toward the port sector.

BBI's buy for £337m at the end of 2005 seems a bit of steal today, when one considers the £3bn+ the Goldman Sachs-led consortium paid for ABP, and the $2.7bn REEFF, forked out for New York's Maher Terminals (which at that time handled 1.5m teu and has seen little growth since)."
_

I suggest people do their own research into BBI as the mainstream media has literally no idea how to distinguish between BNB and the satellites it created.


----------



## Mitsimonsta (14 April 2009)

Wow, that's a nice little jump this morning (BEPPA), hopefully it will fall back a bit later today.

Was going to buy on Thursday afternoon but got busy and missed the close. Angry at myself now


----------



## banska bystrica (14 April 2009)

Mitsimonsta said:


> Wow, that's a nice little jump this morning (BEPPA), hopefully it will fall back a bit later today.
> 
> Was going to buy on Thursday afternoon but got busy and missed the close. Angry at myself now




My broker had a client keen to sell 440,000 BEPPA at 9c. He asked if I was interested and I couldn't resist so I bought them. Maybe I'm wrong but I think 9c is a steal long term, just like PD Ports was at a steal in 2005.


----------



## banska bystrica (14 April 2009)

This might be of some interest to BBI/BEPPA holders. It shows the amount of corporate debt to be paid back or re-financed and the dates. The majority of the risk with BBI is the corporate debt. Remove corporate debt and BBI is safe.

Feb 2010: GBP 85M ($173M)
Dec 2010: NZ$275M ($220M)
Feb 2011: AUD$223M ($223M)
Dec 2011: USD$510M ($730M)

Total corporate debt is approximately $1.35Bn

So, BBI need to come up with $173M within 10 months. You can see that the timetable to sell assets is not as urgent as the market is saying. That gives BBI more than enough time to get robust prices for their assets.


----------



## Mitsimonsta (14 April 2009)

Yes, I like those figures BB. I think it might just pay off now, I cannot believe that the market is not going mental on these already. The 2011 figures are slightly scary but short-term is much better than the SP indicates.

How many BEPPA do you hold now BB? Average buy? You would have to be well over the 1M mark now I should think. If you don't want to put it out publicly, that's cool.

Wish I had $40K lying around to buy shares. I'm also slightly glad that if BEPPA does hit $1, I don't have to pay the CGT on those 440K units either


----------



## banska bystrica (14 April 2009)

Mitsimonsta said:


> How many BEPPA do you hold now BB? Average buy? You would have to be well over the 1M mark now I should think. If you don't want to put it out publicly, that's cool.




It's not really important to anyone but me, but I have a  multiple of that figure you quoted. Average buy price is around 8c.
I've still got a stack of BBI which I will slowly sell down as the BBI price rises to fund my BEPPA purchases. That way, I end up owning the same amount of BEPPA for the same dollar cost of BBI. 
BEPPA are currently owed over 2c per BEPPA in accrued interest. That's a very tidy sum awaiting. By end of calendar year, that figure will be over 4c.
As time passes, BEPPA becomes more and more valuable.


----------



## Mitsimonsta (14 April 2009)

banska bystrica said:


> It's not really important to anyone but me, but I have a  multiple of that figure you quoted. Average buy price is around 8c.



Well, it is interesting to me (and I would suggest other people in this thread too) inasmuch as you have actually put your money where your mouth is.

Even if you simply doubled the number I mentioned, that is a pretty serious holding. And it makes sense that someone as yourself who has put possibly 200+ hours of hardcore research into BBI/BEPPA and has the confidence in the stock would pump quite an amount of money into it.

I hold (some insignificant amount compared to yourself) BEPPA too, so I am betting we are both right. I only hold ~18K units. In fact, you know exactly what I hold (see PM).



banska bystrica said:


> I've still got a stack of BBI which I will slowly sell down as the BBI price rises to fund my BEPPA purchases. That way, I end up owning the same amount of BEPPA for the same dollar cost of BBI.



Without giving out financial advice, it sounds like a reasonably sensible idea. If I had BBI then I would be doing the same, or possibly selling them to fund 50% BEPPA and 50% something else. I still feel that I want to diversify a touch more, and increase holdings in the equities I already have. My financial position/portfolio and yours are completely different and we have different aims and objectives.



banska bystrica said:


> BEPPA are currently owed over 2c per BEPPA in accrued interest. That's a very tidy sum awaiting. By end of calendar year, that figure will be over 4c.
> As time passes, BEPPA becomes more and more valuable.




1000% agree. Even with my piddling holding (a single $1.3K buy), I am due nearly $360 in accrued interest which is a massive proportion of my outlaid money.

I will be buying more, as I think I mentioned previously, I would love about 100K units but I don't know if I will be able to accrue them quickly enough before Joe Public (and John Fund) gets wind of the gains that are possible here.


----------



## jeffTH (14 April 2009)

For your information, my research into unpaid and deferred dividends for BEPPA is -

Oct 08 - Dec 08     $0.0204
Jan 09 - Mar 09     $0.0125
Apr 09 - Jun 09     $0.0106   ex date of 10.06.09 should
                                           the dividends be re-instated.
                Total     $0.0435

May they continue to grow!


----------



## banska bystrica (14 April 2009)

jeffTH said:


> For your information, my research into unpaid and deferred dividends for BEPPA is -
> 
> Oct 08 - Dec 08     $0.0204
> Jan 09 - Mar 09     $0.0125
> ...




You're 100% correct jeffTH. The deferred payments up to and including June 30 2009 are indeed 4.35c per BEPPA.


----------



## Viva_Las_Vegas (14 April 2009)

Mitsimonsta said:


> Yes, I like those figures BB. I think it might just pay off now, I cannot believe that the market is not going mental on these already. The 2011 figures are slightly scary but short-term is much better than the SP indicates.
> 
> How many BEPPA do you hold now BB? Average buy? You would have to be well over the 1M mark now I should think. If you don't want to put it out publicly, that's cool.
> 
> Wish I had $40K lying around to buy shares. I'm also slightly glad that if BEPPA does hit $1, I don't have to pay the CGT on those 440K units either




How is it that you don't have to pay CGT? Is BEPPA exempt? I was of the impression any sort of gains from "the markets" were CG's. Enlighten me mitsimonsta


----------



## Mitsimonsta (14 April 2009)

So at the current $0.091 for BEPPA and BBI trading at $0.066, I make BEPPA trading 1.85c discount to nominal value against BBI?

(That is, BBI value plus deferred distribution value of 4.35c)



Viva_Las_Vegas said:


> How is it that you don't have to pay CGT? Is BEPPA exempt? I was of the impression any sort of gains from "the markets" were CG's. Enlighten me mitsimonsta



I meant the CGT on 440K units, let alone the amount that BB holds which could be quite a scary amount of money if BEPPA does hit $1.

I will be lucky to hold 100K units. If I do get that many at a reasonable price, I will be very happy and it will help set me up financially.

CGT applies to BEPPA like all other 'profit' that you make. I was only referring to BB's buy of 440K units of BEPPA.


----------



## Mitsimonsta (14 April 2009)

Price is up 1.1c for the day, now trading at 9.5c as I type this.

The question is if this is the start of a market re-pricing of the security?

*EDIT: There's a 3:1 buy pressure on BEPPA.... the price will only rise from here now.*


----------



## banska bystrica (14 April 2009)

Mitsimonsta said:


> Price is up 1.1c for the day, now trading at 9.5c as I type this.
> 
> The question is if this is the start of a market re-pricing of the security?




No. The real re-rating will take place once DBCT sells. 9.5c for BEPPA is still a ridiculously discounted price to face value. I believe once DBCT sells and settles, BEPPA will probably trade in line with other listed hybrids, that is a discount of 40-50% of face value. That discount will then close as maturity approaches.


----------



## Mitsimonsta (14 April 2009)

Well, in that case they are seeing the 1.85c/unit discount on BEPPA and moving to secure it.

It's a bit less than that now with BEPPA at 9.5c but it is still in the region.


----------



## fuzzie (14 April 2009)

Interestingly, a million changed hands after the bell. I don't think you can say the BBI re-rating has started until the BBI price itself is going up by more than .2 on the day. The selling profile on BEPPA however seems to have changed. There are no longer 100k lots sitting on all .1 price increments. The forced sellers might be out of the market, but the question is have they just taken a long Easter break? 

It's my unfounded speculative guess there might be a BBI price spike in May if the SPARCS reset gets rejected. Management, in the interests of existing shareholders, might find some news worthy information to release to the market around the time the share price is being calculated for redemption. This could easily be a quite correct update on the DBCT sale progress seeing the advising bankers would have had 6 weeks to work through the offers by then.


----------



## Mitsimonsta (14 April 2009)

Looks like you got a bargain on your parcel BB, that's a fairly hefty rise for the day.

I grabbed another small parcel, up to just over 25K units. The PM has not stimulated me yet, or there would have been a much bigger buy.


----------



## mark_au (14 April 2009)

The question is now, when BBI/BEPPA comes good, at conversion time  does one

take the cash and run ,
  or
convert beppa into bbi shares.
 I feel that   future dividends cannot surely be sustained at around 14c per year as in the past , given the (hopeful) sale of key parts of income producing infrastructure. Wont this  mean that BBI will be less attractive as a long term income producing asset ???

which way to jump.. i guess will be decided closer to 2012


----------



## Mitsimonsta (14 April 2009)

TL;DR so I will summarise:


mark_au said:


> At BEPPA conversion time does one:
> 
> take the cash and run, or
> convert BEPPA into BBI shares
> ...




Basically, it depends on the situation in 2012. I actually think that there might be a vote passed to reset the date of BEPPA conversion before maturity, along with a higher interest rate.

Alot will depend on what has been sold and the conversion offer that is placed on the table. If interest payments on BEPPA have resumed, then that will make things interesting.

I would agree that the 14c dividend will almost certainly fall if DBCT is sold.


----------



## Viva_Las_Vegas (14 April 2009)

Speaking of votes, I have been searching online but with no success as to the outcome of the most recent SPARCS vote.

Mitsi, do you have any info on the outcome of it? Last I heard only a small proportion of holders voted (from memory).

I guess SPARCS and one other have to be paid before BEPPA holders see a penny.

Perhaps another scenario could see BBI buying up BEPPA from the market at sub $1 hence halving their debt. Of course this scenario could only be played out if they sold DBCT and had cash to play with instead of totally paying out BEPPA holders.

If I were in that position I would rather buy back my debts at half price rather than paying the debt in full. Wouldn't you?


----------



## Mitsimonsta (14 April 2009)

Viva_Las_Vegas said:


> Speaking of votes, I have been searching online but with no success as to the outcome of the most recent SPARCS vote.
> 
> Mitsi, do you have any info on the outcome of it? Last I heard only a small proportion of holders voted (from memory).



It was not a vote, but the option of cashing out of SPARCS or converting into BBI. About 17% were converted for cash or BBI shares: http://bbinfrastructure.com/media/410727/709854.pdf 



Viva_Las_Vegas said:


> Perhaps another scenario could see BBI buying up BEPPA from the market at sub $1 hence halving their debt. Of course this scenario could only be played out if they sold DBCT and had cash to play with instead of totally paying out BEPPA holders.
> 
> If I were in that position I would rather buy back my debts at half price rather than paying the debt in full. Wouldn't you?



I would, but they are currently are not allowed to buy back BEPPA until SPARCS is dealt with. They would also have to pay all distributions until the BEPPA interest was paid out in full.

They know that once SPARCS is dealt with and BEPPA is paid, the price of BEPPA would come up. But yes, if all those conditions are met, then they could buy back the debt at a discount.


----------



## Malindidzumu (14 April 2009)

> I feel that future dividends cannot surely be sustained at around 14c per year as in the past , given the (hopeful) sale of key parts of income producing infrastructure. Wont this mean that BBI will be less attractive as a long term income producing asset ???




I very much doubt that the future dividends from just about any stock listed on the ASX will be sustained at the levels they were at prior to the GFC, not for a very long time at least.

In BBI's case I would be very happy to receive a 10c annual distribution in the future, but I would settle for less all things considered just as long as BBI survives and remains listed.

As for BBI being less attractive to investors as a source of long-term income, I guess that depends on how many shares were bought and what price was paid for the shares and how long each individual investor is willing to hold onto their investment in BBI, i.e. what is each individual investor's definition of long-term?

If the shares were bought recently with the price of BBI being less than 10c a share then the distributions on offer in the future don't have to be very substantial for individual investors to receive very attractive returns on their investment.


----------



## hardyakka (14 April 2009)

banska bystrica said:


> No. The real re-rating will take place once DBCT sells. 9.5c for BEPPA is still a ridiculously discounted price to face value. I believe once DBCT sells and settles, BEPPA will probably trade in line with other listed hybrids, that is a discount of 40-50% of face value. That discount will then close as maturity approaches.




I have been looking at a few hybrids and there is some pretty good value out there, but nothing comparable with BEPPA, but I am looking at GNSPA.

Having been acquiring BEPPA for several months now I do not intend on acquiring any more unless prices ease back a bit, which is unlikely. I would estimate that I hold between a third and a fifth of BBs holding.

In my view we are now in a waiting period, and gradually the market will start to re-examine BBI and wake up to it, especially if the markets hold up. The latest date for this being when the DBCT sale is announced, and considering that firm offers must be in by June 30, that is not far off.

Its a bit like the missus or g/friend saying "no, you cannot have another beer you are sloshed". So what to do? Well there is always spirits and wine!! So on that basis I will be looking at BBI now.

Good luck all.

Cheers


----------



## bellenuit (14 April 2009)

banska bystrica said:


> The assets for BBI are in the books at COST price plus cap ex minus depreciation.




What are the tax implications on any asset sales?

Do they pay CGT on the difference between the sale price and the book value? 

BB, I haven't had the time to take a detailed look at your figures yet, but do the net proceeds which you are applying against corporate debt allow for tax payable (if applicable) on the gain from the sale?


----------



## investorpaul (15 April 2009)

BEPPA has cracked 10cents, although it doesnt mean anything for the longer term holders (myself included). 

Breaking 10cents (if it can close above it) will represent a close above a physiological level and it will be interesting to see if more "traders" jump on the stock.


----------



## Mitsimonsta (15 April 2009)

BBI is on a big run today too Paul..... BEPPA had a big run yesterday.

I see BBI at 7.4c, BEPPA at 9.9c

BEPPA is  back to 1.85c discount to BBI.


----------



## fuzzie (15 April 2009)

Look at the volume on BBI. 33 million so far today. The last few days I think it has been running around 9 million.


----------



## Mitsimonsta (15 April 2009)

BEPPA back to 9.5c, BBI holding today's gains.....

Really hard to know what is going on in the market now.


----------



## banska bystrica (15 April 2009)

Today's price action does nothing for me. BEPPA at 9.5c is still a trashed bathroom price. The real action will start when DBCT is sold in my opinion.


----------



## Mitsimonsta (15 April 2009)

With the BEPPA 'discount' going larger today, plus the BBI price movement, have you sold BBI for BEPPA today Banksa?


----------



## banska bystrica (15 April 2009)

Mitsimonsta said:


> With the BEPPA 'discount' going larger today, plus the BBI price movement, have you sold BBI for BEPPA today Banksa?




No. I continue to use free cash from the sale of other stocks to purchase BEPPA and will sell BBI when it reaches my BEPPA purchase price. Both BBI and BEPPA are not even close to fair value. We will have to await news regarding asset sales I would imagine before we get the real re-rating.


----------



## Largesse (15 April 2009)

Aussie market held up pretty well overall considering a dip on the dow. BBI and BEPPA traded particularly well.
However i think over the next week macro factors will stiffle this, and the broader market in general,  somewhat. 
I'm looking for a buy on BEPPA around 8.5c in the next 7 or so trading days hopefully.
Long term this one has alot of legs though.


----------



## banska bystrica (15 April 2009)

bellenuit said:


> What are the tax implications on any asset sales?
> 
> Do they pay CGT on the difference between the sale price and the book value?
> 
> BB, I haven't had the time to take a detailed look at your figures yet, but do the net proceeds which you are applying against corporate debt allow for tax payable (if applicable) on the gain from the sale?




Plenty of carry forward tax losses although a hefty profit on DBCT might incur some tax. I'll raise it with the CFO.


----------



## investorpaul (15 April 2009)

banska bystrica said:


> Plenty of carry forward tax losses although a hefty profit on DBCT might incur some tax. I'll raise it with the CFO.




BB do you contact Babcock and Brown Infrastructures CFO direct? is he normally helpful with this kind of stuff?


----------



## banska bystrica (16 April 2009)

investorpaul said:


> BB do you contact Babcock and Brown Infrastructures CFO direct? is he normally helpful with this kind of stuff?




Best to email the company first as they have over 100,000 shareholders and simply don't have time to actually speak to every person who has a query.
That's what I did at first and one day the CFO rang me as he thought the response was better explained over the phone. I have since spoken to him on four occasions. He is extremely helpful with any queries regarding financials.
Investor Relations (Helen) is probably a better point of contact for you initially. Whilst every shareholder is very important to them, they know I have a large holding and are very obliging. If they don't know you, then for all they know, you could be an "inquirer" rather than an actual shareholder. Best to quote them your HIN number on your share statement. That way they know you are fair dinkum.


----------



## banska bystrica (16 April 2009)

Bought another 258,722 BEPPA at 10c this morning. This looks cheap for those with a 3 month view. Someone else is also starting to chip away at BEPPA.


----------



## investorpaul (16 April 2009)

banska bystrica said:


> Bought another 258,722 BEPPA at 10c this morning. This looks cheap for those with a 3 month view. Someone else is also starting to chip away at BEPPA.




Is that the guy who is purchasing through a cross trade, has prob bought 120K + units by now?

It will also be interesting to see how the price holds up at the end of the day seeing as it lost all its gains yesterday (obviously this isnt of important to us, long term holders but is interesting to see anyway)


----------



## Mitsimonsta (16 April 2009)

BEPPA back to 10c at close, seems to be some big resistance at this level. Apart from some brief intraday peaks, it seems like we just cannot bust through at the moment.

At one stage today I was thinking we'd finish at 11c for the day and really set up a generally upward trend in the chart.

Still., I agree that there is going to be some market weakness next week, or at least I hope so. Would love the opportunity to buy myself more at sub-9c.


----------



## hardyakka (17 April 2009)

banska bystrica said:


> Bought another 258,722 BEPPA at 10c this morning. This looks cheap for those with a 3 month view. Someone else is also starting to chip away at BEPPA.




I tried to stay away from acquiring more BEPPA, but could not resist it and have acquired another 250k over the last few days at prices ranging from 9.7 to 10.2. It is now by far my biggest holding and now I am drawing the line..again.

So I can diversify a little so does anyone have any other suggestions of BBI/BEPPA type stocks I can have a look at, or is that just wishful thinking on my part<s>

I am not yet looking at BBI because, whilst it has the potential for more upside in the longterm I am happy with the more risk averse nature of BEPPA, cushion of $2.4B NTA and expected leverage available to convert BEPPA into BBI once DBCT and Ports have been sold.

IMO the window for BBI/BEPPA at these prices rapidly closing and now it is only a matter of less than 10 weeks.

Good luck folks.

Cheers


----------



## Tysonboss1 (17 April 2009)

hardyakka said:


> So I can diversify a little so does anyone have any other suggestions of BBI/BEPPA type stocks I can have a look at, or is that just wishful thinking on my part<s>




MCW may be worth a look, It has recovered a bit of it's lows of 10c but is still fantastic value, still paying a div in excess of 30%.


----------



## Mitsimonsta (17 April 2009)

Interesting movement in BBI and BEPPA today, a bit all over the shop. Up, down, down more, opening price, up, up a fair whack.

Fridays are always crazy on the ASX


----------



## investorpaul (17 April 2009)

Mitsimonsta said:


> Interesting movement in BBI and BEPPA today, a bit all over the shop. Up, down, down more, opening price, up, up a fair whack.
> 
> Fridays are always crazy on the ASX




BEPPA is still having trouble getting over 10.5c, which is good for me I will be buying more next week, now that i have some extra cash.


----------



## Mitsimonsta (17 April 2009)

investorpaul said:


> BEPPA is still having trouble getting over 10.5c, which is good for me I will be buying more next week, now that i have some extra cash.




Back to 10c now.

Some serious, serious resistance at 10.5c, looks like 9.8c-9.9c is the support level. It's been tested about 3 times today and held every time.

I wonder what it will take to break through the resistance. I have a feeling that once it does, then we might see it march to 15c easily. And then watch people get on.


----------



## fuzzie (17 April 2009)

There's been some substantial volume going through. ~3.8 million so far today and there are as many shares on the sale side as the buy side. Average price for the day is over 10, the dips to 9.8/9 have been small parcels. There have been a couple of 500000 parcels go through. As BB says somebody else (BIG?) is accumulating.

I'd say it also looks like one of the big sellers is back in with 200k parcels sitting at all .5 cent increments.

It's actually interesting sport watching!


----------



## boff (17 April 2009)

hardyakka said:


> IMO the window for BBI/BEPPA at these prices rapidly closing and now it is only a matter of less than 10 weeks.




hardyakka,
Just interested in the thinking behind your 10 week timeline there, i.e. last week in June. I'm guessing an announcement on DBCT.
Thanks.


----------



## RodH (17 April 2009)

boff said:


> hardyakka,
> Just interested in the thinking behind your 10 week timeline there, i.e. last week in June. I'm guessing an announcement on DBCT.
> Thanks.




I think the tenders for DBCT close around then? so hopefully an announcement not long after that?? 

Cheers,

Rod


----------



## hardyakka (17 April 2009)

RodH said:


> I think the tenders for DBCT close around then? so hopefully an announcement not long after that??
> 
> Cheers,
> 
> Rod




Spot on guys, BBI has a June balance date and IMO BBI wants sufficient certainty on the sale of DBCT so that they are able to book the sale in its financials. 

Meeting this deadline is important to the reputation and credibility of BBI management with the obvious flow to market perceptions and dealings with lenders.

Cheers


----------



## nathanblack (18 April 2009)

less income producing assets = less EPS.

originally i was looking at BEPPA only, and was only interested in the $1 on maturity. now im thinking that i would probably rollover into new BEPPA terms if offered or convert to BBI. im even thinking of buying BBI now.

the way im looking at it now is, each share currently has net asset backing of close to $1 depending on who's numbers you use. once sales begin the $1 will vary according to price achieved but unless we're all horibly wrong with our/there valuations then this will cause the share price to trend upwards towards the $1 figure. this applies to BEPPA + BBI

so lets assume in the distant future BBI is trading at $1. they have less assets today and can only earn 7c/share. at $1 thats 7% which is ok but not outstanding.

now assume you bought in at 7cents as an income producing asset. if they earn 7cents/share you are recieving 100% dividend on your initial outlay. thats a fine investment. you can cash in anytime on market.


----------



## fuzzie (18 April 2009)

Also if they return to paying tax deferred distributions that income will be treated like a capital gain and you'll only pay tax on 50% of it.


----------



## banska bystrica (18 April 2009)

nathanblack said:


> less income producing assets = less EPS.




What about $100M per annum saved in interest costs once corporate debt is paid off? That's 4c per share just in interest.


----------



## nathanblack (18 April 2009)

banska bystrica said:


> What about $100M per annum saved in interest costs once corporate debt is paid off? That's 4c per share just in interest.




another great point. that combined with the possible tax benefits mentioned by fuzzy is making me like BBI not just BEPPA.


----------



## banska bystrica (18 April 2009)

nathanblack said:


> another great point. that combined with the possible tax benefits mentioned by fuzzy is making me like BBI not just BEPPA.




I also believe BBI is a fantastic buy at these prices. It's just that BEPPA are still better relative value considering the accumulated interest payments owed to BEPPA holders must be paid before BBI holders get anything.


----------



## Julia (18 April 2009)

I hadn't heard of BEPPA until they were mentioned in a thread re GNSPA so got curious and have read the last few pages of this thread.

Could someone who is so enthusiastic about these - and several of you are clearly buying this in pretty large amounts - tell me why these are so attractive?

BBI have massive debt, has apparently been pretty much written off by most analysts, and has suspended dividends/distributions.

What's the basis of your faith in this investment?

(I'm not being critical, just wanting to know what the attraction is?)
Thanks.
(I haven't tried to find a Prospectus)


----------



## banska bystrica (18 April 2009)

A 100% sale of both DBCT and PD Ports at 12X EBITDA would clear corporate debt and probably SPARCS and NZ bonds.

That leaves BBI debt free at the corporate level with remaining debt at the asset level (non-recourse) plus the BEPPA debt.

It would be an interesting exercise to work out NPAT and FCF in 2010 allowing for those two assets to be deleted from the equation.


----------



## banska bystrica (18 April 2009)

Julia said:


> I hadn't heard of BEPPA until they were mentioned in a thread re GNSPA so got curious and have read the last few pages of this thread.
> 
> Could someone who is so enthusiastic about these - and several of you are clearly buying this in pretty large amounts - tell me why these are so attractive?
> 
> ...




Julia,
I would suggest you read the entire thread from Oct 2008. That is better than people going over the same ground ad nauseum.


----------



## Julia (18 April 2009)

BH, no I don't want to read 45 pages about something when someone could just be polite enough to write a couple of sentences saying why these are a good investment.
Please, someone?


----------



## nathanblack (18 April 2009)

Julia said:


> BH, no I don't want to read 45 pages about something when someone could just be polite enough to write a couple of sentences saying why these are a good investment.
> Please, someone?




hi again julia 

NTA per share is about $1. ie sell all assets at book value and pay off all debt there will be $1 left over/share. debt consists of hybrid security(sparcs/beppa), corporate debt(the kind that kills) and asset level debt(secured against asset and not deadly)

as you pointed out dividends are suspended. this is to put all free cash flow into paying down debt( a requirement of financers).

all assets in the book are at cost price + cap ex. some have been on the book for sometime and will have appreciated. overall most should sell at or above book price.

so if you trust the asset valuations then the shares are trading at a 90% discount. surely the values cant be out by that much?

hope this helps


----------



## Largesse (18 April 2009)

and if you purchase BEPPA you are obviously ranking ahead of the equity holders (BBI).

Market is pricing BBI at circa 7c.... techically if BBI > 0, BEPPA should be $1?

correct me if i'm wrong


----------



## banska bystrica (18 April 2009)

Largesse said:


> and if you purchase BEPPA you are obviously ranking ahead of the equity holders (BBI).
> 
> Market is pricing BBI at circa 7c.... techically if BBI > 0, BEPPA should be $1?
> 
> correct me if i'm wrong




Just about spot on. If BBI > 0 in 2012, BEPPA = $1.04 plus any accumulated unpaid interest (currently 4c in total deferred).
The $1.04+ interest to be paid out as either cash, BBI shares, or a combination of both. BBI price in 2012 is irrelevant to BEPPA holders. The lower the price, the more BBI securities given to BEPPA holders.


----------



## nathanblack (18 April 2009)

Largesse said:


> and if you purchase BEPPA you are obviously ranking ahead of the equity holders (BBI).
> 
> Market is pricing BBI at circa 7c.... techically if BBI > 0, BEPPA should be $1?
> 
> correct me if i'm wrong




as largesse says BEPPA rank higher and get there $1 back before BBI get a cent. so if worse case scenario happens and the company is liquidated in a fire sale. assets would achieve less than book value. asset level debt would be cover by the sale of each asset. then remaining cash used for corporate debt. followed by SPARCS/BEPPA. so the administrators in a worst case situation would need to accept ridiculous low ball offers to prevent BEPPA not seeing atleast there current price.

the small trading price difference between BEPPA and BBI is due to deffered interest payments held by the company and owing to BEPPA holders.


----------



## banska bystrica (18 April 2009)

Julia said:


> BH, no I don't want to read 45 pages about something when someone could just be polite enough to write a couple of sentences saying why these are a good investment.
> Please, someone?




Julia,
Current NAV for BBI is $1 per BBI. This equated to $2.4Bn. This figure also includes the debt to BEPPA holders. Therefore, for BEPPA to be worth zero, the following has to happen:
BBI put into administration.
The firesale of assets leaves no money for BEPPA holders because the prices received destroyed $3.18Bn of equity. ($2.4Bn plus 780M BEPPA debt).

Can that happen? Yes it can but in my opinion highly unlikely. I might be wrong though. As of yesterday I now have 4 million BEPPA to say I'm right. Maybe that's madness?


----------



## Warren Greenspan (18 April 2009)

Banksia, Julia has come to this thread via a thread I started the other day asking about hybrid securities. I started that thread as a result of my interest in BEPPA and then other interest rate securities  eg GNSPA as a direct result of your work in this thread!!!  It's a small world.

BB I have read all of this thread over the past fortnight and I really appreciate you sharing the results of all your long hours of research. Big thanks.

I've accumulated 40 000 BEPPA at 7.9c and about the same for my brother's acc. so I feel I'm 'riding your coat tails' to greatness. (or we're travelling to 'hell in a hand cart' together) Either way I'm grateful to you.

If you, or anyone else, gets the time could you help with any of the following. 

*Are there any other interest rate securities (non perpetual) that have aroused your interest?
*Is there any site that gives details or a bit of background on the various int. rate sec's. I already know of the AFR site Macquarie site ASX site and the fairfax site.   I'm especially interested in knowing whether the payments are franked and whether the security is perpetual.

regards

warren


----------



## Julia (18 April 2009)

Nathan and Banks, thank you for your explanation.   I guess we all have a different appetite for risk.
Hope your faith is justified.
Good luck.


----------



## nathanblack (18 April 2009)

Julia said:


> Nathan and Banks, thank you for your explanation.   I guess we all have a different appetite for risk.
> Hope your faith is justified.
> Good luck.




your welcome julia,
in addition to previous comments, the risk is slightly less due to the longterm nature of the majority of debt. there is not the rush to sell that centro or ozl have had.

but i do regard this as one of my riskier stock and have only a minor holding at this stage.

in the back of my mind i question if im missing something. what are analysts and market seeing that im not? but hopefully one large sale will payoff most debt and the market will re-value at that point.

i think this kind of security adds diversity to my portfolio and i would like another similar to spread the risk if 1 out 2 succeed it would still be worthwhile.

goodluck in all your trading


----------



## drsmith (18 April 2009)

banska bystrica said:


> Julia,
> Current NAV for BBI is $1 per BBI. This equated to $2.4Bn. This figure also includes the debt to BEPPA holders. Therefore, for BEPPA to be worth zero, the following has to happen:
> BBI put into administration.
> The firesale of assets leaves no money for BEPPA holders because the prices received destroyed $3.18Bn of equity. ($2.4Bn plus 780M BEPPA debt).
> ...



Perhaps there's an element of something that can be very, very rewarding but also a little blinding.


----------



## banska bystrica (19 April 2009)

Research, research, research drsmith. That's what's required. Then, if an investment doesn't work out, you cannot blame anyone else. If I research a stock thoroughly and I mean hundreds of hours, not just a couple of hours, I am comfortable with my investment decisions. If it all goes pear-shaped, that's life. We move on.


----------



## hardyakka (19 April 2009)

banska bystrica said:


> Research, research, research drsmith. That's what's required. Then, if an investment doesn't work out, you cannot blame anyone else. If I research a stock thoroughly and I mean hundreds of hours, not just a couple of hours, I am comfortable with my investment decisions. If it all goes pear-shaped, that's life. We move on.




That really sums it up in a nutshell. I have not put as much time in as BB researching BBI and BEPPA, however have conducted enough to form my own view on these securities. I hold just over 2 million BEPPA and will only now seek to increase this further if price spikes permit.

Good luck holders


----------



## cpsharky (19 April 2009)

G'day BB, HY and all,

I've been trying to do a simple valuation spreadsheet for BBI, spurred on by BB/Melua from another place. I am going to go out on a limb here and say that BBI don't publish clear book values at asset level. There is some info on the value of various concessions etc, but no assurance that this represents full asset value. I am an amature at accounting - having done it at school - but at least I know the basics.

Anyway, book values aren't that interesting and are not a good indication for calculating NTA as they represent historical prices. IMVHO it would be better to use asset level EBITDA multples to estimate asset values and then subtract all debt to arrive at a possible liquidation figure.

So, here is what I come up with assuming a conservative EBITDA muliple of 11X can be obtained for each asset. I used the most recent 6 month EBITDA figures from the investment pack. Note we are expecting much more than this caculates for DBCT.

I have to put in an EBITDA multiple of 9 before Beppa is in danger.

I welcome all input. I would like to make this more accurate.


----------



## nathanblack (19 April 2009)

WOW very informative there sharky. Good work. Shows there is quite a buffer of NTA. And i think historically Port sales have/can achieve multiples of about 13xEBITDA

cheers for your effort


----------



## Largesse (19 April 2009)

DBCT

(2x70.1mEBITDA) x P/E of 11 = 1542.2m
(2x70.1mEBITDA) x P/E of 12 = 1682.4m
(2x70.1mEBITDA) x P/E of 13 = 1822.6m


Ok so where are people getting these figures of $3Billion from?

are we perhaps getting a little head of ourselves?


----------



## skc (19 April 2009)

cpsharky said:


> G'day BB, HY and all,
> 
> I've been trying to do a simple valuation spreadsheet for BBI, spurred on by BB/Melua from another place. I am going to go out on a limb here and say that BBI don't publish clear book values at asset level. There is some info on the value of various concessions etc, but no assurance that this represents full asset value. I am an amature at accounting - having done it at school - but at least I know the basics.
> 
> ...




Good analysis. I can see total EBITDA from your calcs is ~$598m, whereas the investor pack (p.12) has total consolidated BBI EBITDA at ~$401m for the latest half year. http://www.asx.com.au/asxpdf/20090227/pdf/31g9swbrvm2g2h.pdf

Did you apply the appropriate ownership percent to each asset? What about corporate overheads (while not at asset level, the new owners will have to pay for them as well so they need to come out of the EBITDA)?

Anyway, applying 11x multiple to the published figure you get total assets of $8.82B - a bit less than the $10.7B of total debt. If we get a bit more generous and say full year EBITDA is $900m, and use multiple of 12x, EV = $10.8B which pretty much pays for all debt without much left over for equity holders. The current price for BBI is not without reason.

Having said that, the DBCT capacity expansion may boost EBITDA and create additional value.


----------



## cpsharky (19 April 2009)

skc said:


> Good analysis. I can see total EBITDA from your calcs is ~$598m, whereas the investor pack (p.12) has total consolidated BBI EBITDA at ~$401m for the latest half year. http://www.asx.com.au/asxpdf/20090227/pdf/31g9swbrvm2g2h.pdf





Well, i figured that the corporate overhead stuff won't really be needed considering we are liquidating individual assets in this analysis. This is an important point, so I hope i am right on this.




> Did you apply the appropriate ownership percent to each asset?




I used the "proportionally consolidated" figures. Sounds like what I needed, but happy to be corrected on that.



> What about corporate overheads (while not at asset level, the new owners will have to pay for them as well so they need to come out of the EBITDA)?



Please see above.



> Anyway, applying 11x multiple to the published figure you get total assets of $8.82B - a bit less than the $10.7B of total debt. If we get a bit more generous and say full year EBITDA is $900m, and use multiple of 12x, EV = $10.8B which pretty much pays for all debt without much left over for equity holders. The current price for BBI is not without reason.
> 
> Having said that, the DBCT capacity expansion may boost EBITDA and create additional value.




Hopefully we can get some more input from HardYakka and BB on these figures. Anyone else with some decent accounting knowledge?


----------



## banska bystrica (19 April 2009)

Largesse said:


> DBCT
> 
> (2x70.1mEBITDA) x P/E of 11 = 1542.2m
> (2x70.1mEBITDA) x P/E of 12 = 1682.4m
> ...




Buyers are not interested in historical figures. You have to use the ABN Amro 2009/2010/2011 figures on the fully expanded DBCT. 
2009/10 EBITDA $224M
2010/11 EBITDA $241M

49 yr lease with 50 year option.


----------



## nathanblack (19 April 2009)

banska bystrica said:


> Buyers are not interested in historical figures. You have to use the ABN Amro 2009/2010/2011 figures on the fully expanded DBCT.
> 2009/10 EBITDA $224M
> 2010/11 EBITDA $241M
> 
> 49 yr lease with 50 year option.




most buyers will take these figures with a grain of salt until they are actually achieved(how many times do we see downgrades?). perhaps somewhere in the middle is more appropriate.

it would certainly get rid of some of the cushion BBI have, but still should be fine.


----------



## banska bystrica (19 April 2009)

nathanblack said:


> most buyers will take these figures with a grain of salt until they are actually achieved(how many times do we see downgrades?). perhaps somewhere in the middle is more appropriate.




You have no idea about how buyers value regulated ports then. What buyer who is purchasing a 99 yr lease on a regulated port uses historical figures when the expanded capacity is locked in? 
This is getting very tiresome.


----------



## cpsharky (19 April 2009)

Thanks Banska, I will plug in a 6 month EBITDA of 115m for DBCT. Seems to me a fire sale would have trouble wiping out Beppa.


----------



## nathanblack (19 April 2009)

banska bystrica said:


> You have no idea about how buyers value regulated ports then. What buyer who is purchasing a 99 yr lease on a regulated port uses historical figures when the expanded capacity is locked in?
> This is getting very tiresome.




what if they have over estimated the capacity? thats all im saying, i'd like to see them achieve capacity first. its a buyers market and as a holder of BEPPA I prefer to be ultra conservative in my figures.


----------



## Largesse (19 April 2009)

banska bystrica said:


> You have no idea about how buyers value regulated ports then. What buyer who is purchasing a 99 yr lease on a regulated port uses historical figures when the expanded capacity is locked in?
> This is getting very tiresome.




Banksa your tone isn't appreciated. you are right, i don't have any idea how buyers value regulated ports, that's why i'm here asking these questions. 
I think you are mistaking the questioning as pseudo-downramping, trying to get people to question their holdings, it's not. I have a genuine interest in taking what i consider a solid stake in BBI relative to my portfolio and i'm just trying to extract as much insightful information as possible.
Not everyone is as well informed as your esteemed self


----------



## nathanblack (19 April 2009)

Largesse said:


> Banksa your tone isn't appreciated. you are right, i don't have any idea how buyers value regulated ports, that's why i'm here asking these questions.




Sorry mate, but his response was as result of a statement i made. So your in the clear this time


----------



## cpsharky (19 April 2009)

Note that the main reason I did this analysis was becuase most (possibly all) NTA figures I have seen are based on assets at book value.

Book value is designed to be very conservative - basically valuing assets at their purchase price less depreciation plus any capital expenditure. If an asset has been owned for a while, the saleable value could be expected to be higher that this. On the other side of the coin, if assets are purchased in a boom but need to be sold in a downturn, then the book value might be larger than can be obtained in reality. But, that is one of the duties of the auditors; they will look carefully to see if any of the book values need to be reduced "impaired" to ensure they remain conservative. (No impairment in the recent BBI accounts.)

So, NTA figures calculated using book values are conservative, but really don't give us an idea of how conservative. That is why I think a valuation based on EBITDA multiples gives a clearer indication of where a company like this stands.


----------



## Mitsimonsta (19 April 2009)

Hi guys, lots said since I was in here on Thursday, but I would like to make a couple of points re BBI/BEPPA.

1) The sale of DBCT is being pushed as 'the saviour' of BBI. While this is not exactly the case, it will firm the balance sheet substantially and will bring confidence to the company, and therefore the equity within. BB has mentioned some other activities which we may see coming, I think the most important of these is a company renaming away from the negative connotations of BNB.

2) DBCT is one of the biggest, most valued coal terminals in the southern hemisphere. Now, while the output has not been stellar in the last year, the expansions have started to come online and the shipped tonnages are going up. It's a step in the right direction. EBITDA will rise as the total capacity rises.

3) Look at the customers that use DBCT. Who ships out of there? BHP and RIO.
BHP is looking for assets to leverage current operations after they withdrew their takeover bid for RIO. And if the RIO/Chinalco deal goes through, RIO will be looking to do the same. By purchasing something like DBCT, they more in control of their own destinies.

Right now, both companies are paying big dollars to a third party to load their coal. If they can save (conservatively) $75m/yr for their own product while adding $100M p.a revenue from other terminal users, then it starts making commercial sense to buy it. They would also have to look at other reserves in the area which would ship out of DBCT, but there is alot of coal in the region.

As I mentioned to a close personal friend of mine, it is my belief that is the FIRB gives the go-ahead to the RIO/Chinalco deal, then the sale of DBCT may get very interesting. Make no mistake, both RIO and BHP want to own DBCT.


----------



## Tysonboss1 (19 April 2009)

Julia said:


> write a couple of sentences saying why these are a good investment.
> Please, someone?




Hi Julia,

Just to add my  

I believe BBI has great assets that are producing solid earnings year round, these assets play an essential part in the economy and can not be replicated so their value is not going to disappear.

BBI have been serverely punished for many reasons that don't all make sense and has put fear into people when it should be giving them confidence.

The main reasons BBI have been spanked are,


first and foremost is their assoiation with BNB, 
they cut their dividends
they have a lot of debt, 
general bear market down trends

When I look at the above issues,

 I see no way that their assoiation with BNB can affect their earnings and I feel the internalisation of management is a positive that will reduce outgoings longterm.

I see the cutting of dividends to BBI as a positive as it will strenghten the company and likly produce share price capital growth long term, and the differing of dividends to Beppa as a smart thing as Beppa is probally their lowest interest rate debt, so the money is better used clearing higher interest rate debt.

Yes they have alot of debt, But the refinancing timetable is by no means urgent and management are taking steps to prepare for it, such as cutting divs on BBI, differing divs on Beppa and making stratigic asset sales. Not to mention that by 2011 it will be a different world refinancing may be troublesome now, but it will be a different story by 2011.


----------



## Tysonboss1 (19 April 2009)

Another interesting point to remember, $750,000,000 of the corp debt is the Beppa shares themselves.

So when some of the calculations have mentioned that BBI have $2.4 Billion of equity after debt has been paid, this is $2.4 Billion left after the Beppa units have been paid out there full $1 face value + interest.

So if you believe 

1, that the world is going down the tube and Essential infrastructure assets with solid regulated earnings are going to lose all value.

2, Banks will never again lend money or refinance loans of any amount.

3, share markets will never again recognise value in companies and will continue the plunge for years into the future.

Then yes BBI and Beppa will be Poor investments.

How ever I believe,

1, Essential infrastructure assets will generally hold their value, and continue to produce solid cashflow.

2, credit markets will free up again, and banks will be looking to loan money to companies esspecially those with contracted regular income.

3, and that eventually investors will return to the market and companies that continue to produce solid earnings will return to valuations that are more realistic.

The way I see it is that BBI are reshaping themselves into a leaner, fitter company.

I can see that given the aggresive debt reduction under way + a couple of asset sales BBI will beable to resume distributions at levels not to far off their current share price and the company should be re rated so that these divs reflect at least a 10% yeild.


----------



## newanimal (20 April 2009)

I have a small holding of BBI I bought in at .11. Knew nothing about BEPPA at the time. Wish I had converted a portion earlier. The gap is now .026. Anyone expect this to fluctuate or just steadily widen from this point on and convert the sooner the better. Many thanks to the contributors of this enlightening thread.


----------



## banska bystrica (20 April 2009)

nathanblack said:


> what if they have over estimated the capacity? thats all im saying, i'd like to see them achieve capacity first. its a buyers market and as a holder of BEPPA I prefer to be ultra conservative in my figures.




Apologies for the tone nathanblack. I tend to get frustrated sometimes.
We are in April (only a short time to the end of 2008/09FY). Equity markets look forward, not back. Same with any asset. The DBCT expansion will be completed by June 30 so it would be wrong for companies to be valuing DBCT on old figures. Serious buyers would be looking at what DBCT will produce from July 1 onwards for the next 100 years, not what DBCT made in 2008/09.
Remember that BBI will not be selling DBCT unless they get a great offer, not just a good offer.


----------



## banska bystrica (20 April 2009)

Largesse said:


> we got a link to this broker report?




Largesse,
If you send me a PM with your email address I will email you a copy of the report. ABN assign fair value of $1 to BBI but have a target price of 5c. They are applying a 95% discount to fair value. Beats me. That seems ridiculous. They use all their financial models to come up with a value of $1 then change it to 5c because of the GFC and lack of investor appetite. I imagine as BBI rises in price, they will revise their target price upwards (after the event as is typical of most brokers).


----------



## banska bystrica (20 April 2009)

From the Financial Review today regarding AIO's ports for sale:

_"Some are convinced that the strong interest in the ports business will mean the the operation fetches healthy mid-cycle multiples of about 14 times EBITDA, rather that the end of cycle 11 times that had been feared amid the softening conditions in the sector."

_

So, the consensus is closer to 14 times EBITDA for ports. Now, DBCT is regulated and AIO's ports are unregulated so you cannot strictly compare, however, if we take 2009/10 EBITDA for DBCT of $224M (and that is a low figure in my opinion) and apply the EBITDA multiple quoted by the Fin Review we get a valuation range of $2.46Bn to $3.13Bn.
My estimate of $2.7Bn doesn't look too far off does it?


----------



## banska bystrica (20 April 2009)

Posted on here last month:
_*"The bottom line is that BBI has massive debt but it also has more than enough free cash flows to service that debt. Because of the fear, panic about the Babcock and Brown empire, we can buy BBI for 4c in the dollar and BEPPA unbelievably at 5c in the dollar. I've never seen a bigger bargain than BEPPA and I've been around equity markets for probably longer than a few of you have been alive.
If you don't understand BBI/BEPPA, then best to buy something else and leave the gems to those that do understand."*_

Well I hope some of you took the opportunity to buy BEPPA at under 5c. You have doubled your money in a month or so. It's still a trashed price and a bargain in my opinion. If you do your own research, you might have a greater understanding and not be tempted to sell too early.


----------



## mark_au (20 April 2009)

banska bystrica said:


> Posted on here last month:
> 
> 
> Well I hope some of you took the opportunity to buy BEPPA at under 5c. You have doubled your money in a month or so. It's still a trashed price and a bargain in my opinion. If you do your own research, you might have a greater understanding and not be tempted to sell too early.




I did, BB , though not enough, i have quite a modest holding compared to yours. 
My wise "better half" likes to remind me to not  count my chickens before they hatch, however the potential upside is that i will have my mortgage paid  and be effectively debt free if BEPPA comes good at $1 . 

Some good news on the TV this morning, the US thinks that the their recession has hit the bottom, at last perhaps we can get some confidence and good news stories to shake off the unjustifiable fear and panic in our markets.
I think the good times (sub 10cent BEPPA) may well be over.....


----------



## banska bystrica (20 April 2009)

mark_au said:


> I did, BB , though not enough, i have quite a modest holding compared to yours.
> My wise "better half" likes to remind me to not  count my chickens before they hatch




It is wise not to count the chickens before they hatch. Just make sure you buy as many chickens as you can afford so that when they do hatch, you will have more than enough chickens to not even have to worry about counting them.
Everything is relative. My 4 million BEPPA may not be worth as much as your holding in relative terms. The guy who has his last $10 on a nag at Randwick is actually a bigger player than a multi-millionaire who has $100K on the same nag.


----------



## Mitsimonsta (20 April 2009)

mark_au said:


> Some good news on the TV this morning, the US thinks that the their recession has hit the bottom, at last perhaps we can get some confidence and good news stories to shake off the unjustifiable fear and panic in our markets.
> I think the good times (sub 10cent BEPPA) may well be over.....




I think you might be right about the sub-10c BEPPA days about to be over Mark. There is starting to be little whispers in the market with alot of us smaller holders jumping on, and until one big firm buys a substantial holding I cannot see any large jump (a doubling on 10c) coming any time soon. Big Corporates are still very risk adverse. Will take a very special/informed trader to grab a decent holding right now.

I will continue to accumulate until the price jumps, and then will simply hold what I have for as long as I can. I am hoping it will hold low until about the 20th of June when I will have some cash coming to me, and I can get in for more units.

After the jump, I will be looking to increase other shareholdings that I have. I hold some MAP, ORG and SHL that I wish to increase. Diversification will be the name of the game.



banska bystrica said:


> My 4 million BEPPA may not be worth as much as your holding in relative terms. The guy who has his last $10 on a nag at Randwick is actually a bigger player than a multi-millionaire who has $100K on the same nag.



BB is once again correct. Mind you, I would love to have the cash to buy 4M units of BEPPA 

I have been pouring as much cash into my portfolio as my meagre salary can afford. I am only new to active investing (6 months, had shares for a number of years as an issuer-sponsored holding). I've jumped in at the bottom of the market, and have amassed 10K worth of equity now.

If BEPPA doubles in price, I will be very happy. If it triples, ecstatic. I want to use it as the driver of my portfolio going forward.... the money that comes out of it in 2012 or later will fund other purchases.


----------



## Mitsimonsta (20 April 2009)

Down to 9.4c now, time for BB to find some cash and buy 

BBI holding ground however.... interesting.


----------



## hardyakka (20 April 2009)

Tysonboss1 said:


> Another interesting point to remember, $750,000,000 of the corp debt is the Beppa shares themselves.
> 
> So when some of the calculations have mentioned that BBI have $2.4 Billion of equity after debt has been paid, this is $2.4 Billion left after the Beppa units have been paid out there full $1 face value + interest.
> 
> ...




Two excellent posts Ty, they basically reflect my views on BBI. 

When DBCT is discussed people mainly refer to the big mining houses as being the primary potential buyers. What is forgotten is that the pool of potential acquirers of DBCT is much bigger than people realise. This is because this is an ideal asset for a consortium of pension funds or similar to acquire. From their viewpoint it is a steady consistent regulated income stream to match against future pension liabilities, which as the population ages becomes more important.

So BB, I know you are estimating $2.7B plus, I am going to go out on a limb and I expect it to achieve $3B plus.

NB/ Got another 100k at 9,4.

Cheers


----------



## Mitsimonsta (20 April 2009)

hardyakka said:


> When DBCT is discussed people mainly refer to the big mining houses as being the primary potential buyers. What is forgotten is that the pool of potential acquirers of DBCT is much bigger than people realise. This is because this is an ideal asset for a consortium of pension funds or similar to acquire. From their viewpoint it is a steady consistent regulated income stream to match against future pension liabilities, which as the population ages becomes more important.
> 
> So BB, I know you are estimating $2.7B plus, I am going to go out on a limb and I expect it to achieve $3B plus.




Of course, the more buyers you have, then the better the price will be. I feel that the prices bandied about here ($2.6Bn-$3Bn) can be achieved by BHP/RIO alone.

While regulated income is nice and exactly what pension funds are after, I am not sure if they will be able to afford DBCT against BHP/RIO that want it for operational and competitive reasons.


----------



## hardyakka (20 April 2009)

Mitsimonsta said:


> Of course, the more buyers you have, then the better the price will be. I feel that the prices bandied about here ($2.6Bn-$3Bn) can be achieved by BHP/RIO alone.
> 
> While regulated income is nice and exactly what pension funds are after, I am not sure if they will be able to afford DBCT against BHP/RIO that want it for operational and competitive reasons.




Size is not a major problem for pension funds, their objectives are basically similar so what you will find is that no single pension fund would bid for DBCT of its own accord. Instead you would have a group of large pension funds bidding as a consortium.

Cheers


----------



## Mitsimonsta (20 April 2009)

I tend to worry that a pension/super fund or consortium would be able to bid enough against two cashed-up miners and be able to get the return required on the investment that they need.

If we look at a $3B figure to be paid for the sale, and take a very conservative $200M EBITDA (for a 15x multiple), then the yearly return on investment is 6.7% - is that enough for the pension funds? I really do not know, not familiar with the internal finances of pension/super funds. If it was a low-risk super fund then it would be a reasonable return. It would not be enough for a medium risk fund at all. 

In real terms, BHP and RIO want DBCT for operational reasons. It will also make their own product more competitive (higher margins). The owner will merely be moving cash sideways between subsidiaries instead of it leaving.

I am not sure how access is determined, but I am sure that there would be some wriggle room in order to get their own product out the door quicker than a competitor. There could be cost savings in shipping wait time charges for example.

As for what you have put forward, I hope you are right. The more interested parties in purchasing DBCT, the better. There could be some very interesting proposals put forward including trailing payments in following financial years which could get a winning bid over the line as some cashflow down the track will be attractive for BBI. There could even be some stock-swap going on.  It's all very interesting.


----------



## snowfree (20 April 2009)

Just a dumb question, if a company wants to take control of DBCT, why don't they consider buying out BBI, even paying off all the corp debt, it would still be less than 3 billion?

- I hold some beppa.


----------



## Mitsimonsta (20 April 2009)

Because the entire value of BBI is alot higher than $3Bn.

BBI is not just DBCT. They have numerous other Assets including gas pipelines and ports elsewhere. They also own some rail lines.

If you had researched you would know this.


----------



## fuzzie (20 April 2009)

I think what snowfree is saying is, at the current share price the capitalization of BBI looks to be about $170 million. If you could get everybody to sell all their shares for 7c a pop you'd be on a winner. The projected NPAT this year is $230 million.


----------



## Mitsimonsta (20 April 2009)

There are people still holding BBI that paid alot more than 7c per share. You would have to offer a hell of alot more than 7c per share otherwise you are asking them to take a loss just so you can profit?

Like that is ever going to happen.


----------



## Tysonboss1 (20 April 2009)

fuzzie said:


> BBI looks to be about $170 million. If you could get everybody to sell all their shares for 7c a pop you'd be on a winner.




I get what snow free is saying, He is saying that taking over BBI would be cheaper than buying dbct out right because of BBI's cheap share price.

How ever this is not true.

Simply multipying the current stock price by the total shares on issue would not give an accurate cost of what a take over price would be.

for example,

Say XYZ company has 1 billion shares on issue, and today the only trade that went through was for $1 per share for a 1000 shares,... the market cap would state the company was worth $1Billion dollars. 

How ever for a take over offer to be successful 90% of the shares must be bought, so to convince people to sell you there holding you would have to offer them a large premium to part with their stock.

An example of this from last year was BG's take over of QGC,.. QGC was trading at around $3.00 but BG's take over offer was for $5.75.

So just because 1% of shares are trading at a low level does not mean that you will be able to gain control of the other 99% at that low level.

P.S... Snowfree there is no such thing as a dumb question


----------



## fuzzie (20 April 2009)

Which is the reason people on this forum are generally buyers and raises the intriguing question about why there are still sellers at these prices. Risk and reward, fear and confidence.....

Then again I sold my BBP. They cost me a lot more. Then again why didn't BBW get flogged.


----------



## awg (20 April 2009)

fuzzie said:


> I think what snowfree is saying is, at the current share price the capitalization of BBI looks to be about $170 million. If you could get everybody to sell all their shares for 7c a pop you'd be on a winner. The projected NPAT this year is $230 million.






The large debt profile of BBI would scare away many investors, as it has already.

Does raise the intriguing possibility of a takeover offer.

I have no doubt that some serious equity players would have at least run a ruler over this one

People may agree or not with BBs analysis, but would he be the only person undertaking this?  

I doubt it


----------



## Mitsimonsta (20 April 2009)

Everyone's personal position and/or portfolio goals may be different Fuzzie.

Some may have bought in at 4c, so then 7c represents a opportunity to lock in profits.

Others may actually incur a capital loss in order to offset capital gains tax liabilities incurred in other trades.

EDIT: some might be heading for a margin call. You never know.


----------



## TheAbyss (20 April 2009)

awg said:


> The large debt profile of BBI would scare away many investors, as it has already.
> 
> Does raise the intriguing possibility of a takeover offer.
> 
> ...




Why would a take over be considered when the assets could possibly be purchased directly? 

I would have thought a preferred option would be to purchase assets and the purchaser retains their own business entity? The BBI name isnt worth a heck of a lot in goodwill i would have thought?

Not trying to downramp anything here just interested to learn why a take over would be considered.


----------



## Largesse (20 April 2009)

BBI/BEPPA traded well today in pretty average market conditions.

Global Macro factors still playing on my mind though (US Earnings and Econo Reports), will prob look to enter early-mid next week, assuming things play out like i expect them to over the next few days

Hopefully i get a bit of a pull back in BBI/BEPPA price. If i'm lucky


----------



## Mitsimonsta (21 April 2009)

Largesse said:


> Hopefully i get a bit of a pull back in BBI/BEPPA price. If i'm lucky




Looks like your wish is coming true. I do not expect much joy this week, unless my 'Christmas Kev' $900 stimulates my stocking.


----------



## Largesse (21 April 2009)

Dow target is 6900 for me, so i'm not really counting any chickens yet...

Realistically i want to enter BBI/BEPPA at around 6c or lower on BBI, and 7.5 or lower on BEPPA.

I guess we'll see how it plays out over this week


----------



## banska bystrica (21 April 2009)

cpsharky said:


> G'day BB, HY and all,
> 
> I've been trying to do a simple valuation spreadsheet for BBI, spurred on by BB/Melua from another place. I am going to go out on a limb here and say that BBI don't publish clear book values at asset level. There is some info on the value of various concessions etc, but no assurance that this represents full asset value. I am an amature at accounting - having done it at school - but at least I know the basics.
> 
> ...




Sharky,
To get a realistic EBITDA figure, you probably need to key in 2009/10 earnings as the new financial year is only two and a bit months away.


----------



## banska bystrica (21 April 2009)

nathanblack said:


> what if they have over estimated the capacity? thats all im saying, i'd like to see them achieve capacity first. its a buyers market and as a holder of BEPPA I prefer to be ultra conservative in my figures.




Once the capacity is built, they get a regulated income based on that capacity. It doesn't matter if not one ship visits the port to pick up coal. BBI are guaranteed a return on the expanded capacity. Also, the users have been screaming for more capacity for a number of years now.
Once DBCT is at full capacity, it is safe to lock in revenue forecasts based on that capacity.

PS. Apologies to nathan and also to Largesse if my tone was aggressive. My reply wasn't to your post Largesse but it doesn't excuse my tone. We are all here to learn and whilst I still have a lot to learn about BBI, I do have more knowledge than others and sometimes I get frustrated with what I perceive to be basic questions. I need to be more tolerant.


----------



## banska bystrica (21 April 2009)

Sharky,
These are ABN Amro's EBITDA forecasts for 2009/10. I think they are a tad conservative but feel free to plug those numbers in and see what you come up with.

Powerco $84M
IEG $82M
NGPL $256M
AETD $213M
CSC $19M
DBCT $224M
PD Ports $94M
Euroports $90M
Westnet Rail $114M
Corporate Fees -$30M (that's a negative $30M)


----------



## cpsharky (21 April 2009)

Thanks Banksa.

Here is the analysis using the Amro figures. Hope the debt figures are correct?
Again, I have left out the coporate overhead because I am interested  how safe Beppa is in the event of a liquidation. Not particularly interested in a takeover figure.

I have again used a EBITDA multiple of 11 to estimate asset values. Should be very conservative in the case of non-fire asset sales.


----------



## cpsharky (21 April 2009)

May as well have a crack at a NAV using this technique. This time I'll use EBITDAx12 as a fair but not optimistic guess at asset values and I'll take out the coporate overheads, because we are assuming the company stays together.

This produces a figure higher than that obtained using book values. (2.4bill from memory).


----------



## Largesse (21 April 2009)

banska bystrica said:


> Once the capacity is built, they get a regulated income based on that capacity. It doesn't matter if not one ship visits the port to pick up coal. BBI are guaranteed a return on the expanded capacity. Also, the users have been screaming for more capacity for a number of years now.
> Once DBCT is at full capacity, it is safe to lock in revenue forecasts based on that capacity.
> 
> PS. Apologies to nathan and also to Largesse if my tone was aggressive. My reply wasn't to your post Largesse but it doesn't excuse my tone. We are all here to learn and whilst I still have a lot to learn about BBI, I do have more knowledge than others and sometimes I get frustrated with what I perceive to be basic questions. I need to be more tolerant.




No worries, Banksa, i'm sorry for coming back at you so hard, was probably out of line myself a bit there.

On a more important note, given the quality of the DBCT asset, are we sure that selling it off to pay down debt is the best option for BBI over the longer term. Sure, it will make alot of security holders happy in the short term as their shares will undoubtedly rise as the debt discount is lowered but do we really want to be sacrificing such a quality asset. EPS will take a bit of a knock with out DBCT on the books..

I'd be looking to offload lower quality assets now, even if we had to accept a SLIGHTLY lower multiple for them.


----------



## Tysonboss1 (21 April 2009)

Largesse said:


> On a more important note, given the quality of the DBCT asset, are we sure that selling it off to pay down debt is the best option for BBI over the longer term. Sure, it will make alot of security holders happy in the short term as their shares will undoubtedly rise as the debt discount is lowered but do we really want to be sacrificing such a quality asset. EPS will take a bit of a knock with out DBCT on the books..




In a perfect world where we didn't have the refinancing risk I would love to see BBI keep dbct, However we have to clear corp debt to make sure we don't default if the lenders decide to not allow BBI to refinance.

DBCT is a fantastic asset, But there is heaps of good assets out there. If we can sell DBCT and get BBI back on track we will be able to take advantage of growth prospects in the future.


----------



## nathanblack (21 April 2009)

BB, no offense taken. i love your work.

as for the last couple of posts, BBI have never said that they intend to sell 100% stake. no doubt they will have many offers varying from part ownership to full. with a premium paid for 100% control. its up to management to sift through the offers and determine whats best.


----------



## nathanblack (22 April 2009)

what should we take from todays announcements regarding asset performances and sales progress?
some assets seem a bit flat but interest in them seems high and that dates are roughly what has been said previously. didnt seem to do much to the share price one way or another, so perhaps not much to be read into on this one.


----------



## banska bystrica (22 April 2009)

Pages 29 and 30 of the SPARCS announcement provides some sobering information of the amount of debt to be re-financed in the next eighteen months.

Asset level debt summary
The majority of BBI’s assets have non-recourse financing and in most cases are secured against the operating assets of the respective business. There is no cross collateralisation of the asset level debt between any of BBI’s assets or with BBI corporate debt. However, any asset level event that restricts cash flow from the asset to the BBI corporate level will have a negative impact on the BBI corporate debt ratios and could potentially lead to a financial covenant breach at the BBI corporate debt level.
The aggregate principal amount of BBI’s proportionate share of asset level debt facility limits as at 31 December 2008 was AUD9,600 million, of which an equivalent of AUD1,446 million matures in the period from 1 April 2009 to 31 December 2010 (calculated on a proportionally consolidated basis). BBI intends to refinance the majority of this debt prior to the maturity date, however given current conditions
in global credit markets, there is a high degree of uncertainty whether BBI will be able to successfully
refinance this debt.
If BBI is unable to refinance maturing asset level debt, it may have negative implications including the winding up of the relevant asset, which may result in no further cash flows being received from the asset with adverse consequences in respect of the financial covenants contained in the Deed of Common Provisions. This could potentially lead to an event of default under the BBI corporate debt facilities and could potentially lead to the winding up of the Corporate Borrowers and the BBI Guarantors, including BBINNZ, BBIL, BBIS and BBI Finance Pty Limited.
The table below details the breakdown of BBI’s proportionate share of asset level debt facilities maturing
in the period from 1 April 2009 to 31 December 2010 in both local currency and AUD equivalent (millions) by month of maturity by asset.

Dampier to Bunbury May 2009 AUD 4 4
Natural Gas Pipeline September 2009 AUD 96 96
WestNet Rail June 2009 AUD 19 19
Multinet Gas June 2009 AUD 4 4
Network July 2009 AUD 27 27
PD Ports July 2009 £ 100 208
BBIPAL (WaterContainer Transport and Tarragona Port Services)
August 2009 EUR 51 102
Powerco August 2009 $NZ 109 90
August 2009 $NZ 67 55
April 2010 $NZ 42 34
WA Gas Networks September 2009 AUD 15 15
September 2010 AUD 148 148
BBI Finnish Ports October 2009 EUR 88 175
International Energy
Group
January 2010 £ 5 10
Benelux Port
Holdings (Manuport
and Westerland)
November 2010 EUR 225 449
Cross Sound Cable December 2010 $US 6 9
Total 1,446

As we have always known, BBI needs a stable global banking system. The assets are great but it only takes one rogue bank to pull the pin. Having said that, I topped up with a few more BEPPA today. 
Looking at the debt repayment schedule again. The following are the larger amounts to be re-financed:

PD Ports July 2009 £ 100 208

BBIPAL (WCT and Tarragona PS) August 2009 EUR 51 AUD 102

Powerco 
August 2009 $NZ 109 AUD 90
August 2009 $NZ 67 AUD 55

DTB Natural Gas Pipeline September 2009 AUD 96 96

BBI Finnish Ports October 2009 EUR 88 AUD 175


WA Gas Networks September 2010 AUD 148 148

Benelux Port Holdings (Manuport and Westerland)
November 2010 EUR 225 AUD449

Doesn't look too bad.


----------



## banska bystrica (22 April 2009)

Well everyone has gone very quiet on here. Was it my last post or something else? zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz


----------



## investorpaul (22 April 2009)

banska bystrica said:


> Well everyone has gone very quiet on here. Was it my last post or something else? zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz




I think everyone is int and see mode. I havnt read the annoucement in full yet but your quick exert covering the debt levels and refinancing dates isnt too pleasing.

There is a heap of individual deals that need to be refinanced there and as you said all it takes is difficulty to refinance one and things can fall apart.


----------



## cpsharky (22 April 2009)

Regarding refinancing difficulties, the question in my mind is - will other lenders take action to avoid a covenant breach if one lender wants to pull the plug? That is, would it be possible that many of BBIs lenders would be fearful of the consequences of a covenant breach and thus step in to avoid it if necessary?


----------



## hardyakka (23 April 2009)

cpsharky said:


> Regarding refinancing difficulties, the question in my mind is - will other lenders take action to avoid a covenant breach if one lender wants to pull the plug? That is, would it be possible that many of BBIs lenders would be fearful of the consequences of a covenant breach and thus step in to avoid it if necessary?




I intend upon digesting the announcements this weekend and will post any my views or commentary unless these have already been covered off.  Even then I just expect this to show that its just "steady as she goes".

BB-sorry I did not participate in the homework exercise, but then I don't know about what happens elsewhere because I am never there

Sharky-Love the look of those numbers using EBITDA of 12!

Cheers


----------



## Mitsimonsta (23 April 2009)

I am more worried about the individual deals. I am hopeful that the money not paid to dividends in BEPPA and BBI will be able to wipe out a large number of the smaller debts facilities.

I'd like to think the following AT LEAST can be paid from cash reserves in this calendar year:
Dampier to Bunbury May 2009 AUD 4 4
WestNet Rail June 2009 AUD 19 19
Multinet Gas June 2009 AUD 4 4
Network July 2009 AUD 27 27

That's only $54M, but that is then unencumbered asset which can boost the balance sheet as there is reduced liability. I am hopeful that this will calm the nerves of the current debt facility providers and show that progress has been made in the face of difficult conditions.

On BEPPA alone there is approx $32.625M worth of unpaid interest distributions that they have to play with. Along with no dividends on BBI, I think it reasonable to assume these 4 assets could be paid off from cash. 

Obviously, the larger amounts will need re-financing. I do not think a capital raising at this time would add value for shareholders, in fact I think it would be detrimental. The dilution alone on the current SP would be horrific.


----------



## banska bystrica (23 April 2009)

Mitsimonsta said:


> That's only $54M, but that is then unencumbered asset




I don't think so. Those figures are just one lot of refinancing. There is much more debt on those assets than those small figures.


----------



## Mitsimonsta (23 April 2009)

Well if that is the case, why refinance such a small amount if you can get rid of it completely?

I thought the whole point of no BEPPA/BBI dividends was to preserve cash and pay down debt (thence freeing cashflows in the future to pay deferred dividends)?

Okay, it may not be an unencumbered asset, but at least the liabilities side of the balance sheet is reduced. It's not only the Corporate Debt that BBI has to be worried about.

Meantine, the SP on BEPPA is falling. Wish I had my stimulus cash now.


----------



## mark_au (23 April 2009)

Mitsimonsta said:


> Well if that is the case, why refinance such a small amount if you can get rid of it completely?
> 
> I thought the whole point of no BEPPA/BBI dividends was to preserve cash and pay down debt (thence freeing cashflows in the future to pay deferred dividends)?
> 
> ...





I just wish i could log into comsec, the site seems to be running appallingly slow.., well it is for me anyhow ;-(


----------



## cutz (23 April 2009)

mark_au said:


> I just wish i could log into comsec, the site seems to be running appallingly slow.., well it is for me anyhow ;-(




It's more than likely to be your internet connection rather than the website, this morning i had problems for about 15min, i experienced a very slow internet connection but iress and TWS was hanging in there , the commsec website and ASF weren’t loading up.

It's been fine since.


----------



## Largesse (23 April 2009)

Don't rush in too early, BEPPA still hasn't broken outside of its intraday range.
And still legs in the Earnings season, i'm willing to bet we can get this cheaper come Monday/Tuesday.

I like the story, but no need to rush in just yet


----------



## Mitsimonsta (23 April 2009)

Large - I bought in at 9.5c last week, so anything below that is a bonus for me. Averaged in at a shade below 7.9c on 25K units.

I'd rather have the cash in my hand before splurging on another parcel of BEPPA.


----------



## banska bystrica (24 April 2009)

A frustrating day for me. I've been close to getting BEPPA and then someone bids up the price and cleans out the sellers.


----------



## Jez (24 April 2009)

banska bystrica said:


> A frustrating day for me. I've been close to getting BEPPA and then someone bids up the price and cleans out the sellers.




I suggest instead of being a WoodDuck, just put your bid in so it's there when the sellers come along. You should be able to get an idea after about an hour of whats happening when there is no news.

Your order must be there "in market" to get the stock when it comes along in this case.


----------



## fuzzie (26 April 2009)

Beats me what that means. I can hardly image anybody thinking BB is reserved about buying into BEPPA! However the volume has sure been dropping off lately, not many large sellers coming back in quickly at lower prices.

On another note I flew out of Sydney today, over Newcastle, and while I know DBCT has nothing to do with Newcastle, the sight of literally hundreds of bulk carriers waiting off shore gave a concrete face to the fact that there is a huge bottle neck in shipping resources out of this country and the talked about interest in DBCT is not just window dressing for this thread.


----------



## banska bystrica (26 April 2009)

Jez said:


> I suggest instead of being a WoodDuck, just put your bid in so it's there when the sellers come along.




This so-called "WoodDuck" has hardly be shy when it comes to buying BEPPA. In fact, barring any major insto buying, I reckon I can safely say I've been the biggest buyer since January.


----------



## Mitsimonsta (27 April 2009)

banska bystrica said:


> This so-called "WoodDuck" has hardly be shy when it comes to buying BEPPA. In fact, barring any major insto buying, I reckon I can safely say I've been the biggest buyer since January.



Filed that Substantial Holder Form yet BB?? 

Interesting day's trading on Friday for BEPPA, just looking at the details now. Still waiting for my stimulation... which is going into more BEPPA units.

Decided that I will buy BEPPA until my average breaks 10c/unit, then I will hold and try building up my portfolio elsewhere.


----------



## fuzzie (28 April 2009)

There must be some rumours around today. BBI and BBEPPA are both up, but BBP is up 40% at the moment


----------



## Mitsimonsta (28 April 2009)

Rumour of a takeover bid for BBP...... I have heard of two possible buyers - one local ASX-listed company with cash, and an unknown to me international company.

As the saying goes, buy on rumour, sell on fact.


----------



## Mitsimonsta (28 April 2009)

BEPPA has hit 11c, BBI is at 9.2c..... what a rally! Waiting for the ASX Cops to issue a speeding ticket.

Maybe the BBP rumour is rubbing off, along with BBC's meeting yesterday including a name change to eircom Holdings.

The quicker that BBI changes it's name the better the shares will do.


----------



## banska bystrica (28 April 2009)

Largesse said:


> Don't rush in too early, BEPPA still hasn't broken outside of its intraday range.
> And still legs in the Earnings season, i'm willing to bet we can get this cheaper come Monday/Tuesday.
> 
> I like the story, but no need to rush in just yet




11c currently. Unfortunately you have lost your bet about getting the stock cheaper Monday/Tuesday.
Maybe Wednesday/Thursday?
Those that are not set yet will need to be very careful about missing this boat sub 10c.


----------



## hardyakka (28 April 2009)

banska bystrica said:


> 11c currently. Unfortunately you have lost your bet about getting the stock cheaper Monday/Tuesday.
> Maybe Wednesday/Thursday?
> Those that are not set yet will need to be very careful about missing this boat sub 10c.




I am crying into my beer at the moment, having sold 100k BEPPA to take a position in MAH. Of course the profit on the MAH is about 1/8 the profit on 100k BEPPA after these price movements. Still I am not complaining.

BB-Do you have any thoughts on MAH? I have been watching it quite a while.

Cheers


----------



## Mitsimonsta (28 April 2009)

I'm not BB - but it looked to me yesterday like MAH had been well oversold. I think it might be one for the long term... a good slow capital gain looks likely once mining projects start running again. I have not looked at it today (checking now, and today looks like the opposite of yesterday, lots of buy pressure).

HOWEVER, I certainly would not have sold BEPPA/BBI for MAH at this time - we are only 2 months from the EOFY and more BBI asset sales.

While I am now sitting on 40% profit on BEPPA, I can see that profit margin increasing by a factor of 10 in 12-18 months.


----------



## fuzzie (28 April 2009)

hardyakka said:


> I am crying into my beer at the moment, having sold 100k BEPPA to take a position in MAH.
> Cheers




I swapped some BBI for BEPPA yesterday when the diff was 1.3c 
I'm now wondering if that was the right move - BBI up 21% BEPPA 18%


----------



## Mitsimonsta (28 April 2009)

fuzzie said:


> I swapped some BBI for BEPPA yesterday when the diff was 1.3c
> I'm now wondering if that was the right move - BBI up 21% BEPPA 18%




BEPPA will follow fuzzie, it usually takes a few days. The average gap has been 1.6c-1.8c, so it's better to buy BEPPA in this situation anyway.

I think you have done the right thing, wait for the end of the week before you judge it mate.

I am wondering if BB took advantage of the BBI rise, sold out and picked up BEPPA before the jump....


----------



## my03 (28 April 2009)

this is a great thread guys thats for all the input, I'm kicking myself having not bought into bbi at 3c a few weeks ago. 

What are you opinions on recent strong performance of bbi, it's been quite consistent and holding well. Do you think bbi will hold or is this just reflective of the recent rally? I'm looking at buying in very soon but don't want to miss the boat. But of course, naturally I want to buy it at 3c and not 10c.


----------



## banska bystrica (28 April 2009)

Mitsimonsta said:


> I am wondering if BB took advantage of the BBI rise, sold out and picked up BEPPA before the jump....




I did as per my stated plan. I sold enough BBI today to cover my previous purchases of BEPPA between 8 and 9c. I actually did even better than that. The result today was I sold 924,000 BBI to cover the prior purchase of 1M BEPPA. I'll do the same tomorrow if the volume and price are still there. I'm now holding more BEPPA than BBI (ratio 5:3).


----------



## Mitsimonsta (29 April 2009)

Watch it go!

Dampier-Bunbury pipeline refinanced, and PD Ports sale extended to June 30.

12c... go go go go!


----------



## investorpaul (29 April 2009)

Mitsimonsta said:


> Watch it go!
> 
> Dampier-Bunbury pipeline refinanced, and PD Ports sale extended to June 30.
> 
> 12c... go go go go!




More good news, the big move will be once a sale is complete.

In hind sight I should have picked up some more last week, i think the best one could hope to pick them up from here on in is 10.5c (if and when it dips)


----------



## Mitsimonsta (29 April 2009)

It's all related to the SPARCS conversion.... if they can get the BBI SP to 20c (from 10c) before conversion, then they only half the number of shares need to be issued, and it's only ~100M shares which dilutes current BBI holders much less than 200M shares.

I fully expect a "Many buyers interested in sale of DBCT, BBI expects an  excellent return for BBI holders' type release about 2 days before conversion.


----------



## banska bystrica (29 April 2009)

I don't believe it has anything to do with SPARCS. I would bet London to a brick BBI have the numbers to get a YES vote passed in May.
This rally is all about BBI being "less risky" and therefore more people willing to buy them. Very few wanted them in November at 2.5c. That's why those of us who believed in our plan and research were granted an early Christmas present.
This stock will remain in the toilet at sub 20c until we see corporate debt reduced substantially. The only way for that to happen is for DBCT to be sold for $2.5Bn+. Only two months to wait.


----------



## Mitsimonsta (29 April 2009)

banska bystrica said:


> I don't believe it has anything to do with SPARCS. I would bet London to a brick BBI have the numbers to get a YES vote passed in May.



Current conditions make me think that BBI would not put a vote forward unless they thought they had the numbers secure.



banska bystrica said:


> This rally is all about BBI being "less risky" and therefore more people willing to buy them. Very few wanted them in November at 2.5c. That's why those of us who believed in our plan and research were granted an early Christmas present.



So you look at the DBP refinancing as a vote of confidence from the credit market which has buoyed the equity?

I only wish I had known about this company at Christmas and got in at under 4c....  



banska bystrica said:


> This stock will remain in the toilet at sub 20c until we see corporate debt reduced substantially. The only way for that to happen is for DBCT to be sold for $2.5Bn+. Only two months to wait.



This one is not in the toilet as far as I am concerned. +53% on average buy for me right now..... and there's another $1K owing in deferred distributions. I have only put $2K in thus far (25,177@ 7.9c avg), so I am very happy with the current SP although looking forward to a fall so I can buy more!

The SP after June 30 is going to be solely based on the DBCT sale figure. The higher the $$$, the greater the SP.


----------



## investorpaul (29 April 2009)

Mitsimonsta said:


> so I am very happy with the current SP although looking forward to a fall so I can buy more!




How much do you really see it falling, I personally don't think we will see BEPPA at sub 10c again (unless there is a bad announcement).

I have a buy order in now at 10.5c but dont hold too much hope of getting it filled.


----------



## wesleysnipesjr (29 April 2009)

Mitsimonsta said:


> It's all related to the SPARCS conversion.... if they can get the BBI SP to 20c (from 10c) before conversion, then they only half the number of shares need to be issued, and it's only ~100M shares which dilutes current BBI holders much less than 200M shares.




Aren't there 146.2 million SPARCS with face values of $1? If so at BBI's current SP full conversion would result in significant dilution.


----------



## fuzzie (29 April 2009)

With the issue of BBI being perceived less risky now, how does this affect the preference to holding either BBI or BEPPA? I hold BEPPA in a SMSF and have no issue about making a decision about swapping later because I have any capital gain issues in those circumstances under control. However on Monday, when BBI shot up and BEPPA was left behind, I made an on the fly decision to swap some BBI held outside super for BEPPA. I'm now reworking the figures and not sure that was the wisest move. From now on any swap between BEPPA and BBI outside of super is going to incur CGT for me.

Given the assumption BBI is not going to fail, I can value BEPPA reasonably easily, what I can't model is what the BBI price is going to target. With more market confidence in BBI, I can see BEPPA going back to around 70c with the current interest rate, however I could easily imagine BBI going back to 70c also, if a distribution around 7c were reinstated (but when?) 

If I continue to hold BEPPA risk is lower, interest is compounding and any reinstated interest is 100% taxable. If I swap later to BBI the CGT would apply to the around 60c(or 30c depending on when) gain but the BBI dist would be presumable tax free for a while. If I swap earlier less CGT involved but dists likely to be in capital gain territory earlier. BBI under that scenario is looking an increasingly better option. I think I maybe did the wrong thing Monday 

I wonder when distributions are likely to be reinstated, given all positive outcomes for asset disposals and then getting SPARCS out of the way?


----------



## Mitsimonsta (29 April 2009)

investorpaul said:


> How much do you really see it falling, I personally don't think we will see BEPPA at sub 10c again (unless there is a bad announcement).
> 
> I have a buy order in now at 10.5c but dont hold too much hope of getting it filled.




Depends how we close today. I can see it coming back to 11c for support, but leave that order in because you never know. I'd be ecstatic to get a buy through at 10.5c now.

The last few days have been a bit up and down, big movements in intra-day prices. Opportunities are there if you can strike them.



wesleysnipesjr said:


> Aren't there 146.2 million SPARCS with face values of $1? If so at BBI's current SP full conversion would result in significant dilution.




There's requests for ~25.8M units to be converted...  http://www.bbinfrastructure.com.au/media/412579/sparcs conversion requests withdrawal right.pdf

I was referring to current requests for conversion, not a full conversion. That is not due for a while yet. The main thrust of my comment was to highlight the fact that if BBI can hype the SP up with good news releases, then the dilution that occurs with the conversion requests already on the table is much lessened.

Some investors will take the cash option at full conversion, there may be a premium of around 3-4% to encourage them to do so and keep dilution at a minimum when it does occur.



fuzzie said:


> I wonder when distributions are likely to be reinstated, given all positive outcomes for asset disposals and then getting SPARCS out of the way?




It's the Billion Dollar Question..... I think they will hold BEPPA distributions until maturity or EPS reset terms are proposed and voted upon in favour. My opinion only.


----------



## investorpaul (29 April 2009)

Mitsimonsta said:


> Depends how we close today. I can see it coming back to 11c for support, but leave that order in because you never know. I'd be ecstatic to get a buy through at 10.5c now.
> 
> The last few days have been a bit up and down, big movements in intra-day prices. Opportunities are there if you can strike them.




Ive upped my bid to 11cents, I dont see it hitting 10.5 and im happy to pay a bit more.

If the transaction goes through it ill give me an avg price of 9 cents. And i will have approx 2 BEPPA for every 1 BBI. 

Initially I started buying BBI/BEPPA on a very spec basis and put a third of what I normally would put into a share. I have now slowly increased my initial $ investment to that which I put into all stocks.


----------



## Mitsimonsta (29 April 2009)

investorpaul said:


> Ive upped my bid to 11cents, I dont see it hitting 10.5 and im happy to pay a bit more.




Looks like you may get your wish, I see trades going through at 11c... there's not very many available at that price though...

EDIT: Buy side out of orders at 11c.... still 43K units at 11c remain and another 95K at 11.5c
Next two buy orders at 10.6 and 10.5c respectively, small numbers though. 100K units bid at 10.1c.


----------



## awg (29 April 2009)

The gap on BBI v BEPPA has closed up to 0, so I am happy with grabbing another 100k of Beppa on the bell at 10.5c

does knock my average price up a fair bit up

but unless we see a big down for the market, may have got some value

perhaps Pairtrader should run his program over this pair

would have done well out of it recently!


----------



## Largesse (29 April 2009)

well it would seem as if i'm not going to my cheap entry. 

somethings definitely up, i'm more than happy to jump on the freight train if it getsa'movin


----------



## nathanblack (29 April 2009)

i too added another $5k at 10.5cents and noted the closing prices. provided wallstreet does ok overnight u would expect beppa to regain its usual 2.5c or so advantage. i expect 12c to be on offer tommorow but im wanting more long term.

the other thing i noticed was a few trades at 10.3cent and similar but when i tried placing at 10.4 i wasnt allowed. must be ,5 intervals. is this an asx rule or comsec? how did some go through at 10.3?


----------



## investorpaul (29 April 2009)

My order went through at 11cents.

If i didn't have to leave the office I would have been able to keep my order at 10.5c but I would rather be safe and pick them up at 11c than miss out entirely.

Avg price for BEPPA is now 0.086c and BBI still 0.071 which i am happy with.

It was interesting to see BBI and BEPPA both close at 10.5c. If BBI can hold above 10c in early moving trade tomorrow BEPPA should at least have a margin of 1.5 to 2c ie (be priced at 12 to 12.5 cents).


----------



## hardyakka (29 April 2009)

nathanblack said:


> i too added another $5k at 10.5cents and noted the closing prices. provided wallstreet does ok overnight u would expect beppa to regain its usual 2.5c or so advantage. i expect 12c to be on offer tommorow but im wanting more long term.
> 
> the other thing i noticed was a few trades at 10.3cent and similar but when i tried placing at 10.4 i wasnt allowed. must be ,5 intervals. is this an asx rule or comsec? how did some go through at 10.3?




I have jumped in to get another block at 10.5. The differential between BBI and BEPPA is minimal, so tomorrow I would expect the margin to open up to about 2 cents, lets hope it is in an upward direction.

The announcements re refinacing, extension of deadline and SPARCS actions are all very positive. To me they indicate that a few banks are beginning to appreciate what the BBI business really is, there is interest in its unregulated (and hence from the BBI perspective riskier) assets and that management is managing the SPARCS issue.

All big positives in my books.

Cheers


----------



## jeffTH (29 April 2009)

nathanblack said:


> i too added another $5k at 10.5cents and noted the closing prices. provided wallstreet does ok overnight u would expect beppa to regain its usual 2.5c or so advantage. i expect 12c to be on offer tommorow but im wanting more long term.
> 
> the other thing i noticed was a few trades at 10.3cent and similar but when i tried placing at 10.4 i wasnt allowed. must be ,5 intervals. is this an asx rule or comsec? how did some go through at 10.3?



The last sales at 0.103 were mine for 947 out of 50k.  I now stand first in line for the remaining 49053 at 0.103.  I guess I will sit on it for a while and then may have to up the ante to get the rest.
I am puzzled as to why Nathan couldn't enter a buy for 10.4cents as at this level increments are at 0.001 cents!


----------



## nathanblack (29 April 2009)

thanks for your insight jeff. maybe its a comsec thing or because i have normal trading account not a prefered one. i pay a huge 29.95 per trade. but i thought 0.1 was allowed till now. anyone can confirm why ? not that im dissapointed. 10.5c is fine with me, probably wouldnt get them at 10.4

cheers


----------



## banska bystrica (29 April 2009)

The BEPPA seller who dumped 5M on the close also had another 5M showing and withdrew it. I would say you guys are a big chance to get some BEPPA cheap whilst they have plenty to sell. It all depends on what BBI does on opening.


----------



## hardyakka (30 April 2009)

banska bystrica said:


> The BEPPA seller who dumped 5M on the close also had another 5M showing and withdrew it. I would say you guys are a big chance to get some BEPPA cheap whilst they have plenty to sell. It all depends on what BBI does on opening.




Its just too hard to resist. I have placed my order and will just keep my fingers crossed that someone wants to take a profit and offload their BEPPAs, preferably very cheap to me

Cheers


----------



## investorpaul (30 April 2009)

Both have opened up strongly again.

For BBI there is a heap of buyers at 10 and 10.5 cents so i cant see it dropping below that easily, but it also looks like people are lining up to sell at 11.5c + to take short term profits.

BEPPA is also at 11.5c so no gap yet (although there briefly was a gap of 0.5c at open).


----------



## investorpaul (30 April 2009)

I cant believe BEPPA was at a discount to BBI

BEPPA 10c

BBI 10.5c

very strange, it must be that guy BB mentioned who tried to shift 10m units


----------



## mark_au (30 April 2009)

Worked for me, I managed to swap some BBI for BEPPA at almost $0 changeover cost...  , Quite a good day on the market. lets hope the momentum continues.. Australia is really doing quite well compared to other countries...


----------



## investorpaul (30 April 2009)

Another interesting day, opened strong and closed weak.

We will prob have to wait a while now (for more good news) before any more significant moves, I dont see any big move tomorrow.

Good on you Mark_au for swapping to 0 difference, that was good timing


----------



## mark_au (1 May 2009)

investorpaul said:


> Another interesting day, opened strong and closed weak.
> 
> We will prob have to wait a while now (for more good news) before any more significant moves, I dont see any big move tomorrow.
> 
> Good on you Mark_au for swapping to 0 difference, that was good timing





Ahaha yea, thanks .. I was due  have a win once in my 40 years ;-0
The market might shake a bit with the Chrysler news.. so see how we go.
hopefully the market can retain some momentum come monday

cheers


----------



## fuzzie (1 May 2009)

Interesting day today from my perspective, at least on how the system works.

I was watching the prices just after market close and noticed the buy and sell orders on beppa building after the close. I've always wondered how that works, today I found out.

Shortly before close I had a sell order unexpectedly go through on another holding. Shortly after close I was looking at beppa and noticed one buy at 10.5 with the nearest seller I think at 10.8, market in pre-open. I refreshed the quote page and there were several big buys for 10.5 a small sell at 10.5 and 1 mil at 10.5. There were more than 1 mil total buys, I refreshed again and there was another 1 mil sell order sitting there that would more than clear the 10.5 buys. I wondered, should I?, then place a buy order. A second later the market was in adjust and the buy was filled.

What I want to work out now is who places those trades you see go through on cent valued shares for 1 or 2 shares! Clearly not somebody who pays $29.95 miniimum brokerage.


----------



## bellenuit (1 May 2009)

fuzzie said:


> I wondered, should I?, then place a buy order. A second later the market was in adjust and the buy was filled.




I thought the only orders that got executed after 4pm were broker to broker orders via telephone?

_Pre CSPA

Between 4:00 pm and 4:10 pm, Sydney time, the market is placed in Pre-open. *Trading stops* and brokers enter, change and cancel orders in preparation for the market closing._

http://www.asx.com.au/resources/education/basics/trading_hours_asx.htm


----------



## Mitsimonsta (1 May 2009)

No, it's the closing price auction system. You can get trades going through then.

I grabbed some more BEPPA today as my stimulation came though. Grabbed at 10.5c which I am happy to pay. My average is now 8.36c/unit.


----------



## nathanblack (2 May 2009)

beppa seems to have found a support level at 10cent now, a previous pschycological barrier particularly on the closing bell. might trade between 10 and 12c range until some news is released god or bad.

im happy with the current price although the volumes seem a bit all over the place. i think its becoming less volatile and might attract a new kind of investor.

just wait for a sale of somekind now


----------



## banska bystrica (4 May 2009)

From Wilson HTM Ltd:

_"The completion of the Euroports capital raising is critical for BBI. The funds raised are required to finance the put option that has been exercised by the minority investors in one of Euroports’ subsidiaries. Without the cash, the worse case scenario is a winding up of Euroports. Also, if the transaction does not complete then Euroports is obligated to refund the B&B European Infrastructure Fund its €35M deposit; however, BBI has stated that Euroports does not have sufficient cash to repay it.

As part of the 29.7% share subscription B&B European Infrastructure Fund, one of the two potential investors in Euroports, paid a refundable €35M deposit to Euroports, guaranteed by BBI and secured against the assets of Euroports. If the transaction does not complete BBI has stated that Euroports does not have sufficient cash to repay the deposit. Could there be a situation where one BNB fund sues another?!"_

This has the potential to bring the BBI house of cards tumbling down.


----------



## nathanblack (4 May 2009)

beppa holding firm on low volume. bbi slightly down in a positive market on relatively low market. seems like sellers arent dropping the ask price to meet buyers.

looks ready to break. could go either way. i suspect both bbi and beppa might get an afternoon run up in line with market. certainly positive that there seems no selling pressure and both stock are holding on to recent gains.

perhaps the forming of a new base.


----------



## nathanblack (4 May 2009)

banska bystrica said:


> From Wilson HTM Ltd:
> 
> _"The completion of the Euroports capital raising is critical for BBI. The funds raised are required to finance the put option that has been exercised by the minority investors in one of Euroports’ subsidiaries. Without the cash, the worse case scenario is a winding up of Euroports. Also, if the transaction does not complete then Euroports is obligated to refund the B&B European Infrastructure Fund its â‚¬35M deposit; however, BBI has stated that Euroports does not have sufficient cash to repay it.
> 
> ...




interesting read. i havent seen any official company announcement today but perhaps its on its way and thats why we are seeing low volumes. be very interesting if the SP will hold post announcement.

in reality how bad would this worse case scenario be? all debt is recourse to asset level only. would this mean the winding up of euroports only? leaving bbi intact? how much do they need to raise for the put option versus the 35mil refund of deposit?


----------



## investorpaul (4 May 2009)

banska bystrica said:


> From Wilson HTM Ltd:
> 
> _"The completion of the Euroports capital raising is critical for BBI. The funds raised are required to finance the put option that has been exercised by the minority investors in one of Euroports’ subsidiaries. Without the cash, the worse case scenario is a winding up of Euroports. Also, if the transaction does not complete then Euroports is obligated to refund the B&B European Infrastructure Fund its â‚¬35M deposit; however, BBI has stated that Euroports does not have sufficient cash to repay it.
> 
> ...




BB just trying to get my head around the above quote.

Basically BBI needs to raise cash to pay for the put option otherwise two things will happen:
1. A wind up of Euroports
2. BBI will have to pay B&B Euro Infrastructure 35 m euros.

Is this correct?

If yes, have your views of BBI/BEPPA altered, will you take a more cautious approach going forward?


----------



## boff (4 May 2009)

banska bystrica said:


> From Wilson HTM Ltd:
> 
> _"The completion of the Euroports capital raising is critical for BBI. The funds raised are required to finance the put option that has been exercised by the minority investors in one of Euroports’ subsidiaries. Without the cash, the worse case scenario is a winding up of Euroports. Also, if the transaction does not complete then Euroports is obligated to refund the B&B European Infrastructure Fund its â‚¬35M deposit; however, BBI has stated that Euroports does not have sufficient cash to repay it.
> 
> ...




Hi BB,
Which BBI is being referred to here. The B&B European Infrastructure Fund was an unlisted B&B fund so I'm thinking it's the 'other' BBI.
Cheers.


----------



## banska bystrica (4 May 2009)

Make no mistake. The BBI is "our" BBI. BNB Infrastructure fund is one of the buyers of Euroports. If conditions precedent (CP) are not satisfied, they can pull the pin, demand their $70M deposit back (which BBI Euroports no longer has due to the bank sweep) and the minority interests can demand the exercise of the put option. Potentially very ugly indeed.
The liquidation of Euroports also has the potential to affect cash flow to the banks to pay down corporate debt. It all depends on how tough a line the banks want to take here. Whilst Euroports has no corporate debt, the potential for a domino effect is there.


----------



## investorpaul (4 May 2009)

banska bystrica said:


> Make no mistake. The BBI is "our" BBI. BNB Infrastructure fund is one of the buyers of Euroports. If conditions precedent (CP) are not satisfied, they can pull the pin, demand their $70M deposit back (which BBI Euroports no longer has due to the bank sweep) and the minority interests can demand the exercise of the put option. Potentially very ugly indeed.
> The liquidation of Euroports also has the potential to affect cash flow to the banks to pay down corporate debt. It all depends on how tough a line the banks want to take here. Whilst Euroports has no corporate debt, the potential for a domino effect is there.




So to refinance this BBI needs to:

1. Refinance Euroports - However given the current financial environment and the uncertainty surrounding the business this could prove troublesome.
2. Sell other assets such as DBCT to help fund the Euroports division????


----------



## banska bystrica (4 May 2009)

BBI's corporate bankers are bleeding us dry here. Make no mistake. If DBCT doesn't sell for a big premium to book value, it will be a very difficult road ahead. The banks do not care about equity holders (BBI) or debt holders (BEPPA) other than themselves.
They lend you an umbrella when the sun is shining and when it rains they threaten to take it from you unless you pay much more interest. Disgraceful really.
We need to clear the corporate debt so we get the banks to let go of our necks.


----------



## nathanblack (4 May 2009)

i think euroports is too pressing to wait for an asset sale to bail us out. DBCT announcement not even due for a month, then IF its acceptabe there are due diligence, government/regulatory approvals, settlement , etc.

they need to think fast on this one and prove there management skills. refinancing eurorts through bank consortium or script are the only options. both will be difficult in this environment/time frame.

how do we analyse the outcome should europrts go into administration. what would be the process? sell the asset pressumable at a discount. where do the proceeds go?
does:
1. banks get first shot at monies. if its insufficient they have no other recourse. if theres left over who gets it first? the put options or the deposit refund? the deposit is guaranteed by BBI so i assume if euroports sale cant cover it, BBI must come up with it one way or another or administrators can use courts to extract 30euro from BBI. what about the put options? do they have a reourse against BBI? how much is the value of put options?

equally as relevent, IF we refund the 30euro and pay the put options out, does that mean BBI have 100% ownership again?


----------



## investorpaul (4 May 2009)

BB do you know how much Cash is needed to fund the Put option?

I assume it will be a for a higher price than the current market value given it was written up/signed some time ago.


----------



## Viva_Las_Vegas (4 May 2009)

Not looking good.

This would be a good time to see some positive leaks or announcements regarding the sale of DBCT. Althought the desperation BBI would be in would surely play into the buyer's hand when negotiating.


----------



## drsmith (4 May 2009)

banska bystrica said:


> BBI's corporate bankers are bleeding us dry here. Make no mistake. If DBCT doesn't sell for a big premium to book value, it will be a very difficult road ahead. The banks do not care about equity holders (BBI) or debt holders (BEPPA) other than themselves.
> They lend you an umbrella when the sun is shining and when it rains they threaten to take it from you unless you pay much more interest. Disgraceful really.
> We need to clear the corporate debt so we get the banks to let go of our necks.



I get the impression from the above a certain level of discomfort from your level of exposure. In the cold light of day banks have always been banks and will continue to be..... banks.

I imagine that from your posts to date you would currently have a reasonable profit so perhaps it's worth considering selling enough to recover your initial capital outlay and leave the rest to do whatever, or something similar.


----------



## banska bystrica (4 May 2009)

drsmith said:


> I get the impression from the above a certain level of discomfort from your level of exposure.




Not at all. I actually bought another 150,000 BBI today at 8.9c. I think it's very cheap. Banks will be banks but they will not send BBI to the wall. It's not in their interests to do so. They will try and bleed them with interest. However, I expect DBCT and PD Ports to sell well above book value thereby paying off the corporate debt which will increase BBI's asset level debt rating.
A corporate debt free BBI will be well north of 9c.


----------



## ricee007 (4 May 2009)

I'm a touch confused:



> As part of the 29.7% share subscription B&B European Infrastructure Fund, one of the two potential investors in Euroports, paid a refundable â‚¬35M deposit to Euroports, guaranteed by BBI and secured against the assets of Euroports. If the transaction does not complete BBI has stated that Euroports does not have sufficient cash to repay the deposit. Could there be a situation where one BNB fund sues another?!




Is worst case scenario, BBI is forced to sell EuroPorts....

Or,  is it BBI is forced to sell EuroPorts and pay up to 35MillionEuros?

At either rate, surely neither is too devastating.... as long as investors act rationally?

Is it mid-june that an announcment RE: EUroPorts will be made? Then 30th June for DBCT?

Cheers.


----------



## drsmith (4 May 2009)

banska bystrica said:


> Not at all. I actually bought another 150,000 BBI today at 8.9c. I think it's very cheap. Banks will be banks but they will not send BBI to the wall. It's not in their interests to do so. They will try and bleed them with interest.



The banks not sending it to the wall does not necessarily equate to meaningful equity being left over for shareholders. Take Centro for example.

With BEPPA have you been turning them over for profit or just buying ?


----------



## banska bystrica (4 May 2009)

You're making a big mistake comparing Centro to BBI. BBi has defensive assets, have never breached a debt covenant and all assets are still EBITDA positive.
It's apples and oranges. There's a lot of headroom with equity. NAV is still $1 compared to a BBI price of 9c. That's a massive difference.

I haven't sold one single BEPPA and I will not until fair value is reached. I bought heavily at 5c, a few at 4.5c, lots at between 5c and 8c. If debt holders want to give up their debt at 10c in the dollar then good luck to them. It's crazy but obviously there are some forced sellers in that BEPPA market. I'll relinquish my debt at 50c in the dollar this year. If I cannot achieve that, I'll hold until reset or switch into BBI at the appropriate time.

Just because a business faces some hurdles doesn't mean you shouldn't buy that business. In fact that's the time to buy stocks like BBI. I'd rather be buying at 9c than $1.90. Warren Buffet was just on CNBC saying that in the recession of 1974, he made a lot of money buying stocks. He also had his most profitable year ever in 1955 (another recession year) when the DOW put on 50% in twelve months. BUY IN GLOOM. SELL IN BOOM.


----------



## ricee007 (4 May 2009)

drsmith said:


> The banks not sending it to the wall does not necessarily equate to meaningful equity being left over for shareholders. Take Centro for example.




Yes. But, in this case, it seems to indicate there will be value for shareholders.

BBI has got over $2Bn in net book value assets, per last financial report ($2.2Bn? I forget, but it's over $2Bn).

If BBI sells DBCT for the prices thrown around on here ($2.5Bn - $3.5Bn*)... Net book-value assets will be in the $3Bn-$4Bn range.

There is a concensus that, WORST case secnario, book value is overvalued by 5%. Let's assume it's 20%.

Lets also assume net assets are $3Bn - 20% then. So, $2.4Bn.

Let's assume that BBI need to have a fire-sale because they are being liquidated....

Let's say that BBI's (largely)regulated assets (and all assets) are being sold at a discount (because of the fire-sale). Let's knock 75% off of the value of their (largely) regulated assets.

$2.7Bn *.25
=$600M Net Assets.
Lets say there are $300Ml in liqudiation costs (excessive?!)

1.8Bn shareholders, sharing $300Ml.

Each shareholder gets $0.165 per share...

If I had enough cash, I'd be buying more. Put it that way.

(For interests sake:
$3Bn net book value assets (fairly conservative if DBCT sells brilliantly), 5% discount to book value (seemingly the pessimistic concensus), firesale resulting in a discount of 33%... then $200Ml liquidation costs)
$1.7Bn net assets / 1.8Bn shareholders....
Nearly $1 each. )

(Or:
$3.5Bn in net assets, valued fairly, no fire sale... 1.8Bn shares....just under $2 NTA per share, being sold at $0.095)

All in all, my avg BEPPA price is $0.10, I wouldn't mind BBI being wound up too much. Yes, I'd be worried liquidation costs would blow out... but, I certainly wouldn't be crying. It still would seem likely to pay-out handsomely.

*($240M * 15multi = $3.6Bn... $3.5Bn certainly isn't out of the question).


BANKSA:-Would you mind checking my figures ^^? Am I in the ballpark?

Also, why would you sell BEPPA for $0.50? Just because you want more BBI? Or for another reason? I'm quite content to sit on my pile till reset / June 2011 and get my 1250% ROI.

June 2011, do you think BBI will be worth more than $1.20?

Finally... this 'reset' business... can you explain that to me?

Is that just when 50%+1 of BEPPA holders vote to reset BEPPA to have another 3 year maturity, and get paid out all interest that is due? And, interest rate above the 90DayBankRate (or whatever is used) will likely increase {But, not paid out the face value of $1 for 3 years from the reset date)?

If this was voted on by BEPPA shareholders, would I have the option of receiving par value, or would I be forced to go with the majority?

Finally... reset date... is that something you would expect Early 2010 / Late 2009, if it were to happen? Why? Improved credit rating?


----------



## hardyakka (4 May 2009)

I had a detailed look at the June 2008  the financials to see whether there was any reference to the E35M being held in a trust account or similar and found no such reference.

If BBI had to walk away from this asset they the impact after asset level debt is about $300M. From the viewpoint of a BEPPA holder the simple fact is that this means that $300M of the $2.4B safety cushion disappears, ie the loss is borne by BBI ordinary units. 

However the real damage would be to the confidence of the market in BBI, so this only reiterates the need to realise DBCT and eliminate as much corporate debt as possible as soon as practical.

Overall I do not see this as a deal breaker type matter, as along the track we have to expect to occasionally take a step back for every two forward.

Cheers


----------



## banska bystrica (4 May 2009)

hardyakka,
It's not in the interests of small minority players to press the buttons too hard here and force Euroports into administration. That will delay their payment for years and they may miss out altogether. I think there will be a negotiation on that matter if the Euroports partial sale falls over. The minority put option holders would be silly to cut off their nose to spite their face.


----------



## hardyakka (4 May 2009)

ricee007 said:


> BBI has got over $2Bn in net book value assets, per last financial report ($2.2Bn? I forget, but it's over $2Bn).
> 
> If BBI sells DBCT for the prices thrown around on here ($2.5Bn - $3.5Bn*)... Net book-value assets will be in the $3Bn-$4Bn range.




The NTA of BBI would only increase by the amount DBCT realises in excess of book. From memory DBCT is held at about $1.9B and BBI NTA is $2.4B. If DBCT sells for say $2.6B, then NTA increases by $0.7B to $3.1B.

(BB if my numbers are out pls say so)

Cheers


----------



## banska bystrica (4 May 2009)

The only asset that presents problems is Euroports. PD Ports will be fine once Tesco start utilising their distribution centre at Teesport. That will be up and running in August. Revenues are expected to increase rapidly. The following is from Cargo news yesterday:

_"Growing interest in the port-centric logistics concept has led senior PD Ports executives to predict bullish 2009 volumes as possible buyers circle the company, now officially for sale.

Commercial director Graham Wall predicted a 27% growth in container volumes at Teesport in the financial year which begins on 1 July, despite the recession. The port has seen an 8% decline this year.

The company expects the new Tesco distribution centre at Teesport to be a major source of cargo when it opens on 17 August, with 160,000 pallet spaces generating additional container imports through the port.

Asda is also expected to increase its throughput at the port, while a series of other deals are in the pipeline.

"We’ve secured a deal with a major 3PL that is going to confirm another 17,000teu through the port, " said Wall.

"Logical Link and East Coast Feeder are also driving volumes. Then there are smaller port-centric logistics deals we’ve done, for instance with Tailors of Harrogate, where we’ve secured a contract for 1,000 containers a year coming through Teesport.

"We’ve also secured a deal with Containerships, which acquired Contaz, and we’re now deemed as the Containerships transhipment hub in the UK, which we expect to develop another 20,000teu with their advancement into the Mediterranean.

"If you look at the Felixstowe, Southampton, and Thamesport scenarios:

they’ve been affected by the global downturn in business, but we’ve locked-in key clients that have to import."

PD Ports is for sale following Australiabased owner Babcock and Brown filing for administration in March.

Wall expected the buyer to be a financial entity, with the sale due to be completed by autumn.

Despite uncertainty over its future ownership, executives remain confident that the planned 1.5m teu Northern Gateway development will proceed, with phase 1 expected to begin operations in mid-2013.

Babcock and Brown has given PD Ports approval to spend £700,000 (US$1m) on ground investigations that will allow it to make an accurate assessment of construction costs.

Wall explained that six shipping lines and four major retailers/industrials had issued letters of intent expressing interest in shipping through Northern Gateway.

He added that the group was in discussions with terminal operators, shipping lines and other investors regarding joining the project.

He said: "We’ve interest from three major terminal operators, one of which made an offer that we weren’t in a position to accept because of the sale process. It was a very good offer from a very well known operator. We could be in a confident position where we have multiple offers."_


----------



## hardyakka (4 May 2009)

banska bystrica said:


> hardyakka,
> It's not in the interests of small minority players to press the buttons too hard here and force Euroports into administration. That will delay their payment for years and they may miss out altogether. I think there will be a negotiation on that matter if the Euroports partial sale falls over. The minority put option holders would be silly to cut off their nose to spite their face.




Agreed BB, my post should have referred to the worst possible case scenario. 

I would like to see this matter negotiated and a resolution announced to the market, not a high profile scramble for funds at any cost by BBI. That would be damaging to confidence.

Cheers


----------



## banska bystrica (4 May 2009)

DBCT will not sell for 15X EBITDA. It's a regulated asset and 15X is too much for a regulated port. More like 12.5X which would value it at $2.8Bn. That would add $1Bn in equity to BBI and bring NAV to $1.38.


----------



## ricee007 (4 May 2009)

banska bystrica said:


> DBCT will not sell for 15X EBITDA. It's a regulated asset and 15X is too much for a regulated port. More like 12.5X which would value it at $2.8Bn. That would add $1Bn in equity to BBI and bring NAV to $1.38.



Hmm, as mentioned, 15X was pretty much best case scenario (then proceeded to use under 15X in my calculations). But, I would have thought 12.5X would have been too low. BHP and Rio can get some serious business improvements here.

And, even then, with EBITA of $240M or so in a year and a month...
$240M * 12.5 still is $3Bn, and I'd be jumping up and down excitedly if DBCT sold for $3Bn. I just want them to sell the whole thing, not just 49%. I'll take 100% sale at $2.5Bn or above very happily.

At any rate, my major point is that liqudation value is not a concern for anyone who bought in at under $0.16.

I edited my last post after you replied, so you might have missed it. Any help would be appreciated 



> Finally... this 'reset' business... can you explain that to me?
> 
> Is that just when 50%+1 of BEPPA holders vote to reset BEPPA to have another 3 year maturity, and get paid out all interest that is due? And, interest rate above the 90DayBankRate (or whatever is used) will likely increase {But, not paid out the face value of $1 for 3 years from the reset date)?
> 
> ...



Regards,
Rhys


----------



## banska bystrica (5 May 2009)

ricee007 said:


> Also, why would you sell BEPPA for $0.50?




I said I would sell for 50c *this year*. I would then buy BBI with the funds as I believe BBI will be higher than BEPPA at reset (2012).

If I cannot get 50c for BEPPA this year, then I will wait. I see 50c as achievable if they eliminate all corporate debt, including NZ bonds, with the sale of DBCT and PD Ports. That should ensure BBI's survival.


----------



## Largesse (5 May 2009)

what is the total number of marketable BEPPA securities?

If 10c holds over the next week, i'm stepping in


----------



## ricee007 (5 May 2009)

Largesse said:


> what is the total number of marketable BEPPA securities?
> 
> If 10c holds over the next week, i'm stepping in



Please don't quote me... but, off the top of my head, I THINK that there are 778,000,000 BEPPA in the marketplace.


----------



## Largesse (5 May 2009)

ricee007 said:


> Please don't quote me... but, off the top of my head, I THINK that there are 778,000,000 BEPPA in the marketplace.




thats a damn thin orderbook then considering......
wouldnt mind some more onscreen buy/sell

don't quite know where to enter at this stage, this rampant Dow bull is running hard, it has to run out of puff eventually though....


----------



## ricee007 (5 May 2009)

Largesse said:


> thats a damn thin orderbook then considering......
> wouldnt mind some more onscreen buy/sell
> 
> don't quite know where to enter at this stage, this rampant Dow bull is running hard, it has to run out of puff eventually though....



It trades on low volumes, yes, much lower than BBI.

Can anyone please explain SPARCS to me?
The NZX website, IMHO, sucks.

Is SPARCS interest due on the 17th May?
Will BBI pay this interest now, or roll it over?
Do SPARCS mature in December 2009?
What are SPARCS currently trading at?

Cheers,
Rhys


----------



## my03 (5 May 2009)

who are the potential buyers for dbtc? what are the underlying obstacles obstructing it's sale? are potential buyers able to raise funds to acquire in this current climate? 

also if you dont mind me asking, are you guys that are currently holding both beppa and bbi skewing your holdings towards beppa?


----------



## ricee007 (5 May 2009)

my03 said:


> who are the potential buyers for dbtc? what are the underlying obstacles obstructing it's sale? are potential buyers able to raise funds to acquire in this current climate?
> 
> also if you dont mind me asking, are you guys that are currently holding both beppa and bbi skewing your holdings towards beppa?



BHP and RIO use that port.... and are begging for extended capacity. They (and the other medium sized players that use the port) would use nearly twice the current capcity easily.

BHP and Rio are the main two...but, the minor players could create a consortium (not as likely).

There are also insurance funds / superannuation funds that would love an asset with pretty much guaranteed cash flows. However, arguably, it won't return an appropriately high enough ROI. This is certainly debateable though. I would disagree.

Chinalco is trying to offer Rio a $20Bn line of credit. Wow. If Rio could get this line of credit, and with BHP cashed up (from trying to takeover Rio last year). Could see a very healthy bidding war.

Those holding BBI/BEPPA are skewing, generally, towards BEPPA. I'm only BEPPA.

BBI has the potential to be worth > $1.20 June 2011. BEPPA doesn't. I bought in for (avg) $0.10. I'll be completely satisfied if I just get my $1.20 from BEPPA!

BanksaBys has >4,000,000* BEPPA (IIRC, it could be BEPPA/BBI combined that are over 4M)... he said just recently that he would convert to BBI if BEPPA reached $0.50 this year. Seemingly thinking that if BEPPA are $0.50 this year, if BBI have NTA per share of $1.50 and are corporate debt free, in a rapidly improving sharemarket, then BBI will be worth >> $1.20 June 2011

Personally, I would say there is a 51% chance of BEPPA hitting $0.50. But, of course, that is just speculation on my behalf. If BEPPA hit $0.50 this year (with BBI close behind), there would seemingly be a good chance of BBI being >> $1.20 June 2011.

My risk profile would result in me being content with my 1200% increase and not risking (seemingly 'sure thing') for the risk of going BBI.

Besides... Recently, BEPPA and BBI were trading equally priced. BBI may have, for a moment, even have been more expensive.

BEPPA is owed 4.35c in interest.... BBI is owed $0 in interest.

If BBI and BEPPA are each 10c, and one of them 'owes' you 4.35c....


*I apoligize if anyone thinks this is rude, but, I mean, he has said 'multiples of a million' and '4million' and then 'bought 150,000 more' in this thread. So, if people looked back they could find it without me


----------



## ricee007 (5 May 2009)

My imagination, or the forum doesn't allow post editing past a couple of minutes?

As to obstacles?
Management only accepting a bid for a minority (49%) stake in it would be the main 'risk' in my opinion. Having said that, the management would probably know better than I about if accepting a minority offer would be best or not.

It would have to get governmental approval, but I don't think anyone anticipates that as a problem.

Having the ability to raise enough? Besides the (ever-present) opportunity to use shares to purchase assets / companies... I touched on the ability that BHP has to pay, and the ability that Rio may have to pay. If Chinalco gets blocked by KRudd, Rio would still have the means (IMHO) to offer enough to purchase it, but would be less likely too.

Having said that, BHP MIGHT need the 2.5Bn-3.5Bn to expand ODX. But that has been in SERIOUS planned development for years, the decision to mine was (effectively) made over 3 years ago {pending Govt approval}. That certainly would have already been factored in by BHPs accountants.


----------



## banska bystrica (5 May 2009)

I do not think BHP and RIO are the main contenders for DBCT. My favs are QIC or a consortium of DBCT users not including BHP and RIO. I think the favoured option is for a 49% sale. I would prefer 100% but hey, I'm not running BBI.


----------



## ricee007 (5 May 2009)

banska bystrica said:


> I do not think BHP and RIO are the main contenders for DBCT. My favs are QIC or a consortium of DBCT users not including BHP and RIO. I think the favoured option is for a 49% sale. I would prefer 100% but hey, I'm not running BBI.



Hmm,

I would put money on Rio, to be honest...

BHP seems to like specialising in mining and focusing on just that (not a really diversified company!)... still would surely interest them.

Why QIC? Just rumours you have heard, or logic behind your thoughts?

As I'm sure you know, BBI have said that they are asking for tenders for a 49% sale... but would accept a 100% offer, if the price is right.

The comments regarding 100% seem to have come after the 49% announcment (IIRC). This indicates that maybe (just maybe) an entity has asked BBI if it could buy it out-right.

Buying it outright would make more sense for a user of DBCT, as they could then make decisions regarding it (expansion!), and would be more likely to pay a control premium for that then a life-insurance / investment fund that wants to maximise ROI.

Are you able to tell me when SPARCS matures, and explain about what would happen in a reset to BEPPA? What % vote is needed by BEPPA holders for this to succeed? Would it be 'forced' to everyone if enough people voted, or would people still have a choice if they didn't want to?


----------



## banska bystrica (5 May 2009)

I think RIO are very long odds. I would be very surprised if they were on the shortlist of three. 

DBCT fits QIC's investment criteria perfectly. I also see a consortium involving Macarthur Coal as a definite possibility.

Don't worry about SPARCS, BEPPA, reset dates and possible scenarios. BEPPA is too far off (2012). The main game is asset sales.


----------



## ricee007 (5 May 2009)

banska bystrica said:


> I think RIO are very long odds. I would be very surprised if they were on the shortlist of three.
> 
> DBCT fits QIC's investment criteria perfectly. I also see a consortium involving Macarthur Coal as a definite possibility.
> 
> Don't worry about SPARCS, BEPPA, reset dates and possible scenarios. BEPPA is too far off (2012). The main game is asset sales.



Hmm, perhaps. But, I mean, BEPPA could offer a reset Q42009.

Couldn't it?

But, you are right to a large extent.

I can not fathom BBI falling if DBCT gets 100% sold.
I can BARELY fathom BBI falling if DBCT gets 49% sold.
I can BARELY fathom BBI not selling at least 49% of DBCT.
As long as BBI doesn't fail, I can BARELY fathom them not being able to honour BEPPA for $1.20 June 2011.

So, I can BARELY, BARELY, fathom not getting $1.20.

Having said that, it would be nice to know what happens in the case of a reset, etc.

When SPARCS mature (/if that is likely to get rolled over or paid out, does it mature Dec 2009?), what happens there MAY change if I roll over to BBI from BEPPA. Etc.

EDIT:
1.11M buyers for BEPPA at 0.105.
2M buyers for BEPPA at 0.104
3.19M sellers for BEPPA.

I can't see BEPPA heading south of 1.04 for a long time, despite the ASX200 dropping at the  moment, quite rapidly.


----------



## investorpaul (5 May 2009)

ricee007 said:


> EDIT:
> 1.11M buyers for BEPPA at 0.105.
> 2M buyers for BEPPA at 0.104
> 3.19M sellers for BEPPA.
> ...




BEPPA has in my opinion established itself above the 10 cent mark, unless there is bad news/a long delay in new info it is hard to see it dropping below that barrier easily.

Last week and the week before when it had its run it did have trouble getting over the 12/12.5c barrier so a close above that would be a positive sign from a technical point of view. 

As mentioned though we really do need to see a positive announcement to have the price really march forward, hopefully that is less than 2 months away now.


----------



## Largesse (5 May 2009)

ricee007 said:


> Hmm, perhaps. But, I mean, BEPPA could offer a reset Q42009.
> 
> Couldn't it?
> 
> ...




Ricee07

"Please don't quote me... but, off the top of my head, I THINK that there are 778,000,000 BEPPA in the marketplace. "

Please explain to me how 1.1m on the bid at 10.5c is going to stop 770m odd off screen pushing the price down if it so wishes......


----------



## ricee007 (5 May 2009)

Largesse said:


> Ricee07
> 
> "Please don't quote me... but, off the top of my head, I THINK that there are 778,000,000 BEPPA in the marketplace. "
> 
> Please explain to me how 1.1m on the bid at 10.5c is going to stop 770m odd off screen pushing the price down if it so wishes......



It won't by itself.
I don't think I said that the 1.1m at 10.5c bid will stop it.

I think I provided *SOME* evidence that it is unlikely to* in the short term. This would seem to provide some evidence of a base for the stock. Combined with past market experience, and, and in the past week it seems to have established itself as a >10c stock.

The comment immediately after mine was:
"BEPPA has in my opinion established itself above the 10 cent mark, unless there is bad news/a long delay in new info it is hard to see it dropping below that barrier easily."

It seems some people would agree with me.

Currently, there are more a fair bit more buy orders at 10.4 c or above than there are total sell orders. No-one is selling the stock for under 11.2c. And we have to wait till we get to 12c before we hit a cumulative total of 1M players.

As pointed out, barring bad news, it's nigh on impossible to see this falling under 10c in the short term. IMHO, it's hard to see this falling below 10.5c in the short term. *PERHAPS* 10.4c, I'll concede that. But, recent trading history seems to show it'll hold above 10.5c, or at the very least, above 10c.

*OK, more fairly, that it won't push under 10.4c in the short-term.


----------



## Mitsimonsta (5 May 2009)

I know Ricee from another place. Welcome to ASF.

I am speaking in terms of BEPPA here, but you can basically apply to BBI as well.

From watching what has been going on in the past few days, I feel it safe to say that there is enough accumulators of BEPPA - if only small investors like myself and the slightly bigger fish like IP, BB etc - to soak up unwanted units below 10.5c. I think what Ricee is trying to say is that there is support above the 10c level, and it would take some fairly seriously bad news to push it below that.

While trades have gone in at up to 12c recently, the volumes at that price have been low. When shares come onto the market at <10.5c then they are snaffled up reasonably quickly. I feel that alot of investors are looking at a 10c average buy price on BEPPA, and that is exactly my strategy on the hybrid.

I feel that the sale price of DBCT is somewhat rubbery. It could have some very strong support from the mining sector, either companies straight out wanting to purchase it, or running into a consortium of users as BB suggested. You then have the possibility of pension/super funds looking to get a regulated return on investment. Past that, you might find some infrastructure funds looking to take a slice of the pie also, but that is likely to be in the 20-35% interest region and possibly not quite enough for BBI to sell on it's own.

BB is quite sure that EBITDA for DBCT will be ~$240M for FY10. However, I do not share his enthusiasm for that figure. He has also mentioned 13x EBITDA as a sale amount previously, but his later comments above about a 12.5 multiple is more correct at the higher earnings. I tend to think that 13x is right *IF* the EBITDA is correct. I see it more like $220M-$225M which makes $2.85B-$2.9B.

The difficulty with Pension/Super funds is that they need the highest possible earnings on the lowest multiple to make decent money for their clients. Now if the EBITDA is $200M and they need to pay 14x or 14.5x to secure the facility, then the annualised return is going to be less - to the point of getting a better return from cash once things pick up a bit. If BB's $240M EBITDA is correct, the pension/super funds will come into play.

As a hybrid holder, the more interested parties for the purchase of DBCT, the better the chance of a good price for it.


----------



## banska bystrica (5 May 2009)

I have used $224M for 2010FY EBITDA. 
There are three serious bidders about to be short listed for 49% of DBCT. The Fin Review is spot on with it's mail as per the Gloucester announcement today.


----------



## investorpaul (5 May 2009)

Todays Financial review states:



> Elsewhere, it's said that Macquarie Capital is in the final stages of short-listing three parties for a the sale of a 49% stake in the Babcock and Brown Infrastructure's Dalrymple Bay Coal Terminal.
> 
> A consortium of miners including Xstrata has been sniffing around the asset for more than a year, but it would also make sense for some of the bidders interested in Asciano's port assets to be in the mix.




This means a number of things to me:

1. Firstly as BB also said, I expect this short list to be released shortly or at least rumours to emerge of who is on the list.

2. It still seems that BBI's preference is to sell a 49% stake. BBI management would obviously have run their own figures and would believe that a sale of only 49% will still ensure that the company is in a strong position to survive. Otherwise they would be pushing for a 100% sale.

Initially I thought that the run during part of last week/week before was due to short term traders looking for a "volatile" stock to trade, however it does appear that there are a number of long term buyers accumulating up to a 10 cent average. 

If we are expecting an announcement before the end of the financial year, 55 odd days away, it cant be long before a few more articles are written mentioning the potential buyers.

I must admit my nerves had been swayed a bit with the quote regarding Euroports Put option and 35 m euro break fee. Obviously it is still a fairly unsteady ship, however I dont think it will take all that much (a sale and positive announcement should do it) to steady the ship.


----------



## investorpaul (5 May 2009)

I dont have access to live data at the moment (I'm on a public computer), but as per the asx website (20 minute delayed) BBI and BEPPA again traded at the same price, 11 cents.

I thought when this occurred last week it was a once off, very odd indeed. What are other peoples thoughts on this? Perhaps this is because people are happier with the prospects of the company and therefore dont mind holding equity (BBI) as opposed to debt (BEPPA) even though they rank lower in the event of a wind up


----------



## boff (5 May 2009)

investorpaul said:


> I dont have access to live data at the moment (I'm on a public computer), but as per the asx website (20 minute delayed) BBI and BEPPA again traded at the same price, 11 cents.
> 
> I thought when this occurred last week it was a once off, very odd indeed. What are other peoples thoughts on this? Perhaps this is because people are happier with the prospects of the company and therefore dont mind holding equity (BBI) as opposed to debt (BEPPA) even though they rank lower in the event of a wind up




I think it's just noise. Both prices are so low it's almost inevitable that they'll touch. Once prices move up towards say 20 cents I think a gap will open up.


----------



## banska bystrica (5 May 2009)

I think Macquarie Capital are leaking like a sieve on DBCT. The Fin Review is on to it and news cannot be far off. Everyone has had ample time to get set. No excuses.


----------



## investorpaul (5 May 2009)

banska bystrica said:


> I think Macquarie Capital are leaking like a sieve on DBCT. The Fin Review is on to it and news cannot be far off. Everyone has had ample time to get set. No excuses.




Quick Q BB, why would Macquarie Capital leak news, would it be for strategic purposes so bidders know there is other interest or is it merely to gloat that they are about to complete another multi billion dollar deal???


----------



## fuzzie (5 May 2009)

At a guess I'd say we are in the 20 trading days leading up to 17 May for calculation of the VWAP for SPARCS redemption. Even if you think the SPARCS reset will get voted through, it wouldn't hurt to have the share price bumped up a bit, just in case.

On the other hand if you think the SPARCS holders are going to reject the reset terms I'd expect BBI holders to be bailing out about now.


----------



## Mitsimonsta (5 May 2009)

investorpaul said:


> Quick Q BB, why would Macquarie Capital leak news, would it be for strategic purposes so bidders know there is other interest or is it merely to gloat that they are about to complete another multi billion dollar deal???




You'd have to say both IP.

The gloating comes from an MQG company advising a BNB company. 18 months ago, that was absolutely unthinkable. You would have been sent to the loony bin.

They would also be trying to pump the price up - while the advising deal would be confidential, you can bet there would be much better commission if the sale breaks the market expectation of say $2.5Bn-$2.6Bn.


----------



## ricee007 (5 May 2009)

Mitsimonsta said:


> You'd have to say both IP.
> 
> The gloating comes from an MQG company advising a BNB company. 18 months ago, that was absolutely unthinkable. You would have been sent to the loony bin.
> 
> They would also be trying to pump the price up - while the advising deal would be confidential, you can bet there would be much better commission if the sale breaks the market expectation of say $2.5Bn-$2.6Bn.



Hmm, well, it is looking more likely to be a 49% sale....

So, what price would that get?

If 224*12.5 is the fairest evaluation we can come up with... and that includes a control premium.....

Would 112 * 11.5 = $1.2-1.3Bn be a more realistic sale price?

Would 'the market' like that?

How much corporate debt does BBI have? 2.5Bn or so?


----------



## banska bystrica (5 May 2009)

ricee007 said:


> How much corporate debt does BBI have? 2.5Bn or so?




$1.3Bn................................................................................................


----------



## hardyakka (6 May 2009)

banska bystrica said:


> I think RIO are very long odds. I would be very surprised if they were on the shortlist of three.
> 
> DBCT fits QIC's investment criteria perfectly. I also see a consortium involving Macarthur Coal as a definite possibility.




DBCT is an prime infrastructure asset located in QLD, so I see QIC as being a lead member of a consortium bidding for the asset. Consider, over time the predictable regulated income stream matches increasing superannuant income demands and there is political benefit if income generated in QLD is retained for the benefit of Queenslanders.

Secondly I would guess a consortium of the miners, including BHP and RIO. I do not see either of the big miners (BHP or RIO) seeking outright control of the asset.

Thirdly I would see some of the big offshore pension funds in a consortium with some Australian funds. From the pension fund  perspective it is a regulated steady income stream that is an exposure to a base resource near major markets in a politically stable economy.

Cheers


----------



## banska bystrica (6 May 2009)

Very smart accumulation happening in BBI/BEPPA. The buyer just cleaned out the stack at 11c and did the same in BEPPA at 12c.


----------



## Mitsimonsta (6 May 2009)

Until the prices dropped this afternoon BB.....

Rule number 1 of buying into BBI/BEPPA - wait until 2pm or later


----------



## investorpaul (6 May 2009)

Mitsimonsta said:


> Until the prices dropped this afternoon BB.....
> 
> Rule number 1 of buying into BBI/BEPPA - wait until 2pm or later




It happens every day. 

People jump in all excited in the morning and then after lunch it tappers off.

Rule 2 if you want to sell BEPPA sell in the morning.


----------



## ricee007 (7 May 2009)

Clearly it's 5 hours to open... but it's interesting to see what early indications are, and if they often hold true...

137,000 sellers at 0.12
150,000 at 0.13
100,000 at 0.135
203,000 at 0.14
1 at 0.145
50,000 at 0.15
55,000 at 0.185
60,000 at 0.194
15,000 at 0.2
110,000 at .21.
Then Others Off Screen.

Total 1.7M sellers, 3M buyers.

But, most expensive buyer is at 0.113 -<Lower than yesterdays close.

This shows that there may be plenty of accumulators. This generally means that the current price is likely to be supported, and, hopefully, push slowly but steadily up. It's hard to see it fall, barring any bad news.

Another indicator of this is the fact that there are 6 individual buyers at 10c, averaging only $3,000 each.

It seems that relativly few people are willing to sell BEPPA, resulting in only upward price movement, till any bad news (if any) is released.

I'm a bit dissapointed we haven't seen massive gains, since we are well inside the 20days M.Avg for SPARCS. But, it still climbed a bit yesterday -<Just not massivly.

IF BEPPA holders don't reduce... It'll take less than $17,000 of trades before we are up to $0.13, up over 14% today. This just depends on how desperate some BEPPA holders are to sell....

Similar story, just more pronounced, with BBI.
*50* individual buyers at 10c, buying 4.2M BBI.
22.3M buyers, 18.4M sellers.

Dow Jones +99, FTSE+55, HangSeng+404, NASDAQ+6, Nikkei+149, S&P+15, SPIFutures+8.

My prediction: Green day, especially given overnight USA jobloss news being good... and, an especially green day for BEPPA, and a pretty good green day for BBI.

Time will tell just how useless predictions with 5 hours to open are


----------



## mark_au (7 May 2009)

ricee007 said:


> Clearly it's 5 hours to open... but it's interesting to see what early indications are, and if they often hold true...
> 
> 137,000 sellers at 0.12
> 150,000 at 0.13
> ...






gday ricee007, the only thing that we can predict with certainty is that we're both up too early in the morning LOL

But indeed, things are looking a lot better.. the news from the states is getting more positive  (unless the car industry implodes further). The RBA here was optimistic (in spite of what Turnbull was trying to say on the 7:30 report last night). So all in all, things may be on the way up including bib and beppa.. ;-)


----------



## ricee007 (7 May 2009)

I'm in Leeds (UK) (till July, since January)  Only 10PM here.

Regarding general sentiment dragging BBI/BEPPA...

All Major Markets are green.

AU$1 Buying USD$0.7482 (up 0.0075!)... and, even better, 0.4946 GBP (up0.0049,  ).

1 AU is  1.28NZDollasr, which, as I understand it, is also good news for BBI -< up .1.

BEPPA buyers/sellers haven't changed in the last two hours (much).


----------



## banska bystrica (7 May 2009)

ricee007 wrote: _"I'm a bit disappointed we haven't seen massive gains, since we are well inside the 20days M.Avg for SPARCS. But, it still climbed a bit yesterday - Just not massively."
_

How on earth do you expect massive gains when they still haven't sold DBCT or PD Ports? They haven't reduced their debt substantially so nothing is happening to the BBI/BEPPA price until we get some concrete news. We might go up or down a few cents here and there but until corporate debt gets reduced in a big way, we will not see 25c+.


----------



## ricee007 (7 May 2009)

banska bystrica said:


> ricee007 wrote: _"I'm a bit disappointed we haven't seen massive gains, since we are well inside the 20days M.Avg for SPARCS. But, it still climbed a bit yesterday - Just not massively."
> _
> 
> How on earth do you expect massive gains when they still haven't sold DBCT or PD Ports? They haven't reduced their debt substantially so nothing is happening to the BBI/BEPPA price until we get some concrete news. We might go up or down a few cents here and there but until corporate debt gets reduced in a big way, we will not see 25c+.



People believing that the higher BBI goes, the less dilution there will be. It's in the holders of BBI's interests to want BBI price to be particularly high now. Even more so than normal.

Isn't it? *Is any of my analysis incorrect?*

The 'leak' to the FinReview regarding 3 solid buyers also did little for the shareprice -<I thought that may have had a bigger impact.* Why is "concrete news" a necessary precursor for a significant increase in shareprice?* _Leaks and rumours help substantially_. To be honest, I expected more rumours floating around this week, as was rumoured on here that that might happen. Turns out, only one leak (that I am aware of) was leaked (the FinReview's article).

Finally, I would call 15c a very substantial gain (One that I thought was optimistically achievable by now) (I wasn't realistically hoping for 25c).

*Do you think it was unnreasonable to have hoped for BEPPA to be 15c by now?*

So, in conclusion... how could I have thought that BBI could have increased 'massively' since 20days prior to SPARCS meeting. (for example, from 9c to +50% higher at 13.5c)... on leaks of DBCT sale, pressure on BBI due to SPARCS meeting, market sentiment improving dramatically (look how high the ASX has climbed recently -meaning credit will be easier to obtain in the nearer future).

BBI looks set to open at 11c. This is a greater than a 22% increase. This is significant. Yes, I was hoping for even more (and, still believe that BBI will rise today), but, I was right in expecting it to rise fairly significantly... just not as much as I had hoped.

Does that make sense?


----------



## ricee007 (7 May 2009)

banska bystrica said:


> ricee007 wrote: _"I'm a bit disappointed we haven't seen massive gains, since we are well inside the 20days M.Avg for SPARCS. But, it still climbed a bit yesterday - Just not massively."
> _
> 
> How on earth do you expect massive gains when they still haven't sold DBCT or PD Ports?



Like I said, in the 20 days before SPARCS meeting, i was hoping for a 'massive gain'.

BBI has increased from about 9c (would 8.9c be a fair call?) to currently 12c.

That's a 35% increase.

So, yes, that's a significant gain....... 35% probably, to be fair, is probably 'massive', but I was more hoping for 50%. Hence, my statement alluring to the fact that we've had good gains, just not as massive as I had hoped. I suppose we still have over a week left though.

And, just for laughs, BEPPA jumped to 12.5 (pushing 13c, as that's lowest sell offer, with well over twice as many buyers compared to sellers)...

So, About 9.5c - 12.5c... Or, a significant gain, of over 30% for BEPPA.

So, how can I expect 'massive gains' in the 20 days prior to SPARCS meeting? We are, ATM, ~+35% and ~+30% already, with over a week left.

That's how.


----------



## Largesse (7 May 2009)

Ok, i have now (finally) taken my position in BEPPA. So probably best all you guys sell now.
Am sufficiently comfortable with global macro at the moment to wade into the market. BEPPA makes me a bit more comfortable knowing that I'm ranking ahead of equity holders. Short term trading is looking strong enough.

In and holding until maturity.


----------



## Largesse (7 May 2009)

just a bit of strategic planning here aswell:

Should SPARCS elect to convert into common equity, would it be reasonable to expect a big switch out of BBI into BEPPA? SPARCS conversion is in effect doubling the size of the equity pool, would make a few people pretty uncomfortable if they have picked up longer term holdings in the last few months.

Similarly, if SPARCS elect to rollover and not convert, would we expect a migration out of BEPPA from holders that were hedging their bets so to speak, and are now more comfortable that the potential dilutionary effect has been removed?


----------



## banska bystrica (7 May 2009)

Largesse said:


> SPARCS conversion is in effect doubling the size of the equity pool




Don't agree about doubling the size of the equity pool. More like adding 10% to it.
I sold some BBI this morning at 12c and bought BEPPA at 12.5c. Trying to buy some more at 12.5c but a few bids jumped in front at 13c.


----------



## investorpaul (7 May 2009)

Quiet a good day for BBI and especially BEPPA.

It was good to see BEPPA close near its highs 0.133 c (high was 0.135) and BBI 0.12 (high of 0.125).

Hopefully there is more green tomorrow , there will probably be some more resistance once/if it heads towards 15c in my opinion.

I still have room to accumulate more units before my avg hits 10c and will prob look to do so if we see another dip. Interesting times ahead.


----------



## Largesse (7 May 2009)

investorpaul said:


> Quiet a good day for BBI and especially BEPPA.
> 
> It was good to see BEPPA close near its highs 0.133 c (high was 0.135) and BBI 0.12 (high of 0.125).
> 
> ...




Not that technicals are really much use on these kind of stocks but to me next resistance for BBI is 14c and BEPPA is 15c


----------



## hardyakka (7 May 2009)

Nice to see BEPPA move the  way it has, my only whinge is that it is getting harder and harder to pick them up at a price below 12 cents  My strategy is now to simply hold and wait.

There seems to be a lot of concern regarding dilution of BBI if the SPARCS vote does not go through, with many wanting to switch to BEPPA. My view is that SPARCS is irrelevant and if anything will provide a buying opportunity should many BBI holders panic. 

Either way I agree with BB on this issue in that the key issue is the asset sales, and should SPARCS not go through the effect on the BBI price will be a few cents maximum only..big deal.

Either way the impact for BEPPA is neutral if SPARCS goes through or positive if not (BEPPA will have higher priority ).

Cheers


----------



## Mitsimonsta (7 May 2009)

Largesse said:


> Not that technicals are really much use on these kind of stocks but to me next resistance for BBI is 14c and BEPPA is 15c




After today's trade, I tend to agree with you, but maybe not so much as a 'technical' resistance, but in more of a market 'Mental' resistance.

I think we have a pretty solid support set at 10-10.5c on both BBI/BEPPA, I doubt it will get back there unless bad news (SPARCS not being reset mainly, but also PD ports with a low sale price, or difficulty in refinancing other projects elsewhere) hits the market.

It will be interesting to watch tomorrow. I have a feeling that we are going to see yet another 'ASX Profit-taking Friday' which should knock off approximately 1c off the price of BEPPA anyway. Unless the US goes gangbusters again tonight, and then the US futures hold up during our trade, there will be alot of day traders and short-term holders cashing out for the weekend.

So, prediction is BEPPA closing the week at 12.2c - lets see how right I am.


----------



## hardyakka (7 May 2009)

Mitsimonsta said:


> So, prediction is BEPPA closing the week at 12.2c - lets see how right I am.




The results of the US stress tests on banks will be released tomorrow and the comment from the Fed is that they will reassure the market, positive double speak.

I think we will see an upward movement of a cent or more, this is because of the above and the substantial buying volumes in BBI. Any day trader trading IMO is now irrelevant as positions are being built by some big players.

The SPARCS vote if anything will cause persons to move from BBI to BEPPA thus resulting in upward price pressure. But then to me SPARCS is minor issue.

Cheers


----------



## Elvis3577 (8 May 2009)

Hi guys!
I'm just a new member to this thread. And I've been studying the BBI pages with great interest.And even though a lot goes over my head ( especially most abbreviations and the math/ economics ), I'd like to think that I get the core message:
Yes there's a great risk to this share, yet there 's some healthy foundation to it.
Yes there's a lot of panic, hence the highly undervalued share price.
( Market trading to some degree is pure emotion and has got nothing to do with the company's performance )
So to me this , in general , is an opportune time to become a millionaire.
And I've been on the 'other side' , where I've lost about a 100 grand about twelve years ago. The opportunities ahead though , are unheard of. It definitely beats working for a boss from 9 to 5....
So in the spirit of ' nothing ventured nothing gained ', I've refinanced the house and bought just over 1M BBI / BEPPA shares in the ratio of 6:1.
And I've put them away safely in my 'July1 2012' drawer. Simply betting on their survival....
Worst case scenario.... I'll break even.


----------



## ricee007 (8 May 2009)

Elvis3577 said:


> Hi guys!
> I'm just a new member to this thread. And I've been studying the BBI pages with great interest.And even though a lot goes over my head ( especially most abbreviations and the math/ economics ), I'd like to think that I get the core message:
> Yes there's a great risk to this share, yet there 's some healthy foundation to it.
> Yes there's a lot of panic, hence the highly undervalued share price.
> ...



First, I appreciate your spirit.

But, sorry, did you say 5M BBI and 1M BEPPA? That is an interesting choice. BEPPA is a safer investment than BBI. 

At conversion date, with BEPPA, you are (assuming company is going along ok) guarantteed a 900% (or so) return on investment. With BBI, you are risking your $500,000 or so, (hoping to make much more than 900%, but.)...

If I had as much balls as you, I think I'd still play it a bit more safer.


----------



## prawn_86 (8 May 2009)

Elvis3577 said:


> Worst case scenario.... I'll break even.




To me it sounds like worst case scenario you will lose the lot including your house.

I have no interest in BBI and have never looked at them before, but good luck...


----------



## Elvis3577 (8 May 2009)

Okay, sorry for the confusion

I've bought just over a M shares in totall. In fact 170K Beppa and the rest in BBI.
Also, I've ( only )used about half the equity to finance this.
By putting it in a drawer doesn't mean I'm not following the market/ read the news etc. , and listen to everything that you guys have to share...
I just meant that I'm in it for the long haul ....
My reasoning ( provided the comp. survives of course ! ) was that 170K times a $1.20 still gives me about $200K, which repays me my outlay 4 now + the loss from a decade ago....
I certainly would have preferred to buy Beppas in bulk, but there's hardly any trading in them @ the mo... So I chose to go this way instead for now. And purchase some more Beppas when I can. At least I'm on the train right now , and it's not leaving me behind. Time can prove me right or wrong, but everything is always easy in hindsight !!
Again , I'm aware of the risks involved. But like I've said b4, and many others have said one way or the other : Nothing ventured  nothing gained. If one doesn't want to take the risk, buy blue chips and be satisfied with a 10% pa or don't invest in shares at all !! Simple....


----------



## investorpaul (8 May 2009)

Elvis3577 said:


> Okay, sorry for the confusion
> 
> I've bought just over a M shares in totall. In fact 170K Beppa and the rest in BBI.
> Also, I've ( only )used about half the equity to finance this.
> ...




Obviously I share your enthusiasm for BBI and BEPPA given i am also a shareholder.

That certainly is a bold move you have made to refinance your home, etc. Just dont get in the trap of chasing your losses.

On another note volume is pretty low today especially for BEPPA, definitely a sign to me that there are long a number of longer term holders who are unwilling to sell for a quick buck.

BBI has a ton of buyers between 10 and 11.5c


----------



## investorpaul (8 May 2009)

Wow BEPPA shot up to 15.5 and BBI up to 13.5. I thought it was going to take a break/pull back a bit today ..... guess i was wrong


----------



## investorpaul (8 May 2009)

Somethings going on here, way too much buying for just an average day or sustained up trend.

Surely a speeding ticket is on the way


----------



## Mitsimonsta (8 May 2009)

BEPPA

Total profit/loss: + $3,134 / + 121.3%

*TODAY: + $0.052 / + $1,607 *

Wow.

BB's a millionaire!


----------



## awg (8 May 2009)

Mitsimonsta said:


> BEPPA
> 
> Total profit/loss: + $3,134 / + 121.3%
> 
> ...




he probably was before he started

Elvis will be singing as well

hopefully some trades go through in the close auction and take it back up to near 18c

what a nice friday


----------



## Mitsimonsta (8 May 2009)

I had +$853 on the portfolio yesterday, and am still at +$1000 today. Been a nice way to end the week.


----------



## investorpaul (8 May 2009)

Mitsimonsta said:


> BEPPA
> 
> Total profit/loss: + $3,134 / + 121.3%
> 
> ...




The office loves me.

A mate got wind that I bought BBI a few weeks back and spread the news to another colleague who threw a bit on it.

I tried to talk them out of it and said do your own research etc, but they wouldnt listen and said that they would take it as if they were at the casino or the races.

Again i explained the potential to lose all their money but they said they didnt  care and went ahead. So far it has panned out alright and they were running around the office before. I had to calm them down and say it will prob pull back a little bit and that they need to look at the long term pic not just the gains made or lost today and tomorrow.

Never the less they are excited.


----------



## nathanblack (8 May 2009)

nice gains today on both bbi/beppa, new support has been found now above 10c. not sure where the next resistance is, too hard with this heavily discounted stock to use T/A.

keep in mind though that the larger part of todays gains were achieved in the closing auction and at low volumes. the average price for the day is closer to 15/17cents bbi/beppa.

still a positive move. and still no news. just gaining market popularity maybe because they keep dealing with each issue as it arises. less daytraders as more of us buy and hold or perhaps a pending announcement


----------



## Tysonboss1 (8 May 2009)

What a massive day. I put in a bid for some beppa for 13.oc thinking it had a good chance of going though at some stage this afternoon, I was thinking the usual friday weakness might push it though, the share price just rocketed away.

I will have to reassess on monday, Hopefully some profit takers will give me a chance to buy some more.

Any thoughts on what has caused this strength, Maybe the results of the USA bank stress tests, Maybe confidence in the banking sector will give people confidence in BBI's refinancing.

Or maybe leaks about the DBCT sale, I could just imagine the lunch time conversations between macqurie staff.


----------



## banska bystrica (8 May 2009)

Tyson,
I believe the last option is close to the mark. They leak like a sieve. Notorious for it.

Also, I don't know who said it but the theory about BEPPA being weaker in the afternoon got blown out of the water this week. Really guys, trying to short term trade and predict short term price movements is fair dinkum guess work. I prefer to do the research, buy low and hold. That 800,000 BBI parcel I bought at 2.5c in November is looking ok for the moment. Long way to go. Asset sales are still the key to unlocking the inherent value in BBI and therefore BEPPA.


----------



## Largesse (8 May 2009)

banska bystrica said:


> Tyson,
> I believe the last option is close to the mark. They leak like a sieve. Notorious for it.
> 
> Also, I don't know who said it but the theory about BEPPA being weaker in the afternoon got blown out of the water this week. Really guys, trying to short term trade and predict short term price movements is fair dinkum guess work. I prefer to do the research, buy low and hold. That 800,000 BBI parcel I bought at 2.5c in November is looking ok for the moment. Long way to go. Asset sales are still the key to unlocking the inherent value in BBI and therefore BEPPA.





Banksa, i think i'm starting to hear what you have been hearing from your 'insto' mate recently.
I got moderated out on HC but yeh... lets just say the whispers are getting louder...


If this isnt TOO private, but how many of these are you holding now, BBI/BEPPA combined?


----------



## Viva_Las_Vegas (8 May 2009)

Mitsimonsta said:


> I had +$853 on the portfolio yesterday, and am still at +$1000 today. Been a nice way to end the week.




Mitsi,

Me too, entire portfolio up appro $8k.

Big for me.

I must thank you again for encouraging me to hold HFA, it has done well thus far! So THANKS!!!!

I hope we see BBI rise along with BEPPA.

Obviously Fridays meeting is not scaring anyone away! Or is it those whispers people are referring to?


----------



## fuzzie (8 May 2009)

From my perspective BBI/BEPPA is at the moment just being swept along with the tide. I think a lot of sidelined money is going back in. Many other unloved infrastructure and high debt companies of the last year are going up at the same time, it's not just BBI, check out BBP, MMG etc. Even INF is well up when it didn't hit the lows of the rest of the BB stable.

The potential is still there for this to be a bear market rally. If it were truly a value driven revaluation of BBI company prospects BEPPA should be way up. As someone said earlier. If BBI > 0, BEPPA value is 100+. A proper discount of beppa back to market rates should see it trading 50+ at least.


----------



## hardyakka (8 May 2009)

Largesse said:


> Banksa, i think i'm starting to hear what you have been hearing from your 'insto' mate recently.




I am 100% BEPPA and am pleased at the movement today, but there is bound to be a small pullback on Monday. Also I have heard similar commentary.

Cheers


----------



## ricee007 (9 May 2009)

hardyakka said:


> I am 100% BEPPA and am pleased at the movement today, but there is bound to be a small pullback on Monday. Also I have heard similar commentary.



The weekend break kinda came at the right time. Gives time for more positive rumours to spread. Maybe time for people to reasses their positions and decide to take on some more risk

BEPPA doesn't seem to have many sellers, and, surprisingly, so far not many profit-takers.

If the market is up Monday (it does have momentum...), then I can't see BEPPA falling. If the market is flat Monday, I would be quite surprised if BEPPA ended below 17c (hell, I'd be surprised if it didn't challege $0.2).

Sure, if the world dies over the weekend, sure, it may head to 15c or so... but.


----------



## Largesse (9 May 2009)

with a strong dow tonight we will see BEPPA $0.20 punched through on opening spike easily. will most likely pull back reasonably sharply, probably to around 0.17, then hopefully have another crack at a leg up.

Thats what i'm predicting anyway, not that im going to trade it.


----------



## hardyakka (9 May 2009)

There is one thing that I think we will all be agreed upon.

I would like to thank BB for drawing our attention to this stock and also for providing research commentary of a superb quality. 

I have been directly involved in infrastructure and property for decades and through my own research have not been able to fault his commentary, if you knew me you would appreciate that that is a heck of a compliment. 

I also read the posts on that other forum that I do not exist on.

Very simply a superb job BB and a heartfelt thanks.

Cheers and at the survivors party there is a bottle of 2004 Grange waiting for you from me.


----------



## hardyakka (9 May 2009)

Largesse said:


> with a strong dow tonight we will see BEPPA $0.20 punched through on opening spike easily. will most likely pull back reasonably sharply, probably to around 0.17, then hopefully have another crack at a leg up.
> 
> Thats what i'm predicting anyway, not that im going to trade it.




Do we really care what the price will on a daily basis? I think not as it is the end result that we are interested in, but lets be honest it is great fun to speculate

Cheers


----------



## Mitsimonsta (9 May 2009)

investorpaul said:


> The office loves me.
> 
> A mate got wind that I bought BBI a few weeks back and spread the news to another colleague who threw a bit on it.



Don't share your secrets any more. They pushed up the price for the rest of us 



banska bystrica said:


> Also, I don't know who said it but the theory about BEPPA being weaker in the afternoon got blown out of the water this week. Really guys, trying to short term trade and predict short term price movements is fair dinkum guess work.



That was me BB.

It was simply an observation that BEPPA opened with strength then died in the afternoon, closing a near-opening price. It did this for a while (about a week and a half), enough to show a trend.

But yes you are deadset correct about trying to predict the SP on a stock like this. You can only observe and extrapolate based on what you have seen.




Viva_Las_Vegas said:


> Mitsi,
> 
> Me too, entire portfolio up appro $8k. Big for me.
> 
> I must thank you again for encouraging me to hold HFA, it has done well thus far! So THANKS!!!!



Congrats mate. You just need to have patience, yet know when to jump as things turn sour but that is easier said than done. You bought in at the bottom of the market, so all you needed to do is chill out and wait a while.

You wouldn't buy into a stock that you thought was going to fall. Wait for the rise, and then execute a sell when you see the gains made. Or, buy into a bigger, more stable company with good long-term dividends and take a longer-term view. It's much less stressful, trust me.

I always say "Never trust anyone that says 'Trust me'" by the way



hardyakka said:


> There is one thing that I think we will all be agreed upon.
> 
> I would like to thank BB for drawing our attention to this stock and also for providing research commentary of a superb quality.
> 
> ...




x2.

Except the Grange. While I have had a nice rise, I am not rich enough to afford Grange (yet). There will be something though. I don't think BB will need to pull out his wallet that night AT ALL.  

I am going to leave BEPPA accumulation now, as there is simply too great a Delta between the cost average of my shares and buying in for more. If I was able to get more for 13c, then I would.

I am going to look at consolidating some of my smaller holdings, and diversify into a couple of new market sectors. I am seriously overweight on BEPPA now and need to invest 'against' it in order to follow my investment strategy. While the SP rise is appreciated, there are issues and problems created by it.

Cheers all, just cracked a beer.


----------



## Tysonboss1 (9 May 2009)

hardyakka said:


> I would like to thank BB for drawing our attention to this stock and also for providing research commentary of a superb quality.




Yes, thanks BB.

While I hope we have all conducted our own research, It was definatly your original comments that pointed me in the direction of beepa, So far so good.

Even if this current rise is just a flash in the pan and we do drop back on monday (which I hope we do) I feel very confident holding onto this stock, I am on board for the big win on this one.


----------



## investorpaul (9 May 2009)

fuzzie said:


> From my perspective BBI/BEPPA is at the moment just being swept along with the tide. I think a lot of sidelined money is going back in. Many other unloved infrastructure and high debt companies of the last year are going up at the same time, it's not just BBI, check out BBP, MMG etc. Even INF is well up when it didn't hit the lows of the rest of the BB stable.




Good point you make there, If i get some time later I might do a table of all REIT and similar infrastructure funds with the lowest price they hit, current price and percentage gain.

It will be interesting to see where BBI stands in relation to others.


----------



## Largesse (9 May 2009)

investorpaul said:


> Good point you make there, If i get some time later I might do a table of all REIT and similar infrastructure funds with the lowest price they hit, current price and percentage gain.
> 
> It will be interesting to see where BBI stands in relation to others.




I think you'll find that BBI is moving on news that Asciano potentially has multiple takeover bidders. Asciano hold some substantial infrastructure assets, particularly some PORTS.

If we see a good valuation on their ports, then geewillackers, we may be in for a ride....

i'm looking to margin into Asciano on monday provided it doesnt gap up too much....


----------



## investorpaul (9 May 2009)

Largesse said:


> I think you'll find that BBI is moving on news that Asciano potentially has multiple takeover bidders. Asciano hold some substantial infrastructure assets, particularly some PORTS.
> 
> If we see a good valuation on their ports, then geewillackers, we may be in for a ride....
> 
> i'm looking to margin into Asciano on monday provided it doesnt gap up too much....




I hold the same view. Even though the entire market has moved ahead and alot of property/infrastructure funds have seen strong gains, BBI has outperformed because of Ascianos situation, the impending annoucement of the sale of assets and the fact that it is perhaps one of the most oversold stocks


----------



## investorpaul (9 May 2009)

Please see the attachment for an excel spreadsheet showing current market price, 52 week low and percentage gain.

I included both Property Trusts because they have been hit hard over their debt levels and utilities, the sector which BBI is included in.

As of yesterdays close BBI has had a 700% increase from its 52 week low, the next biggest mover is 305% for VGP and the average for all the stocks is 118%. Even if we remove yesterdays gains BBI still performed stronger than others.

As per the discussion above, it was mentioned that BBI may just be running along with the rest of the market and those stocks that had been oversold.

While I believe some of the gains would have occured to general market sentiment the current percentage gain on BBI is far greater than any of its peers. I believe this highlights what we have been discussing for the last couple of months. I.E that BBI has been massively oversold (along with BEPPA) and that the sale of assets should ensure the security of the company.

Although we are not out of the woods yet, such strong gains in comparison to the rest of the property trusts/utilities indicates to me that the market is starting to see the long term potential for BBI/BEPPA (if a sale of assets occurs). This in my opinion is also evident by the market depth/transactions over the last couple of weeks where it appears to have moved from a stock that people were buying for short term gains/trades to one where there is a buy/accumulate/hold strategy.


----------



## Largesse (9 May 2009)

investorpaul said:


> Please see the attachment for an excel spreadsheet showing current market price, 52 week low and percentage gain.
> 
> I included both Property Trusts because they have been hit hard over their debt levels and utilities, the sector which BBI is included in.
> 
> ...





You're average worked out to be 118% on what many would have called high risk securities.

For comparisons sake lets look at the market movers

RIO - 52w low: $29.91, Current: $71.60, %Gain 139%
BHP - 52w low: $20.00, Current: $35.31, %Gain 77%
CBA - 52w low: $24.03, Current: $36.74, %Gain 53%
NAB - 52w low: $15.85, Current: $22.78, %Gain 44%

average - 78.25%

a sizeable difference, but not that big when considering the difference in risk.


pretty much what im saying is we still got legs in this


----------



## banska bystrica (9 May 2009)

investorpaul said:


> Please see the attachment for an excel spreadsheet showing current market price, 52 week low and percentage gain.
> 
> I included both Property Trusts because they have been hit hard over their debt levels and utilities, the sector which BBI is included in.
> 
> ...




I agree wholeheartedly with you comments. I note you haven't included BBP in your table. I also own a few of them and am pleased with their performance. My average is a tick over 5.2c. I see them as higher risk than BBI and not necessarily higher reward, hence my smaller position in BBP.


----------



## investorpaul (9 May 2009)

banska bystrica said:


> I agree wholeheartedly with you comments. I note you haven't included BBP in your table. I also own a few of them and am pleased with their performance. My average is a tick over 5.2c. I see them as higher risk than BBI and not necessarily higher reward, hence my smaller position in BBP.




I typed it up pretty quick, so I may have missed a few. I will add/update later, so if anyone knows of any other stocks that should be included, let us know?


----------



## Luciano (9 May 2009)

Hi There,

Thoroughly enjoyed reading this fantastic thread over the last few months. I've bought some BEPPA, but have been trying to pick up some BBI at a good price over the last few days and the shares have just missed my buy mark a few days running... and now they appear to be running over the hill with me desperately trying to catch up with them! Of course, what happens on Monday will be anyone's guess, but I am hoping BBI gets a speeding ticket and replies in the standard way. Fingers crossed this leads to a few people taking profit and then some traders jumping on the bandwagon with some short trades, so temporarily forcing the price down so they can then long it later in the day... Do you guys reckon I might be hoping in vain? Leaks from Macquarie dudes involved in the DBCT sale, Long term holders jumping in, even funds? another green day in the US will snatch this baby from my grasp again? I worry that if I wait too long what with the impending sale of DBCT, I'll never get a good price!


----------



## my03 (9 May 2009)

The discussion on this thread also got my initial attention of this stock, and I must thank all involved in here for their input. 

I bought in at .108 and have been rewarded by this spike in sp, I would of bought more but i was a bit cautious as it was my first trade in a few months. I guess for now, I'll just sit on it and see what it does, I would like to add more to my portfolio at a higher price but it's currently my only holidng so I might not want to skew my portfolio heavily towards one stock. 

It seems like stocks such as bbi, have a massive gap between the NAV of the stock and what the market is pricing them at. Have you guys got your eyes on other stocks that have been heavily discounted by the market? Perhaps some REITs, don't mean to go off topic, but I thought I'd ask the question after the spreadsheet by Paul was brought up. 

Cheers


----------



## cbrendan (9 May 2009)

my03 said:


> The discussion on this thread also got my initial attention of this stock, and I must thank all involved in here for their input.
> 
> I bought in at .108 and have been rewarded by this spike in sp, I would of bought more but i was a bit cautious as it was my first trade in a few months. I guess for now, I'll just sit on it and see what it does, I would like to add more to my portfolio at a higher price but it's currently my only holidng so I might not want to skew my portfolio heavily towards one stock.
> 
> ...




Also interested in what the bbi/ beppa faithful are diversifying their portfolios with currently.

Cheers to all holders


----------



## Tysonboss1 (9 May 2009)

cbrendan said:


> Also interested in what the bbi/ beppa faithful are diversifying their portfolios with currently.
> 
> Cheers to all holders




MCW is my largest holding just ahead of Beppa, But it has already recovered off it's lows of 10c to 36.5c. Still alot of upside in this stock though and it's still paying a good div.

my holdings as of friday are, from largest to smallest.

MCW
BEPPA
Sims Metal 
APA
BHP
Australian automotive holdings
TOL
CBA
BBI
arrow energy
Beach petroleum
Villiage roadshow
fkp property

the first 2 make up 50% of my holding.


----------



## ricee007 (9 May 2009)

Luciano said:


> have been trying to pick up some BBI at a good price over the last few days and the shares have just missed my buy mark a few days running... and now they appear to be running over the hill with me desperately trying to catch up with them! Of course, what happens on Monday will be anyone's guess, but I am hoping BBI gets a speeding ticket and replies in the standard way. Fingers crossed this leads to a few people taking profit and then some traders jumping on the bandwagon with some short trades, so temporarily forcing the price down. Do you guys reckon I might be hoping in vain?




At the moment, all markets shown on Commsec are Green.
BBI has 385 buyers buying 31.1M BBI and 42 sellers selling 2.6M BBI
BEPPA has 72 buyers buying 4.4M BEPPA and 18 sellers selling 1.5M BEPPA.

BEPPA lowest sell is above the last close, and BEPPAs highest buy is yesterdays close.


MacqCap can leak  more over the weekend.

Closer to DBCT release.

Time for people to research BEPPA/BBI more over the weekend

Whilst anything could happen, I think you are being overly optimistic.


----------



## jeffTH (10 May 2009)

cbrendan said:


> Also interested in what the bbi/ beppa faithful are diversifying their portfolios with currently.
> 
> Cheers to all holders




Hi Brendan

I also wonder what other BBI/BEPPA followers invest in.  I am only into BEPPA but not BBI and only by virtue of this thread and my thanks to BB for his insight and favouring us with his depth of knowledge.  I have a two portfolios - my 'personal' and my SMSF.  My stocks in the 'personal' are virtually all resources and my SMSF more diversified.  The stocks are -
Personal  
      AXM Apex Minerals         
      BAU Bauxite Minerals  
      BEPPA                                 
      CCG Citadel Resources   
      EQN  Equinox Minerals   
      JML  Jabiru Minerals       
      MAH Macmahon Group   
      MGX Mt Gibson Iron                   
      PLA  Platinum Aust        
      UMC United Minerals     
SMSF
      APZ Aspen Group
      BEPPA
      HST Hastie Group
      LEI Leighton Holdings
      MCP McPhersons
      MGX Mt Gibson Iron
      RIO
      SKI Spark Infrastructure
      UGL United Group
      WOW Woolworths

Good luck to all holders and I am hoping to hold for the long term and eagerly await resumption of dividend payments - 4.35 cents/share accrued by end June 2009.


----------



## Tiles (10 May 2009)

Tysonboss1 said:


> Yes, thanks BB.
> 
> While I hope we have all conducted our own research, It was definatly your original comments that pointed me in the direction of beepa, So far so good.
> 
> Even if this current rise is just a flash in the pan and we do drop back on monday (which I hope we do) I feel very confident holding onto this stock, I am on board for the big win on this one.




I would like to add my thanks to BB. His analysis and commitment to BBI caused me to reverse my pessimism. I had given up on the company. After reviewing the assets and prospects for the company I decided to buy more to reduce my overall average price.  I'm now less poor (on paper), thanks to this thread.


----------



## Mitsimonsta (10 May 2009)

I am going to diversify into REITs now for the time being. My portfolio is massivley overweight on BEPPA and I need to get more equity in other market sectors.

I have posted this elsewhere, Ricee007 has probably seen it already. It's more of my own thoughts and concerns about my holdings, and my plan to improve it in line with my personal goals and my own 'rules' of investing. *It is not to be construed as financial advice.*



			
				Mitsimonsta said:
			
		

> I was asked:
> 
> 
> > Are you saying you think BEPPA isn't a good investment anymore at this price? or did I read that wrong?
> ...




VPG (for CG) is more than likely my next target. Low price, very large growth potential. Had some decent rises in SP but it really has not fired up yet like I expect it to. WDC (for divs) and MOF (balanced CG/Div) are another two REITs that I am thinking about. Which one I buy will more than likely be deceinded by SP movements when I am ready to open a position in one of them.

Mining is another sector I do not have in my portfolio right now, although previously had BHP, RIO & FMG. LGL is probably my first target. I also like FLX, and would be almost remiss of me not too get some BHP and RIO back into my portfolio at one stage.

Energy is my final target. Anything wind and/or gas is on my hitlist. I hold ORG and wish to consolidate my holding there. There are a few other stocks that I am researching now that look attractive on the surface but I am unsure regarding the real value of them yet.

Sorry, it's a long post, I will shut up now.


----------



## banska bystrica (11 May 2009)

I have never been one for the diversification theory however I acknowledge it is possibly a "safer" option for investors.
If you are looking for some mining stocks, two that I own that are massively undervalued in my opinion are:
Indophil (IRN)
Intrepid (IAU)

Please, as always, do your own research.

Disc. BBI/BEPPA represents 88% of my current portfolio. I will not sell either until they are fair value according to my analysis.


----------



## w.m.buch@bigpond (11 May 2009)

Mitsimonsta; Ive had my own businesses for the past 30 years, and rarely make more than 30% on capital invested after everything paid (inc wages to me),sometimes you make a loss. I look at BBI as another business that I own, and if it does manage to succeed in staying afloat to the dividend paying stage, I expect to get far more than 30% on initial capital invested ,every year, from my investment. Obviously there are substantial risks in this strategy but owning your own business comes with substantial risks and a lot of headaches and heartache. BBi to me represents an opportunity to have a passive business with an exceptional return on initial capital invested.
If BBI can hold 50% of DBCT and continue to hold NGPL,they alone should contribute FCF of approx $200m per year this equates to dividends of more than 8cents per share. Thats before everything else is taken into consideration. Large asset sales are the key and if 50% of DBCT and 100% of PD Ports goes for reasonable prices I reckon its in the clear. 
All I am really saying is that the dream of owning your own business is not as great  as it may seem.
I hold BBI for long term and BEPPA for shorter term.These are 100% of my portfolio. P.S. I dont mind a bit of risk!!!


----------



## investorpaul (11 May 2009)

banska bystrica said:


> Disc. BBI/BEPPA represents 88% of my current portfolio. I will not sell either until they are fair value according to my analysis.




Wow thats a huge percentage of your portfolio. 

However i do see your logic, why would you invest in anything else (at this point in time) if your research and opinion suggests there is potential for a 1000% gain (based on your purchase price of sub 10c). Since the market bottomed the only stock I have bought is BBI and BEPPA.

On another note, any predictions on where BBI and BEPPA open today? it will definately be interesting


----------



## ricee007 (11 May 2009)

investorpaul said:


> On another note, any predictions on where BBI and BEPPA open today? it will definately be interesting



BBI Indicative Price + 12.5% to 18c
11 times more buyers than sellers.
People buying at 22c, 21c, 20c, 19.5c, 18.5c, 18c, 17.5c, 17c, 16.5c, 16c, etc.
It closed at 16c...

BEPPA indicative price is up 0.5c to 18.5c.
Buy offers for 20c, 19c, 18.5c, 18.1c, 18c, etc.
5 times more buyers than sellers
It closed at 18c


Early trading, I would be surprised if at least one of BEPPA or BBI didn't hit 20c.

IIRC, if either BEPPA or BBI do, that would make it a > 100% gain in the 20 trading days.... quite a massive gain. IMHO.

Whilst I know it is quite far into the weighted average, a close of 20c would still help reduce dilution if SPARCS goes that way...

As to my fairly baseless guesses...

BEPPA 20c, BBI 18.5c at open


----------



## investorpaul (11 May 2009)

BBI got a speeding ticket ASX Announcement

and there is also another announcement about CORUS, which is a major customer of PD ports and may mothball one of their productions plants


----------



## investorpaul (11 May 2009)

Both opened down, probably in response to the announcements.

BB and others how do you view the announcement regarding CORUS? cause for concern?


----------



## ricee007 (11 May 2009)

investorpaul said:


> Both opened down, probably in response to the announcements.
> 
> BB and others how do you view the announcement regarding CORUS? cause for concern?



IMHO,

It's damaging to BBI in the short term.

Quite possibly 'quite' damaging to BBI in the medium term - long term.

IMHO, selling PD Ports at a depressed price will not effect BEPPA at June 30 2012.


----------



## investorpaul (11 May 2009)

Looks like the market doesnt care, both BBI and BEPPA are now up. I definately thought the price would be depressed at least for a day or two as people took profits and or were spooked by the announcements.


----------



## ricee007 (11 May 2009)

investorpaul said:


> Looks like the market doesnt care, both BBI and BEPPA are now up. I definately thought the price would be depressed at least for a day or two as people took profits and or were spooked by the announcements.



BEPPA is up 7.5% and BBI is up 3%...

Its 10.22am.

People wre spooked..

For about 10minutes.

Maybe we caught some day traders in our stock though


----------



## investorpaul (11 May 2009)

I was looking to buy today, but ill stay out of it for now its up and down like a yoyo. It is probably a battle between the day traders (who are most likely off loading stock for a profit after last weeks gains) and long term buyers or are trying to purchase at the best possible price.

I can only afford one more transaction of BEPPA at approx 15 cents before my avg buy hits 10 cents so i have to make it count.


----------



## ricee007 (11 May 2009)

investorpaul said:


> I can only afford one more transaction of BEPPA at approx 15 cents before my avg buy hits 10 cents so i have to make it count.




That's one obsession I never understood.

If you believe BEPPA is worth $1.20 June 30 2012...

Who cares if your average price is $0.13 or $0.10?

You, obivously, but...

I know I'd much prefer 100,000 at $0.13 then 10,000 at 0.09....


----------



## Mitsimonsta (11 May 2009)

banska bystrica said:


> Indophil (IRN)
> Intrepid (IAU)
> Please, as always, do your own research.



Noted and noted. Currently looking at GGG and am about halfway through their financials.



banska bystrica said:


> Disc. BBI/BEPPA represents 88% of my current portfolio. I will not sell either until they are fair value according to my analysis.



That's huge, but you are so sure of it so I do not blame you. I have less cash than you, and while I am not adverse to risk, I prefer to spread that risk around risk a little.



w.m.buch@bigpond said:


> I look at BBI as another business that I own, and if it does manage to succeed in staying afloat to the dividend paying stage, I expect to get far more than 30% on initial capital invested ,every year, from my investment. Obviously there are substantial risks in this strategy but owning your own business comes with substantial risks and a lot of headaches and heartache. BBi to me represents an opportunity to have a passive business with an exceptional return on initial capital invested.



Yes, I look at it the same way. However, BEPPA is my 'Big CG stock' that will increase my portfolio to workable levels. It is there to get me well on my way to my financial goals.



w.m.buch@bigpond said:


> All I am really saying is that the dream of owning your own business is not as great  as it may seem.



I do not want my own business at this time, but I would be happy to invest in someone else's business as a partner.



investorpaul said:


> Both opened down, probably in response to the announcements.
> BB and others how do you view the announcement regarding CORUS? cause for concern?



Bad for PD port sale price, that's for sure.  



ricee007 said:


> IMHO,
> It's damaging to BBI in the short term.
> Quite possibly 'quite' damaging to BBI in the medium term - long term.
> IMHO, selling PD Ports at a depressed price will not effect BEPPA at June 30 2012.




I agree with all Ricee's points.



ricee007 said:


> That's one obsession I never understood.
> 
> If you believe BEPPA is worth $1.20 June 30 2012...
> 
> ...




It's about keeping certain targets/goals in your portfolio. For me, I can find better targets than BBI/BEPPA at 15c or higher.

A really interesting morning so far, very volatile. I was surprised to see a very large (insto) buy order on BBI at about 9.30am.... it disappeared before opening.


----------



## investorpaul (11 May 2009)

ricee007 said:


> That's one obsession I never understood.
> 
> If you believe BEPPA is worth $1.20 June 30 2012...
> 
> ...




The main reason is that 1 cent makes a big difference in the number of units I can  purchase, which when multiplied by $1.20 results in a significant difference in end value/profit.

Given todays volatility and announcements I think BEPPA will hit 15 cents again and perhaps go lower. I will most likely sit on the side lines today and if I miss out altogether thats a risk I will have to take.


----------



## STYLSH (11 May 2009)

Today seems to be an awesome day to convert bbi to beppa.  So many times the difference between them is 0


----------



## investorpaul (11 May 2009)

Mitsimonsta said:


> It's about keeping certain targets/goals in your portfolio. For me, I can find better targets than BBI/BEPPA at 15c or higher.
> 
> A really interesting morning so far, very volatile. I was surprised to see a very large (insto) buy order on BBI at about 9.30am.... it disappeared before opening.




How large was the insto order ? I must have missed it. 

I need to add some letters to get to 100 characters


----------



## shiftyphil (11 May 2009)

investorpaul said:


> How large was the insto order ? I must have missed it.
> 
> I need to add some letters to get to 100 characters




It was more than 2 million, at 25c or 26c I think. Was only there for a bout 10 minutes (Just before the BBI announcements).


----------



## Mitsimonsta (11 May 2009)

Yes, was 2.5M units at 25c...... was definitely going to spike the prices towards north.

BBI green, BEPPA red last check.


----------



## investorpaul (11 May 2009)

Mitsimonsta said:


> Yes, was 2.5M units at 25c...... was definitely going to spike the prices towards north.
> 
> BBI green, BEPPA red last check.




Interesting.... maybe they are waiting for the market to adjust to the news before they re-enter or perhaps they are spooked for good.


----------



## STYLSH (11 May 2009)

What do you think the chances of it touching our 20c high today again?  Seems to like to yo yo around.


----------



## johannlo (11 May 2009)

If you look at the market depth as of 15 minutes ago, not too likely

Look at these sellers

16.5 1,255,426   35 
17 2,360,890   31 
17.5 2,000,921   18 
18 1,732,539   31 
18.5 1,305,953   18 
19 1,619,407   27 
19.5 1,888,229   17 
20 1,162,296   26 


The number of buyers lined up don't hit this level of qty until we dip back to ~13

disclaimer: as of 15 minutes ago  what a crazy market this month has been


----------



## investorpaul (11 May 2009)

johannlo said:


> If you look at the market depth as of 15 minutes ago, not too likely
> 
> Look at these sellers
> 
> ...




I agree i think there is more chance of it hitting 15c than 20c but only time will tell. It was a crazy morning and last Friday was crazy as well.

It didnt really move until the last hour and a half on Friday so its anyones guess until market close.

As per my posts above I hope it does hit 15c again so i can pick up some more BEPPA


----------



## fureien (11 May 2009)

w.m.buch@bigpond said:


> Mitsimonsta; Ive had my own businesses for the past 30 years, and rarely make more than 30% on capital invested after everything paid (inc wages to me),sometimes you make a loss. I look at BBI as another business that I own, and if it does manage to succeed in staying afloat to the dividend paying stage, I expect to get far more than 30% on initial capital invested ,every year, from my investment. Obviously there are substantial risks in this strategy but owning your own business comes with substantial risks and a lot of headaches and heartache. BBi to me represents an opportunity to have a passive business with an exceptional return on initial capital invested.
> .....
> I hold BBI for long term and BEPPA for shorter term.These are 100% of my portfolio. P.S. I dont mind a bit of risk!!!




is that 30% per year on average? or max. i see where your coming from, i am currently helping my dad with his business venture, but he started it mid last year, and obviously he got hit by the recession. ive been telling him that ive made more profit in stocks the past month than he has in the year to date lol.
but if you think about it, isnt the whole point of equity stocks, essentially owning a part of a business. its like living the dream while sitting infront of a computer.

but yeh stop losses in place and hopefully bbi will look good in the long term.



investorpaul said:


> I was looking to buy today, but ill stay out of it for now its up and down like a yoyo. It is probably a battle between the day traders (who are most likely off loading stock for a profit after last weeks gains) and long term buyers or are trying to purchase at the best possible price.
> 
> I can only afford one more transaction of BEPPA at approx 15 cents before my avg buy hits 10 cents so i have to make it count.




i sold my bbi this morning at 0.16. i woke up a bit late and didnt get to edit my sell order in time >< but i had a buy order from friday and managed to get back in at 0.145
it keeps fluctuating around open (0.155), making me nervous lol.
i want to get some beppa, but doubt if its gunna drop to 15cents today.


----------



## investorpaul (11 May 2009)

Interesting day:

BEPPA down 0.005 to 17.5c
BBI up 0.01 to 17c

There was some crazy trading in the morning but overall the market does not seem to care about the announcements and the potential impact on the PD port sale.

I also thought there may be some more profit taking, although it was evident in morning trade it quickly dried up and we even saw BEPPA touch 20c briefly. The way things are going I would not be surprised to see it push through some time this week.

The only cause for concern is that people may have been caught up in the general run/potential for large profits and are turning a blind eye to announcements (such as todays) that go against what they want to see. It just seemed a bit weird to me that it bounced back so quick.


----------



## banska bystrica (11 May 2009)

I call it as I see it. That Corus announcement was very negative in my opinion. It has the potential to affect future revenues substantially and BBI indeed stated that if Corus do pull out, BBI will probably be making a write down of PD Ports in the year end accounts. This would be the first impairment of BBI assets.
Not good when trying to sell it. It has got to be a negative on the potential price a buyer would pay. Combined with the Euroports announcement a week or so ago, it is two lots of bad news from the Transport Division in the Northern Hemisphere.
I view the big volume buying as positive. One would think there is a significant "event" going on in the background that is over-powering the two negatives that have been announced. That event could only be the DBCT sale process given the fact it has the potential to eliminate virtually all of BBI's corporate debt if 100% sold.


----------



## investorpaul (11 May 2009)

banska bystrica said:


> I view the big volume buying as positive. One would think there is a significant "event" going on in the background that is over-powering the two negatives that have been announced. That event could only be the DBCT sale process given the fact it has the potential to eliminate virtually all of BBI's corporate debt if 100% sold.




I dont really understand the share price at the moment, a huge run over the last couple of weeks, negative news and a speeding ticket today yet it basically maintains its price.

I do hope the Mac Bank have leaked and the price is being sustained because of positive news that is yet to be released. 

I guess the question is are long term holders who believe the company is undervalued going to jump ship? I personally wont, however I am now hoping positive news gets releases sooner rather than later because my fear is people could dump this like a ton of bricks if no positive news eventuates.


----------



## banska bystrica (11 May 2009)

investorpaul said:


> I dont really understand the share price at the moment, a huge run over the last couple of weeks, negative news and a speeding ticket today yet it basically maintains its price.
> 
> I do hope the Mac Bank have leaked and the price is being sustained because of positive news that is yet to be released.
> 
> I guess the question is are long term holders who believe the company is undervalued going to jump ship? I personally wont, however I am now hoping positive news gets releases sooner rather than later because my fear is people could dump this like a ton of bricks if no positive news eventuates.




If the buying we have seen is DBCT related, then fine. However, if it is just the bullish market and there is no real substance to the buying, it will indeed deflate like a pricked balloon.
I'm holding because the volume says some very positive news is imminent. If it all falls in a heap to below 10c again, I'll cop it on the chin.


----------



## investorpaul (11 May 2009)

banska bystrica said:


> If the buying we have seen is DBCT related, then fine. However, if it is just the bullish market and there is no real substance to the buying, it will indeed deflate like a pricked balloon.
> I'm holding because the volume says some very positive news is imminent. If it all falls in a heap to below 10c again, I'll cop it on the chin.




Without the huge volume and given the bad news would you have looked to reduce your holding?

Hopefully imminent is less than 2 weeks, todays announcement is a bit unnerving for me


----------



## fuzzie (11 May 2009)

I think BEPPA is still the long term play with the risk reward stacked in its favour. Short term trading opportunities are all around at the moment, but that's not what most of this thread has been about. You have to decide what camp you are in or you'll have a nervous breakdown. There are no guarantees the bear market is over.


----------



## random (11 May 2009)

The sp has headed north since my last input on this site some time ago, which of course is great news for all of us happy with our lot but todays news by Corus is of great concern to me also. 

Whilst realising volumes of trade through the ports will be down overall do the gec it still comes as a bigger than expected  "probable hit" to us in the short term. 

Don't get me wrong - I'm still happy with my holding and expect it to shine in a few years but what it does reinforce to me is that we are unlikely to hold onto the 51% in DBCT. A full sale of DBCT is almost inevitable IMHB. Survival is still our number one goal even though it hurts me so much to sell this jewel. The ports will come good in a few years and show what a great investment it is but timing as we all know is everything.

Thats the negative vibe.

The good vibe is that the sale will put a shine on all our dials because we will get money to extinguish that awfull corporate debt once and for all and I've got no doubt that many deep and meaningful conversations are going on to determin its value to individual and united purchasers. Its good that Mac Bank is involved to, and as BB said they leak like a sieve - but thats not such a bad thing for us is it? 
I mean look at volumes and sp. 

Would it be a different story if we were doing our own consultations and bargaining?? mmmm

I do reckon however that we will see another substantial drop before it heads north with any real momentum.
Cheers


----------



## Viva_Las_Vegas (11 May 2009)

Am I reading the latest SPARCS announcement correctly that no conversion requests were received?

If that is the case is that why the price went up just before market close as it eliminates the possibility of dilution?

OR.....


Is the meeting this friday the most important?


----------



## awg (11 May 2009)

I have attached a BEPPA chart showing last 2 months price and volume.

for yall to look at

biggest volume and range of any day so far.

I was watching the price today, and it was very volatile.

someone is still accumulating, day traders are well on this now as well IMO

not to bad for a red day, 

looking at that volume chart, another interesting one ahead


----------



## nathanblack (11 May 2009)

no WITHDRAWLS of previous conversion requests were recieved. fridays meeting is still the relevant thing.

cheers


----------



## BSDL (11 May 2009)

nathanblack said:


> no WITHDRAWLS of previous conversion requests were recieved. fridays meeting is still the relevant thing.
> 
> cheers




Hi Nathan

Can you expand on this please? As I see it there are 2 things that can happen,

1, The conversion goes ahead on 17th May 2009
2, It gets delayed for 1 year

How will either of those events impact on the share price?

cheers


----------



## ricee007 (11 May 2009)

BSDL said:


> Hi Nathan
> 
> Can you expand on this please? As I see it there are 2 things that can happen,
> 
> ...



If conversion goes ahead:
SPARCS gets converted to BBI, BBI gets diluted.
SPARCS doesn't get converted, BBI pays higher interest to SPARCS holders and delays the payment.

SPARCS gets converted to BBI, BEPPA moves up a step in priority (SPARCS disappears, in a winding up, BEPPA gets payments first)
SPARCS doesn't get converted to BBI, SPARCS remains in priority to BEPPA and pays a higher rate of interest.

As to effect on SP, IMHO, SPARCS conversion is moderatly negative for BBI and mildly positive for BEPPA

As to effect on SP, IMHO, SPARCS NOT converting is mildly positive for BBI (depending how much interest rate is / time to maturitiy), and mildly negative for BEPPA.


----------



## nathanblack (11 May 2009)

agree completely with ricee.

suspect the vote will result in rolling over SPARCS for new terms. the new terms obviously will be benefitial to holders. but at the same time an extra 1 or 2pct is cheap for BBI in the current environment and with there credit rating. a bit of a win-win.

once SPARCS has been pushed aside, management can concentrate on other matters. it creates some certainty and investors and bankers may be more willing to invest, knowing that SPARCS doesnt need any near term capital.

since most on here agree BBI will survive and only needs time to sort some stuff out, delaying SPARCS seems the logical response. we think they can handle BEPPA in 2012, so im sure they can handle SPARCS in a year or 2.

cheers


----------



## investorpaul (12 May 2009)

Not as wild an open as yesterday, a slight sell off of BBI and BEPPA but I think we can now conclude that the market has basically shrugged off the negative announcement yesterday, except for "minor" profit taking.

It will be interesting to see how it closes.


----------



## wesleysnipesjr (12 May 2009)

This is link is interesting. Although it doesn't tell us anything we don't already know. 

BBI asset sales under pressure


----------



## investorpaul (12 May 2009)

Also of interest on BBI is two trades of 1,000,000 units.

One occurred at 10:01am and another at 10:24am both for 1m units at 15 cents and was a cross trade, it would be interesting to know who the buyer is. Ill keep an eye on the depth/trades to see if they pick up any more


----------



## hardyakka (12 May 2009)

I think that we need to put this all into perspective. there has been two lots of bad news out, one major (Corus) and we have still seen the share price move materially north over the last 4/5 weeks.

Rather than move on the 'slowly but surely" basis, it has jumped significantly in the last week or so yet is still holding onto the majority of those gains. 

I do not see this as a problem in the least because IMO small movements with consolidation is much more preferable than spiky movements that may not be held. With small movements it established a new floor for the price. This goes back to the discussion mentioned many times of the short term versus long term holder.

What we are seeing is volume start to build, possibly indicative of the start of instituitional buying, but as we all know the trigger for this will be the DBCT announcement.

Don't forget, wasnt it only a few months ago that there was widespread concern over the massive potential SPARCS dilution at about 5 cents. How many now consider this still a concern, after the DBCT announcement I feel that the same thoughts will apply to Corus. Yes it was an issue, but not significant in the overall scheme of things.

Cheers


----------



## investorpaul (12 May 2009)

Another trade of 1,000,000 units just went through at 14.5cents.

So far thats 3 trades for 1m units each, all cross trades, within the hour. The trades are going through with gaps of 20 to 30 mins so it will be interesting to see if it continues.


----------



## Mitsimonsta (12 May 2009)

The thing to remember is that Corus is not yet shutting down their plant, it is merely the start of the possibility of it shutting down.

If Corus can enforce the contract with the consortium to take 70-odd percent of the plant offtake, then everything keeps going for a while. Even if we get a 2-year extension, it might just be enough to stabilise the PD ports revenue, and hence price when it is sold. I believe that in 2 years time, the global steel market will have improved due to increased demand as things get moving again.

I would agree with yakka, ~15c is the new support level for BEPPA and that is not a bad thing. A couple of positive announcements - including SPARCS conversion later this week - should help the BEPPA price significantly..... I will throw out a +30% figure as a guess. I'd expect it to trade about 20c.

I'm still around +80% on my buys, so not worried at this stage. While I have basically decided I will not be buying any more BEPPA, if it falls to about 12.5c then I may just be tempted. I would be happy to buy at just under 50% gain over current average. Any higher and it will not add value to my current holding, just raise my buy average.


----------



## banska bystrica (12 May 2009)

The Corus news is terrible and has shocked BBI. It came out of left field. PD Ports will almost certainly suffer an impairment as a result. BBI has $170M worth of corporate debt due for rollover in July. This $170M is attached to PD Ports.

The Euroports issue is still a way off being resolved.

SPARCS meeting on Friday is a non-event in comparison.

The other concern is the mark to market losses of 250M on FX and interest rate hedges. Whilst this does not affect cash flow, it would be a concern if the counter parties to the transactions called in their profits. This would probably only happen if BBI went into administration. Then the losses would be realised and very real and knock off about 10c per BBI worth of equity.
Not a huge problem but certainly not nice.

A sale of DBCT by June 30 is vital. Simple as that. Without it, BBI are in trouble.


----------



## hardyakka (12 May 2009)

banska bystrica said:


> The Corus news is terrible and has shocked BBI. It came out of left field. PD Ports will almost certainly suffer an impairment as a result. BBI has $170M worth of corporate debt due for rollover in July. This $170M is attached to PD Ports.
> 
> The Euroports issue is still a way off being resolved.
> 
> ...




BB,
I agree with you on DBCT, of course any price achieved above the book of $1.9B (100%) will also contribute to the NTA per BBI security. So the way I see it is that BBI holders may take a hit of 10 cents, yet at the same time will receive a boost from the sale of DBCT. I have not even tried to calculate this number but would estimate it would be about 25+ cents ($0.9B profit/2.4B securities).

From the viewpoint of a BEPPA holder the pluses and minuses attributable to the NTA of the ordinary securities should not in theory be a concern for BEPPA holders.

However you are spot on in that if the sale of DBCT does not go through then we are in trouble. To take a hit and have to write off my total holding of BEPPA because BBI failed would be a very unpleasant and costly experience.

But then what would Warren Buffet do in this climate? i would guess he would be buying!!

Cheers


----------



## prawn_86 (12 May 2009)

hardyakka said:


> But then what would Warren Buffet do in this climate? i would guess he would be buying!!




People love to use Buffet to try and compare their investing too. IMO Buffet would not be buying a company is possibly teetering on the edge of bankcruptcy or with huge debt issues. He would be buying companies with solid earnings histor and stability that had been oversold due to fear or bad management.

All imo


----------



## Tysonboss1 (12 May 2009)

prawn_86 said:


> People love to use Buffet to try and compare their investing too. IMO Buffet would not be buying a company is possibly teetering on the edge of bankcruptcy or with huge debt issues. He would be buying companies with solid earnings histor and stability that had been oversold due to fear or bad management.
> 
> All imo




BBI situation is not that different from Goldmen sashs before buffet invested $5B,...

and people say,.. 'oh, but buffet got 10% interest buy investing in a special prefrence share,... average investors can't do that'

Hello,.... BEPPA is a prefrence share and is earning 30% interest based on todays price.


----------



## prawn_86 (12 May 2009)

Yes but the standard BBI investors cant assure the future of the company (ie $5bill) and also replace the management team and take a controlling stake etc etc


----------



## investorpaul (12 May 2009)

BEPPA is trading at a small discount to BBI at the moment, great for anyone who wants to swap over.

I hope todays losses are just a pull back after last weeks run, it would push my nerves if it was to reverse to 10 cents or thereabouts.

Given that the whole market is down, i guess it isnt too bad


----------



## banska bystrica (12 May 2009)

prawn_86,
You are spot on with your comments.

The market is finally waking up to the fact that the PD Ports news was terrible. I cannot put it any other way. I call it as I see it.
I am committed to holding BBI/BEPPA because it is still my view that DBCT will sell at a very good price.
If for any reason DBCT does not sell, have no doubt.... BBI are in big trouble.
It all hinges on asset sales. In that regard, nothing has changed since March when the stock was 3c. It rose over 500% in two months. Naturally some people will take some money off the table.


----------



## Mitsimonsta (12 May 2009)

Appears to be alot of money going off the table today. Anything under 12.5c is possibly worth buying with my current average and last buy price.


----------



## investorpaul (12 May 2009)

Mitsimonsta said:


> Appears to be alot of money going off the table today. Anything under 12.5c is possibly worth buying with my current average and last buy price.




Mitsimonsta the announcement yesterday isnt of concern to you? or you were always planning on increasing your stake and are hoping to get a cheaper entry because of the announcement?


----------



## tracytop (12 May 2009)

it seems there is some support at $0.14

By the way, just a silly question. 
If BBI falls, Is Beppa going to be calculated based on its face value $1+interest or simply just the market price.

Because even it is some fraction of $1, it will still much better than its current market price.

thanks.


----------



## Mitsimonsta (12 May 2009)

investorpaul said:


> Mitsimonsta the announcement yesterday isnt of concern to you? or you were always planning on increasing your stake and are hoping to get a cheaper entry because of the announcement?




Of course it is a concern, but it is not a confirmation that the Corus facility will shut. If you read the Corus release to their market, they state that they will be attempting to enforce the contract as it stands. If they can enforce the contract, then there is no change.

I am not saying we should be pinning our hopes on a Corus win in court. I am hoping that they will agree to hold on for possibly half the remaining contract, any extension that Corus is producing is beneficial for PD Ports and BBI.

As to the question of myself increasing my BEPPA stake, I cannot see any real value being added to my portfolio unless I can buy in less than my current average buy price plus 50% (8.36c*1.5=12.55c), hence my 12.5c or less remark. Any higher and I feel that I am merely increasing my average buy price without getting the value of the units I did before.

I think buying into other equities at the current time is also better for my portfolio from a management/mix perspective. If you read my large post in the last couple of pages you will possibly see my point and thought process.


----------



## Mitsimonsta (12 May 2009)

Also, probably related to the recent Corus announcement:



> *Corus signs MoU on Teesside sale with Marcegaglia and Dongkuk*
> 
> 29 Jan 2009
> 
> ...




Possibly Marcegaglia and Dongkuk are forcing the issue as Corus wants to charge too high a price for TCP?

Who knows what is going on, but I do not see it as badly as TCP will close and PD Ports (and BBI as its parent) will see a hole in their revenues.


----------



## hardyakka (12 May 2009)

prawn_86 said:


> People love to use Buffet to try and compare their investing too. IMO Buffet would not be buying a company is possibly teetering on the edge of bankcruptcy or with huge debt issues. He would be buying companies with solid earnings histor and stability that had been oversold due to fear or bad management.
> 
> All imo




It seems that we have an opposite view of what Buffett may do, so all I can say is that we will have to agree to disagree. Yes I agree BBI has debt issues, that is why the securities are at such a discount. There are plenty of blue chips which offer a nice secure return if the level of risk in BBI is too high for an individual.

PD Ports EBITDA for the 6 months to Dec 08 was $44.2M (pcp $50.2) on revenue of $143.6M  (pcp $153.7M) and this is before the Tesco site becomes fully operative.  

If Corus is material lets assume it accounts for 30% of revenue ie $42M (30% x $143.6M) and since EBITDA is about 1/3 of revenue, then $42M of revenue equates to $14M EBITDA. 

Ignoring the fact that any loss from Corus is likely to be significantly offset by the added contribution from Tesco then I agree a loss of 30% as per above is material in the context of PD Ports in isolation. 

In the overall context of BBI the loss in revenue from Corus, when offset against the contribution from Tesco is immaterial.

The real problem is the potential impact on the sale price of Price of PD Ports and the asset level debt financing. But to consider that it is material in the overall context of BBI is unrealistic.

Cheers


----------



## banska bystrica (12 May 2009)

hardyakka said:


> The real problem is the potential impact on the sale price of Price of PD Ports and the asset level debt financing. But to consider that it is material in the overall context of BBI is unrealistic.




And possibly the re-financing of the 85M GBP of corporate debt attached to PD Ports and due in February 2010.
Whilst there are hurdles, they can be overcome. Of course there is still risk. That's why the stock is trading at a trashed price of 14c.
I agree with you hardyakka that if people want a very low risk investment, they better look elsewhere.


----------



## fuzzie (13 May 2009)

I'm still having problems with understanding why the market seems to be treating BEPPA as purely a proxy for BBI. Do you think it is because most debt instruments are actually owned indirectly through managed products and the managers are still very risk averse? The price movement in BEPPA is then being driven only by traders and not long term holders.

Many years ago when I first started buying shares I held Smorgon Steel SSX and SSXPB for a short time. While SSX was in the toilet SSXPB used to hold up.


----------



## cbrendan (13 May 2009)

You can't buy anything close to a decent holding in BEPPA without sending the price SOARING.

So serious buyers seem to be focusing on BBI.

That being said just check out the charts from 6 months ago and you'll see that BBI and BEPPA haven't always been joined at the hip.


----------



## fureien (13 May 2009)

market taking a beating today

i hope things take a rebound tommorow, as it stands im making a loss from bbi -_- but i plan to hold this for a longer term so hopefully things turn out right. i just dont want to see it hit 10 cents again either.


----------



## investorpaul (13 May 2009)

fureien said:


> market taking a beating today
> 
> i hope things take a rebound tommorow, as it stands im making a loss from bbi -_- but i plan to hold this for a longer term so hopefully things turn out right. i just dont want to see it hit 10 cents again either.




It is concerning, but last fridays run was unsustainable with out any further positive news. Since then we have also had the negative CORUS announcement and today BBP went into a trading halt, the outcome of which could go either way. As BB mentions in the BBP thread any negative outcome will also affect sentiment towards BBI.

time to buckle up and ride this week out and hope for some positive news next week.


----------



## investorpaul (13 May 2009)

Wow someone just took out every buyer at 12.5 cents.

Not good and just before close as well, tomorrow will be interesting.


----------



## random (13 May 2009)

I think its more a case of some shareholders not "taking some out" but more importantantly dumping a few mill shares in the last few minutes and just wanting out. 
Some can't take the heat it seems.


----------



## investorpaul (13 May 2009)

random said:


> I think its more a case of some shareholders not "taking some out" but more importantantly dumping a few mill shares in the last few minutes and just wanting out.
> Some can't take the heat it seems.




Hopefully this has been a hint of over reaction. Everyone who did their research would have bought knowing this is a high risk investment. Surely they would have expected some negativity along the way. Maybe a few people have got caught up in it and decided to jump ship.

I must admit the last few days have been hard to watch, even though I have no intention to sell yet it does make you worry a bit.


----------



## banska bystrica (13 May 2009)

This is why it's a serious issue:

_PRESS RELEASE: Fitch: THPA Finance Notes Watch Negative



Fitch Ratings-London-12 May 2009: Fitch Ratings has today placed THPA Finance Limited's (THPA) notes on Rating Watch Negative (RWN) as follows:

GBP145m class A2 secured 7.127% fixed-rate notes due 2024: rated 'A'; placed on RWNGBP70m class B secured 8.241% fixed-rate notes due 2028: rated 'BBB'; placed on RWNGBP30m class C secured floating-rate notes due 2031: rated 'BB'; placed on RWN

THPA is a securitisation of the assets held, and earnings generated, by the PD Ports group which owns the port of Tees & Hartlepool on the northeast coast of England.

The rating action follows Corus' recent announcement that it might have to close its Redcar steel plant located at Teesport in northeast England. Corus has justified this potential move as a direct consequence of the apparent decision by the four off-takers to cancel their agreement to buy 78% of the Redcar plant's production until 2014. Corus said the consortium's withdrawal had made the plant's ongoing operations unviable. Fitch estimates that the loss of revenues generated by the imports of iron and ore and the handling of slab steel production for export through Teesport, *could directly reduce THPA's EBITDA by up to 25%.*

Fitch will aim to resolve the RWN on all notes once more certainty emerges about the plant's future or its impact on PD Ports' activities. If the potential closure of the plant is confirmed, and assuming all else remains equal, the most likely outcome for the class A2 notes would be an affirmation or a downgrade by one notch, whilst the class B and class C notes would most likely be downgraded by one or two notches respectively. Further developments, including the potential impact on the port's operations, will be closely monitored by Fitch going forward.

PD Ports is owned by Babcock & Brown Infrastructure Ltd, an Australia-based infrastructure investment vehicle.

Contacts: Radim Radkovsky, London, Tel: +44 (0) 20 7682 7260; Guillaume Langellier: +44 (0) 20 7682 7563.

Media Relations: Julian Dennison, London, Tel: +44 020 7682 7480, Email: julian.dennison@fitchratings.com._


----------



## investorpaul (13 May 2009)

The bad news just keeps coming, :-(

I dont hold much hope for the share price tomorrow. 

Does everyone on here still maintain their original holdings or have some of you reduced your holdings in light of the recent announcements?


----------



## Gamblor (13 May 2009)

banska bystrica said:


> This is why it's a serious issue:
> 
> _PRESS RELEASE: Fitch: THPA Finance Notes Watch Negative
> 
> ...




Ouch! I'm really glad i didn't get myself too far in with BBI - the next couple of months will be very interesting.


----------



## hardyakka (13 May 2009)

banska bystrica said:


> This is why it's a serious issue:
> 
> _PRESS RELEASE: Fitch: THPA Finance Notes Watch Negative
> 
> ...




I consider this matter in light of the following:

a) This is material at the asset level only, not in the overall context of BBI.

b) This will be offset to a certain extent by revenue generated from the Tesco site.

c) If my memory serves me correctly weren't Aldi constructing a site on a smaller scale than the Tesco one? (BB do you recall?).

d) I added 150k BEPPA today, I see this as a buying opportunity.

e) Expect bad news at times with BBI, it is high risk high reward investment

BB if I make the survivors party the bottle of 2004 Grange is a certainty.

Cheers


----------



## Mitsimonsta (13 May 2009)

banska bystrica said:


> The rating action follows Corus' recent announcement that it *might* have to close its Redcar steel plant located at Teesport in northeast England.




Might people. Not WILL. Huge difference.

Two of the four companies offtake consortium for TCP have signed an MOU to buy the facility. Obviously the negotiations are not going well, and they are trying to screw down the price they will pay to Corus.

It's a case of 'make a deal, or we will walk away and you will lose everything'. 

It is simply leverage in negotiations, nothing more. Unfortunately this affects other companies that supply services to Corus, and PD Ports is one. If PD Ports is smart, they should start bellowing about the Tesco facility and how it is going to make a 35% increase in profits which more than covers the possible loss of Corus.

In 6 weeks time we should have an announcement that will triple our SP and this will all seem like a bad memory. In the meantime, I hope you have all taken you heart tablets.


----------



## Viva_Las_Vegas (13 May 2009)

Mitsimonsta said:


> Might people. Not WILL. Huge difference.
> 
> Two of the four companies offtake consortium for TCP have signed an MOU to buy the facility. Obviously the negotiations are not going well, and they are trying to screw down the price they will pay to Corus.
> 
> ...




Mits,

I haven't taken my heart tablets, but I would be lying if I said I hadn't lost my nerve.

Currently am thinking of moving my capital from bbi into either beppa or hfa.

I hope this turns out well for us all in the end.


----------



## mcahn1 (13 May 2009)

Hi guys,
I am new to this forum and am beppa holder.
Just wanted to let people know that i've enjoyed reading the bbi forum and appreciate the wealth of info here.

I find it hard to find any research coverage on bbi however the recent one i've read from merills/bank of america has underperform on bbi with target price of 10 cents. 

I guess uncertainty coupled with global retreat in equities is really taking a toll on bbi. Next couple of days will be interesting though.


----------



## hardyakka (13 May 2009)

mcahn1 said:


> Hi guys,
> I am new to this forum and am beppa holder.
> Just wanted to let people know that i've enjoyed reading the bbi forum and appreciate the wealth of info here.
> 
> ...




Do you really have any confidence in these guys? 

They had a buy recommendation on BBI when it was a $1 plus, were unable to recognise the inherent risk in the toxic assets they held/were writing, have had to be bailed out in $ billions because of their financial mismanagement and no doubt by virtue of the fact they have access to the same published information as you and I (in theory) are experts on the intricacies of a multi billion dollar diversified infrastructure business.

I dont put much credence in analysts.

Cheers


----------



## banska bystrica (13 May 2009)

If DBCT gets sold by June 30 all is well. BBI will survive.

If DBCT doesn't get sold, BBI may be in trouble because EBITDA may fall circa 25% at PD Ports to a level that will trigger a debt covenant breach. There is 75M GBP of corporate debt allocated to PD Ports. This puts them at the mercy of the banks. Do the banks give them breathing space or do they call in the debt? That's the worry. Asset impairment cannot trigger a debt covenant breach but EBITDA/DEBT ratio can. 
However, on the positive side, the new Tesco facility will add significant EBITDA which may just save BBI's bacon at PD Ports.

They also have the problem that if Euroports deal doesn't satisfy conditions precedent by June 30, that sale may not go ahead. That will then require BBI Euroports to pay back the 35M Euro deposit (which BBI says BBI Euroports doesn't have). This is guaranteed by BBI. BBI cannot pay this because of the "sweep" facility being enforced by their corporate lenders. Once again, they would have to rely on the banks agreeing to a new deal and new terms (what will the new interest rate be?)

BBI also has to pay out the minority interests in Euroports that have exercised their put option. The quantum is unknown at this stage but could run into $200M+. BBI does not have this cash (once again due to the cash "sweep" forced on them by the corporate lenders).

I see the next two months as critical to BBI surviving. Quite simply, they must now sell 100% of DBCT at anything above $2.5Bn. They then have to negotiate with the corporate lenders who are owed approximately $1.3Bn on what happens to that free cash generated by the sale of DBCT in regard to the sweep, bearing in mind BBI might have legal commitments to the BBI Euroports minority interests AND a commitment to repay the $35M euro deposit to BNB European Infrastructure Fund (BBEIF).

One would hope that the corporate bankers allow BBI to honour those commitments if they are there.


----------



## hardyakka (13 May 2009)

banska bystrica said:


> If DBCT gets sold by June 30 all is well. BBI will survive.
> 
> If DBCT doesn't get sold, BBI may be in trouble because EBITDA may fall circa 25% at PD Ports to a level that will trigger a debt covenant breach. There is 75M GBP of corporate debt allocated to PD Ports. This puts them at the mercy of the banks. Do the banks give them breathing space or do they call in the debt? That's the worry. Asset impairment cannot trigger a debt covenant breach but EBITDA/DEBT ratio can.
> However, on the positive side, the new Tesco facility will add significant EBITDA which may just save BBI's bacon at PD Ports.
> ...




BB,

Very well put BB, sums it up in a nutshell, now we can only wait and see and whether the risk or reward side of the equation starts to prevail.

Cheers


----------



## mark_au (14 May 2009)

investorpaul said:


> The bad news just keeps coming, :-(
> 
> I dont hold much hope for the share price tomorrow.
> 
> Does everyone on here still maintain their original holdings or have some of you reduced your holdings in light of the recent announcements?





Gday

I also have what i consider a lot to lose, but also the potential for massive gains
im also feeling pretty nervous at this time, so i have put in stops on bbi, the only time ive used them  ( I wish i had used them before the GFC hit and id be sitting in cash now) but i never got around to having to do comsec's silly test to get access to the facility , (I have now LOL)


----------



## investorpaul (14 May 2009)

Looks like it is going to be another tough day for BBI and BEPPA.

Traders have all but dropped this stock and the depth of buyers has drastically reduced.

We just have to write off this week and hope it finds some support at current levels before hoping for some positive announcements in the next couple of weeks.


----------



## boff (14 May 2009)

Although in fairness the market in general is very much taking profit at the moment. The Dow has been on a slide since the end of last week. Dropped heavily last night. I believe sentiment is such that even without the ports bad news the SP would have slid in line with the market.
The time to worry is when the market's on the up and we're on the down. Which isn't the case, so I for one am looking for 'top-up' opportunities at the moment.


----------



## max421 (14 May 2009)

BEPPA is being hammered today big time. Is that something to do with sparcs voting tomorrow. I sold BBI holding today thinking of switching to BEPPA more.


----------



## max421 (14 May 2009)

If sparcs voting goes bad tomorrow BBI will be around 8 cents. BBP bad news could also help in smashing the sp. would like to pickup some BEPPA under 10 cents tomorrow


----------



## hardyakka (14 May 2009)

I wonder what the affect of the DBCT announcement will be on the BBI and BEPPA prices when and if it is released? IMO the "if" is very likely, if it does not happen prior to 30 June then of course there will be major problems.

My instinct is that the buying action has pulled back and will possibly kick off again late today or early tomorrow as sellers start to panic about the SPARCS outcome. Then there may be some price movement, but then I am always wrong.

Geesh, I am falling into the mentality of a trader and watching day by day price movements.

Cheers


----------



## Mitsimonsta (14 May 2009)

Found this: http://www.thenorthernecho.co.uk/business/4366998.PM_joins_Corus_in_fight_for_contract/



> *PM joins Corus in fight for contract*
> 
> 5:00am Thursday 14th May 2009
> 
> ...




I think what I mentioned yesterday is true, there is more to the story than what has come out in the media so far.


----------



## investorpaul (14 May 2009)

So just to clarify, If this mob by the factory, PD ports still has a customer which is good news. If this mob dont buy the factory, CORUS pull the plug and close it down which is bad news.

So at this point in time it is all if, buts and maybes


----------



## Mitsimonsta (14 May 2009)

Yes, that is exactly it. There is no actual decision as yet to the actual decision yet.

Basically it looks like the two companies that signed the MOU basically wanted Corus for cheap steel, now the **** has fallen out of the market and having them around is a competitive disadvantage. So, sign an MOU, then break the contract, and let the factory slide into the ground.

Also found this.... gives a bit more background: http://www.dailymail.co.uk/money/article-1179763/How-Signora-Steel-slashed-10-000-jobs-Corus.html



> *How Signora Steel slashed 10,000 jobs at Corus*
> 
> By Tom Mcghie
> Last updated at 9:00 PM on 09th May 2009
> ...


----------



## fuzzie (15 May 2009)

Looks like the SPARCS resolutions didn't get passed. The nominated conversions are all going through. There will be a few more BBI on the market today I would guess.


----------



## investorpaul (15 May 2009)

fuzzie said:


> Looks like the SPARCS resolutions didn't get passed. The nominated conversions are all going through. There will be a few more BBI on the market today I would guess.




But only 25m off get converted to BBI, another 120m remain as SPACS, have I read that correctly ???

If that is the case, it isnt that bad


----------



## fuzzie (15 May 2009)

Interestingly the pre open price for BBI seems to be going up on a couple of largish buy bids.

I'll be watching what happens during the day.


----------



## investorpaul (15 May 2009)

I just hope BBI holds above 10 to 10.5c, it seems to have support there (although we have said that about other levels as well).

However viewing the depth now there is 5m worth of units wanting to be bought at 11cents so it will take a while to get through that

EDIT: I know this doesnt mean much but BBI is the second more bought stock through commsec at the moment.


----------



## STYLSH (15 May 2009)

I also read it as only 25million shares converted and a whole heap staying as SPARCS

wow 5million shares traded in 1 go at 0.11c at 10:05:21am ! or am i reading it wrong.


----------



## investorpaul (15 May 2009)

STYLSH said:


> I also read it as only 25million shares converted and a whole heap staying as SPARCS
> 
> wow 5million shares traded in 1 go at 0.11c at 10:05:21am ! or am i reading it wrong.




I was hoping/thinking the price would hold up today at around 10.5c and 11c im less optimistic now there is twice as many sellers to buyers at the moment

and yes a bucket load went through at 10:05:21 I havnt done the sums but it is approx 5m


----------



## banska bystrica (15 May 2009)

I posted over the road on opening that I sold 1.5M at 12c and the balance of my BBI holding at 11.5c.
I am bullish long term but much prefer the BEPPA entry. I am looking to buy more BEPPA next week.


----------



## ricee007 (15 May 2009)

BBI announcment seems positive for BBI (Only 25M SPARCS out of 145M)...

ORG/BBP's announcment seems positive for BBP.

RIO's announcment seems to indicate good news for RIO/Chinalco Deal, which *MIGHT* increase DBCT sale price.

Yet, BEPPA and BBI both fall, whilst the ASX200 rises.

Hmmm...


----------



## banska bystrica (15 May 2009)

ricee007 said:


> BBI announcment seems positive for BBI (Only 25M SPARCS out of 145M)...




25,803,504 SPARCS get converted at approx 10c. This will add 260M shares to the BBI register. Most of those will be sold on market (given that SPARCS converters want to cash out via the conversion).

The 2nd resolution passing is potentially disastrous for BBI holders. That's why I exited my remaining BBI shares this morning.
The remaining 120,400,605 SPARCS can be converted into BBI securities before 28/09/2009. Now think about that dilution if the BBI price is still less than 15c.
This vote in NZ this morning was a very negative result for BBI.

Looking to buy more BEPPA next week.


----------



## boff (15 May 2009)

banska bystrica said:


> 25,803,504 SPARCS get converted at approx 10c. This will add 260M shares to the BBI register. Most of those will be sold on market (given that SPARCS converters want to cash out via the conversion).
> 
> The 2nd resolution passing is potentially disastrous for BBI holders. That's why I exited my remaining BBI shares this morning.
> The remaining 120,400,605 SPARCS can be converted into BBI securities before 28/09/2009. Now think about that dilution if the BBI price is still less than 15c.
> ...




Crikey - when BB moves, we take notice. Me, I just sold 250k BBI, average buy price was 5.5c so it wasn't all bad. What a wild ride it's been over the last couple of months


----------



## banska bystrica (15 May 2009)

banska bystrica said:


> This vote in NZ this morning was a very negative result for BBI.




Just to clarify that statement.
The vote was a big negative for BBI holders, not BBI the company. It was actually beneficial for the company because debt got converted to equity.
The BBI holders got diluted but the company is better off to the tune of $25.8M. That's $25.8M they no longer owe.


----------



## max421 (15 May 2009)

Why buy BEPPA aswell, BBI sp drop makes Beppa fall too. Soon both will be around 5 cents.What a disastrous week its been for BBI. Can they ever come up with good news for change.


----------



## Mitsimonsta (15 May 2009)

With BB having as many shares as he does, you'd be crazy not to sit up and take notice.

I am just more upset that I didn't sell out of BEPPA at 18c and then buy back in either today or early next week.

I think we may just test our 10c support level in BEPPA.


----------



## banska bystrica (15 May 2009)

max421 said:


> Why buy BEPPA aswell, BBI sp drop makes Beppa fall too. Soon both will be around 5 cents.What a disastrous week its been for BBI. Can they ever come up with good news for change.




I said I am looking to buy BEPPA "next week". I don't know about 5c as you say but certainly anything under 10c would be great. This news today is not bad for the company. As I explained, debt has been transferred to equity by this surprise vote (surprise to me anyway). The losers are BBI equity holders. BEPPA will fall in sympathy but it's actually positive for BEPPA. Less debt stands in front of it in the case of liquidation.


----------



## Mitsimonsta (15 May 2009)

banska bystrica said:


> BEPPA will fall in sympathy but it's actually positive for BEPPA. Less debt stands in front of it in the case of liquidation.



Meaning that BEPPA holders have $25M more to be distributed to them than before IF a liquidation takes place.


----------



## max421 (15 May 2009)

The way things are going with BBI and their problems with selling assets looks like Banks will pull the pin on this one too. Then Beppa and BBI will both will be wortless as the Banks will take all the cream.

If they amend BBP terms good news for BBI, incase they pull the pin on BBP BBI is next in line.


----------



## Mitsimonsta (15 May 2009)

I doubt that BBP will not have debts refinanced, they have had some good news of late, and there is a good chance that ORG would want to buy at least some of the assets. ORG are cashed up and ready to roll.

BBI are in a similar situation. They have had a reset of terms with the DBP which was very good news (and a relief to most of us holding stock). 

Today's news is good for BBI as it is a direct $50M improvement in the balance sheet. Not only is $25M removed from the debt side, it's also added to the equity side. This will be noted by the banks.


----------



## ricee007 (15 May 2009)

Mitsimonsta said:


> I doubt that BBP will not have debts refinanced, they have had some good news of late, and there is a good chance that ORG would want to buy at least some of the assets. ORG are cashed up and ready to roll.
> Today's news is good for BBI as it is a direct $50M improvement in the balance sheet. Not only is $25M removed from the debt side, it's also added to the equity side. This will be noted by the banks.



More importantly...

NetTotalAssets are seemingly above $1. I did a calculation recently, using disastrous figures, NTA was still 16c per share (slightly less now that there are another 200,000,000 or so BBI shares).

If BBI goes to the wall (unlikely) BEPPA and BBI holders should still manage to get a good return, IMHO!

But, yea, in September, 125,000,000 SPARCS could convert to equity. At 10c, thats 1.25B more BBI. About 1.9B BBI are currently issued (then add 0.2B for todays notice).... so, an additional 1.25B will have a *VERY VERY VERY significant* effect on BBI shareprice.

If in September, DBCT has been sold and BBI is 40c, only 0.3Billion BBI could be created, nowhere near as significant dilution.

However, of course, none of that is fundamentally negative for BEPPA holders. It would just mean $125M less debt. $125M more equity. And ranking $125M higher in the case of a liquidation/administration.

As to my opinion? I've been saying all a long that I'm happy with the 1200% return I expect from BEPPA, and don't care if BBI reaches higher than $1 (and so, can't see why people are long term holding BBI over BEPPA).

I think today reaffirms my position.


----------



## banska bystrica (15 May 2009)

I am a very small player in the scheme of things. There are 778M BEPPA on issue. The instos will always determine short term price movements.

I would be happy buying BEPPA as cheap as possible. 5c? Who knows? It wasn't that long ago we were loading up at 5c.
Today's vote result was positive for BEPPA holders but the BEPPA price is going down in sympathy with BBI.


----------



## bellenuit (15 May 2009)

Mitsimonsta said:


> Not only is $25M removed from the debt side, it's also added to the equity side. This will be noted by the banks.




I'm not sure that I agree with that statement. Debt and Equity are on the same side of the balance sheet.

A=L+E (Assets = Liabilities + Equity)

A has stayed the same, but $25M has been moved from L to E). 

I don't think banks care much about E, but they are interested in A-L, which has increased by $25M. Seeing it as a $50M improvement is double dipping IMO.

(I may be wrong, but that is how I remember it from some accounting units I did many moons ago).

It certainly is positive for BEPPA and negative for BBI, but I think BEPPA will still follow BBI in sympathy due to misconceptions of what BEPPA is.


----------



## hardyakka (15 May 2009)

ricee007 said:


> More importantly...
> 
> 
> 
> ...




The conversion of SPARCS to BBI, no matter how many are converted will depress the BBI price because it will create an overhang of stock in the market and dilute BBI.

As you have said this is a positive for BEPPA, but unfortunately BEPPA religiously follows BBI and of course will trend downward. Sooner or later the market will wake up to the fact that the conversion of SPARCS to BBI is a plus for BEPPA and price it accordingly, but then is this market rational?

I have only ever held BEPPA for several reasons including no matter how many additional BBI are issued and the dilution existing holders suffer the NTA "cushion" of $2.4B for BEPPA remains and will actually increase by the value of SPARCS converted. Again risk/reward.

So BBI has gone down a few cents because of the SPARCS vote. What do you think will be the impact of the positive news of the DBCT sale? 

These developments have IMO affirmed the more risk averse strategy of only holding BEPPA, but there is still a level of risk in those.

A while ago BB commented that on the upward trend he expected the gap between BBI and BEPPA to widen significantly in the 20 to 50 cent range, an astute observation should the securities reach these levels.

Cheers


----------



## hardyakka (15 May 2009)

The banks hold senior debt which ranks above SPARCS, BEPPA and equity, so reallocations between those classes at the end of the day is totally irrelevant for them, except it affects gearing.

However it is very important for the BEPPA/SPARCS and BBI holders in a realisation scenario.. 

BBi do not get a cent until SPARCS and BEPPA debt and accrued interest have been paid out. So if BBI NTA is $2.5B, then this is the amount by which the realisable value of the assets must drop before BEPPA and SPARCS are affected.

Cheers


----------



## select (15 May 2009)

banska bystrica said:


> Poor old "select" is assuming the 34% who submitted conversion forms will be voting NO.
> I know one substantial SPARCS holder who sent in a conversion form but will be voting YES for the new terms. I'm certain there are many like him.




BB,

What happened to your mate who was a "substantial SPARCS holder" who sent in a conversion form, didn't withdraw it and very likely voted NO to the new terms?

We had a good chat on pages 30 31 32 and 33 re our opposing views but I wont take the liberty of re hashing them at this stage.

But it's interesting that your views are now very similar to those that I expressed and I have been proved right.

Good luck


----------



## hardyakka (15 May 2009)

select said:


> BB,
> 
> What happened to your mate who was a "substantial SPARCS holder" who sent in a conversion form, didn't withdraw it and very likely voted NO to the new terms?
> 
> ...




Select,

At the end of March the BBI price was about 5 or 6 cents. So the disaster that you predicted has given rise to roughly a 100% increase in price.

Hmmm.


----------



## banska bystrica (15 May 2009)

select,
You were correct about the vote result. The result surprised me. There will now be approximately 260M new BBI securities issued and I would imagine a big percentage of those will sell asap. This will put further pressure on the BBI price.
Another lot of dilution will come in November with another 25.8M SPARCS to be converted.

My decision to be selling BBI over the past months and convert to BEPPA has paid off handsomely. My average sell price for BBI has been nearly 100% above my average buy price. I have been buying BEPPA at parity or within 1c of parity.
Like I said over the road on opening this morning, I dumped 1.5M BBI at 12c and the remainder of my holding at 11.5c. I am sitting on that cash now and will wait for the opportune time to load up with more BEPPA. I suspect I will be buying BEPPA below 10c next week. I might be wrong but that's what I think. The company has some hurdles to jump over the next few months, however, a sale of DBCT will solve all their short term problems.


----------



## banska bystrica (15 May 2009)

select said:


> BB,
> 
> What happened to your mate who was a "substantial SPARCS holder" who sent in a conversion form, didn't withdraw it and very likely voted NO to the new terms?




I haven't spoken to him but I would imagine he is a very happy chappy right now. I'll let you know what he thinks after I speak to him tonight.


----------



## max421 (15 May 2009)

drop in sp further before close. sounds like 3-5 cents is not far away. maybe by middle of next week. what a great ride one week and a disastrous the other. I think BBI management should get their act together and sell of 100% DBCT now above 2.6 billion. By selling only 49% they are just holding to their pride. pd ports sale is gona be delayed for sure now. Why not sell NGPL.


----------



## investorpaul (15 May 2009)

max421 said:


> drop in sp further before close. sounds like 3-5 cents is not far away. maybe by middle of next week. what a great ride one week and a disastrous the other. I think BBI management should get their act together and sell of 100% DBCT now above 2.6 billion. By selling only 49% they are just holding to their pride. pd ports sale is gona be delayed for sure now. Why not sell NGPL.




If your going to quote price targets at a substantial reduction to todays close can you at least provide some supporting evidence.

Everyone here is aware of the difficulties BBI faces but to randomly pull figures out of the air and say it isnt too far away shows a lack or research and thought on your part.

If you can provide some serious discussion and points as to why it will hit that price target then thats great, I and everyone here would welcome discussion both positive and negative


----------



## nathanblack (15 May 2009)

investorpaul said:


> If you can provide some serious discussion and points as to why it will hit that price target then thats great, I and everyone here would welcome discussion both positive and negative




i think its safe to say that BBI(and probably BEPPA) has further to fall. I can see this becoming much more volatile in the next weeks. the reason is we will have increased volume(SPARCS dilution). i dont feel there will be too many big buyers out there whilst further dilution is possible and without updates on PD ports and euroports. only an DBCT asset sale or possitive outcome of PD/euro ports will bring buyers back in great numbers.

each negative news announcement only gives potential buyers more leverage in sale negotiations, so im not expecting huge premiums to book value, but im still hopeful.

if you look at the volumes and run up last week, followed by the volumes and sell off this week, with the SPARCS dilution there will be even more liquidity. i can see this becoming a daytraders stock, hence my view it will be manipulated and become quite volatile intra day.


----------



## cbrendan (15 May 2009)

nathanblack said:


> i think its safe to say that BBI(and probably BEPPA) has further to fall. I can see this becoming much more volatile in the next weeks. the reason is we will have increased volume(SPARCS dilution). i dont feel there will be too many big buyers out there whilst further dilution is possible and without updates on PD ports and euroports. only an DBCT asset sale or possitive outcome of PD/euro ports will bring buyers back in great numbers.
> 
> each negative news announcement only gives potential buyers more leverage in sale negotiations, so im not expecting huge premiums to book value, but im still hopeful.
> 
> if you look at the volumes and run up last week, followed by the volumes and sell off this week, with the SPARCS dilution there will be even more liquidity. i can see this becoming a daytraders stock, hence my view it will be manipulated and become quite volatile intra day.




Still holding BEPPA for the long term.

Trying to stay positive with my thoughts.

Can't realistically see DBCT not selling for a decent price. Certainly not for the 'knock your socks off' price some where hoping for. but 2.5 - 2.6 billion should be easily obtainable for an asset of such class. 

That being said i still have trouble following along with the belief that in the event of a the DBCT sale falling through BEPPA holders will be left with nothing.

BBI is cashflow positive and covering all interest payments, debts have been refinanced recently and while the corus news is negative, i believe it will be resolved. Comparing BBI to BBP is like comparing apples and oranges, or maybe oranges and mandarins. 

They will bleed BBI dry with high interest, but thats the poiint, it isn't in their best interests to call the debt when they can make more money basically extorting us with high interest.

I just don't see the banks calling the debt. 

Very interested to here BB's (and others) thoughts % wise on the odds of  survival.

Personally i still see it as 85%+ likely that BBI will be around for the next 10 years plus (albeit with the Babcock name removed)

Summation.

I hold in hope.


----------



## hardyakka (15 May 2009)

cbrendan said:


> Still holding BEPPA for the long term.
> 
> 
> 
> ...




What we need to remember is that BBI is not in breach of its banking covenants yet and has proved to be cashflow positive through one of the most horrendous markets in a very long time. Yes they will try and bleed BBI, yet at the same time they will not kill the goose that lays the golden egg. Any losses come off there bottom line and affect tier 1 capital requirements.

What I have also noticed is a massive swing in sentiment from from positive to negative, and I fail to understand why. Consider the following:

a) The DBCT sale is still on track, nothing has changed.
b) The price after the spike is still trending up compoared to a month ago.
c) SPARCS dilution is 9%, or about 1 cent per security. How material is this if it cost 10cents and you would like to sell above 50 cents.
d) SPARCS is positive for BEPPA.
e) Corus is bad news yes, but the revenue stream loss will be offset by Tesco, with the added bonus of additional revenue if Corus generates some revenue.

The only real negative is Corus IMO. This board so far has acted in the best interests of unitholders, my only concern is that they do not try and hold on to part of DBCT. But then that depends on the price they get and I consider it will be close to the $3B mark. If they sell 49% of DBCT and are banking on a sale of Euroports before 30 June as well that would concern me.

I am in this for the longterm  and hold a significant number of BEPPA only.



Cheers


----------



## banska bystrica (15 May 2009)

hardyakka,
I feel that Euroports is the most important hurdle to jump. That deal must close by June 30 otherwise there are problems with the minority interests having exercised their put option and there is also the 35M Euro refund to Babcock and Brown European Infrastructure Fund.


----------



## ricee007 (15 May 2009)

banska bystrica said:


> select,
> You were correct about the vote result. The result surprised me. There will now be approximately 260M new BBI securities issued and I would imagine a big percentage of those will sell asap. This will put further pressure on the BBI price.
> Another lot of dilution will come in November with another 25.8M SPARCS to be converted.



Howdi BB, just a couple of questions...

How do we know 25.8M SPARCS will be converted in  November? What will happen to the other 95M of them?

Cheers,
Rhys


----------



## ricee007 (17 May 2009)

hardyakka said:


> What I have also noticed is a massive swing in sentiment from from positive to negative, and I fail to understand why. Consider the following:
> 
> a) The DBCT sale is still on track, nothing has changed.
> b) The price after the spike is still trending up compoared to a month ago.
> ...




BBI became diluted by, according to you, 9% (I'll trust your numbers, i cant be bothered double checking).

25M/145M SPARCS were recently converted.

When will the other 120M SPARCSconvert?

1.9Bn BBI has became 2.15Bn BBI following the recent announcment.

120M SPARCS are left. At 10c, roughly 1.2Bn will be issued (give or take 25% for forex  / approximations, etc).

So, up until a couple of days ago, 1.9Bn BBI on issue. Potential for another 1.45Bn, or an extra 75%+ BBI.

If NTA were $1/BBI share, now it could be more like 56.7cents.

Take away less if PD Ports needs to be impaired, and even more if assets have became impaired due to the GFC.

Now, imagine if 120,000,000 SPARCS convert when BBI is 5c.... 2.4Bn more BBI + the 250M that just became issued...

1.9Bn original BBI holders may turn out to be 4.55Bn BBI.

If NTA were $1/BBI share, NTA could become $0.41. Again, take away any impairment from PD Ports, any guarantee issues with EuroPorts, any asset impairments due to GFC, any hedging writeoffs any investment losses....

It's a much less rosy picture for BBI holders than as of a week ago.

Having said that, the retirement of $25M debt, and potential  retirement of $120M more debt... is surely only a fantastic thing for BEPPA holders.

IMHO, due to irrational investors, BEPPA has gone.


----------



## ricee007 (17 May 2009)

Er, quick edit of the above

I forgot issued BBI were around 2.4Bn, not 1.9Bn.

Numbers will be out by about 0.5Bn for a lot of calculations (Y).

Sorry.

And, 
IMHO, due to irrational investors, BEPPA has gone. 
Should read:

IMHO, due to irrational investors, BEPPA has gone down.


----------



## nathanblack (17 May 2009)

ricee007 said:


> Er, quick edit of the above
> 
> I forgot issued BBI were around 2.4Bn, not 1.9Bn.
> 
> ...




BEPPA has recently followed BBI closely, due to the fact that it relies solely on the survival of BBI. Most on here put a minimum premium on BEPPA of the retained interest, plus a slightly reduced risk.

This premium is generally represented on market at about 1.5cents, although recently its been parity quite often. Many have speculated the gap will widen as assets are sold and both SP rise.

How do you see the current dilution effecting the premium? and future dilution? Is it likely that BBI will fall further than BEPPA and a bigger gap develops?

ALSO my interpretation of the most recent announcement regarding SPARCS was that requests for conversion were approved and will take place next week AND all remaining SPARCS CAN convert at ANYTIME before September upon request???

Out of curiosity, what is SPARCS trading at in NZ? has it been punished ala BEPPA? Not a bad out, if they are trading at say 20c...get converted into $1 of BBI...then sold on market for say 90c.


----------



## hardyakka (17 May 2009)

ricee007 said:


> BBI became diluted by, according to you, 9% (I'll trust your numbers, i cant be bothered double checking).
> 
> 
> So, up until a couple of days ago, 1.9Bn BBI on issue. Potential for another 1.45Bn, or an extra 75%+ BBI.
> ...




Rice,

You are making the assumption that all SPARCS will be converted to BBI, the 9% number refers to the conversion resulting from last Fridays meeting of 25M odd SPARCS.

Lets assume all SPARCS were converted and for simplicities sake this means that rather than have 2.4B securities with an NTA of $1 there are 4.8B with an NTA of 50 cents. In theory the price of BBI would halve from its current 9.2 cents to about 4.6 cents. The same amount of money invested after conversion would buy double the number of securities with half the NTA, ie no change. But of course we know that the market will not do that.

As a BEPPA holder this does not concern me, I have always considered and said the BBI NTA in my view is a safety cushion for BEPPA holders. That being my simple risk aversion strategy for a high risk stock.

As regards the current situation, I consider there will be wholesale dumping of BBI with a resultant drop in the BBI price. This I view as being an acquisition opportunity, it is even possible that the price may touch some of its lows. 

AS regards BEPPA, IMO that is becoming more and more tightly held as people start to recognise its inherent value and IMO there will be a widening of the gap between the BBI and BEPPA prices. Then again that is theory and supposed educated analysts cant get it right, so as per usual we may even see BEPPA prices drop in sympathy with BBI. Again an acquisition opportunity IMO.

The above of course is subject to one simple critical point which has been made countless times, and that is that assets are realised, ie 100% of DBCT.

There is IMO another point which is also very important. When we speak of NTA we talk about a $1 per BBI, ie $2.4B. Yet people forget that none of the BBI assets have been revalued as are assets held by property trusts. 

DBCT from memory is held in the books at $1.9B, yet has a value of between $2.5 and $2.9B, lets be conservative and assume $2.6B. That alone adds $0.7B to NTA. Some assets such as PD Ports may be impaired (despite the fact Tesco and Corus revenues will largely offset), but overall I would not be in the least surprised if NTA would on a net basis increase by $1.5B (primarily DBCT and NGPL). 

I have a pretty good idea how instos look at the infrastructure market, and it is never with a short term horizon. Fluctuations in equity capital and income  caused by the GFC has pushed home the necessity for guaranteed long term returns, ie regulated income. That is why I consider we may be pleasantly surprised at the bidding for DBCT coming from a consortium of instos.

NB/ The above is a load of crap and brought about by my fantasising after having a bottle too many of a very cheap plonk so DYOR

Cheers


----------



## ricee007 (17 May 2009)

nathanblack said:


> BEPPA has recently followed BBI closely, due to the fact that it relies solely on the survival of BBI. Most on here put a minimum premium on BEPPA of the retained interest, plus a slightly reduced risk.
> 
> How do you see the current dilution effecting the premium? and future dilution? Is it likely that BBI will fall further than BEPPA and a bigger gap develops?
> 
> ...




I asked about SPARCS trading price a few pages back, but no-one replied. the NZExchange website is terrible.

How do I see the current dilution affecting premium? The latest news was bad for BBI share price and fundamentally good for BEPPA price... an increasing premium should be expected... IMHO.

BEPPA shouldn't necessarily follow BBI. For example, if Babcock & Brown Infrastructure issued 5 Billion BBI shares at 5cents... it would be bad for BBI share price (TERRIBLE!), but BBI would have 250M more equity and cash to pay down debt...

Some news, like Corus should affect both SP in a similar fashion... but dilution is not one of those.

Similarly, IMHO, if DBCT gets 100% sold (or 49% at an awesome price), there would be little doubt of Babcock & Brown Infrastrucutre not being able to operate as a going concern (due to negligible corporate debt). As such, the market may think BEPPA will almost certainly be paid out June 2012. Ergo, the premium should increase, IMHO.

All SPARCS holder can choose to reset SPARCS or convert SPARCS, if I'm reading the ASX announcment correctly.

Having said that; Monday is the day when the converted SPARCS will be issued. Not sure if they will become tradeable then or not... but, BBI will quite possibly sink lower as people holding converted SPARCS try to sell BBI to recover most of their $1.

All in all, BBI might get a rough ride coming up... BEPPA may (imho) irrationally follow. To that end, I'm quite happy just holding BEPPA, with the view that I finish University in July 2012. I have no need to sell BEPPA prior to this. Coincidentally, June 30 2012 works out well for me.

I believe the company can operate as a going-concern, ergo, whilst short-term flucuations in BEPPA's price annoy me, and worry me just a touch... I'll hold long term.


EDIT:-Hardyakka,
I wasn't assuming... I was running with worst case numbers. I do know that conversion is optional for the SPARCS holder.

Having said that... if number of BBI issues double... the share price shouldn't halve  That's important to note. BBI will have $145M less debt, for starters. If the SP halved, it would just be (IMHO) irrational.

Pages back I said NTA could very well be in the $3-$4Bn range. Whilst I don't want administrators called in... $1.0435 now would be quite nice...


----------



## Mitsimonsta (18 May 2009)

Meh, I think I am over all this.

I bought in at (average) 8.36c.

If BBi gets liquidated, and BEPPA holders only get 20c/$ (plus outstanding interest payable) then as far as I am concerned, it's a good return.


----------



## Tysonboss1 (18 May 2009)

Mitsimonsta said:


> Meh, I think I am over all this.
> 
> I bought in at (average) 8.36c.
> 
> If BBi gets liquidated, and BEPPA holders only get 20c/$ (plus outstanding interest payable) then as far as I am concerned, it's a good return.




Agreed, It gets tiring when your always jumping at shadows. I have placed my bet, Like my odds, I am just going to ride this out now.


----------



## Mitsimonsta (18 May 2009)

Tysonboss1 said:


> Agreed, It gets tiring when your always jumping at shadows. I have placed my bet, Like my odds, I am just going to ride this out now.




Exactly.

That said, I have only invested about $2.6K cash into BEPPA, while that is a substantial portion of my portfolio, it's not so much money as to wipe me out completely if BBI goes under and takes everything with it. I do have other high-dividend stocks that I can use to my advantage.

This is in stark contrast to BB, who has a massive investment in BEPPA and it it basically only in BEPPA. A brave, well informed man is BB.

I personally can afford for BBI to go bust. BB has stated to me (I think via PM, apologies BB) that if BBI does implode, it will hurt him but "not have a material day-to-day impact on my life" or something along those lines.
Still, I'd be very upset if it did go under with that much invested.

That said, if the SP falls to ridiculously low levels (sub-8c) then I see it as a buying opportunity. I really did not want to get more after the SP spike in the last 2 weeks, but if the value is there again then you cannot discount it out of hand.

A good investor sees opportunity in the market, then seizes it. My investment plan is fluid, and if I mention doing something or looking to buy a certain stock, then it is in the context of the current market conditions. The markets change, then so does my strategy.

I was hoping for BBI to stay above 13c, below 12.5c is a speculative buy for me, and anything below 10.5c is a definite buy. I will wait and see where the SP leads me today.


----------



## nathanblack (18 May 2009)

Mitsimonsta said:


> Meh, I think I am over all this.
> 
> I bought in at (average) 8.36c.
> 
> If BBi gets liquidated, and BEPPA holders only get 20c/$ (plus outstanding interest payable) then as far as I am concerned, it's a good return.




good return? even if it takes the administrators 2years to give you your 20cents?

anyway, things will be fine soon enough. lets just sit back and wait for these sales to kick in.


----------



## Mitsimonsta (18 May 2009)

nathanblack said:


> good return? even if it takes the administrators 2years to give you your 20cents?



In my situation, it is still well over double bank interest, actually it would be close to three times, even if it did take 2 years to get the payout.

Anyway, I am in it for the long haul. Looks like BLP has had a small jump in SP today


----------



## banska bystrica (18 May 2009)

A liquidation would take many, many years. Bell Group took 15 years. BBI would take a minimum of 5 years and possibly more. I haven't loaded up with BEPPA to wait for liquidation. I'm in it for a big re-rating in the next 6-12 months.


----------



## nathanblack (18 May 2009)

205mil odd new shares issued at 9.84cents for SPARCS. atleast the weighted average was pretty good due to recent gains.


----------



## banska bystrica (18 May 2009)

2.58Bn BBI securities on issue now. NAV drops to 92c. Stock is still ridiculously cheap at a 91% discount to NAV.
I am prepared to buy more BEPPA but only at 6c or cheaper. I have more than enough if things work out positively so I don't need to chase the stock.


----------



## Mitsimonsta (18 May 2009)

banska bystrica said:


> I am prepared to buy more BEPPA but only at 6c or cheaper. I have more than enough if things work out positively so I don't need to chase the stock.




That's exactly what I have been trying to say, only not as eloquently. My buying point is higher than yours however, but that is all horses for courses, different portfolios and vastly different sums invested.

Looking for my next buy target now..... unless BEPPA drops more, I don't think I will be buying. It would have to be under my average buy price now...


----------



## random (18 May 2009)

I genuinely don't know if i am happy or sad with the current sp.
If it goes down further i buy more beppa and if it goes the other way i just grin.
The bottom line is that i'm a believer that we survive. These are just the trials and tribulations we endure.
A few months and we will know for sure!


----------



## Mitsimonsta (18 May 2009)

Nvm.....


----------



## nathanblack (18 May 2009)

Mitsimonsta said:


> Nvm.....




yeah  i was just taking the piss of him (Max) because he just comes here to stir trouble. 

the SP is a tough one at the moment. remove the big (unexpected) run up that occured 2weeks ago, then consinder where we were and were we are. its been a pretty solid, steady incline since the lows. all we did was give back all the gains from a few huge days.

and although the risk/ reward equation has many variables today, its only a matter of a month now until end of june when an announcement is scheduled regard DBCT. so , one way or another we will be in a better position to judge.

we need to know if a sale will go through, when it will go through, for what stake (100% or less) and the amount achieved. once this has happened there will be a re-rating up or down and a change in volatility.

1month and counting...


----------



## johannlo (18 May 2009)

OK sorry to be a pain but can someone explain to me what BEPPA is. Is it a stock that is actually a loan or something like that? e.g. its BBI's debt packaged as a security. 

I'm a newbie (obviously) and I've only invested in FPO shares to date. Including BBI (doh), a painful knife cut and one for the lesson book. 

thanks in advance


----------



## bunyip (18 May 2009)

I can see that value investing is the favoured approach of quite a few of you who own BBI, or are considering investing in it.

An entirely different school of thought is that performance, not perceived value, is a better basis for stock selection.

Here are my views on BBI for what they're worth.....

Sticking with BBI could prove a costly mistake for owners of this stock. 
Sure, its share price increased six fold in recent months, but now it's lost more than half that gain in just the last few days as it goes into free fall. 
This is the sort of volatile price action that results when investors are uncertain what to make of a stock, and their sentiment swings back and forward between wild exuberance and doom and gloom.

The word is that BBI is drowning in debt. That alone should be enough to set alarm bells ringing and send prudent investors heading for the exit gate. Time enough to reinvest in the company later if it manages to overcome its problems and get back on a sound footing.
A couple of years ago I expressed similar opinions on the GTP thread in relation to that stock. My view ruffled the feathes of a couple of GTP investors who then prodeeded to give me a lambasting. They're not lambasting me now that GTP has folded.
I can never see any point in sticking with dogs of stocks while they wallow in non-performance for extended periods of time. It can be a very costly way to have your funds invested, even if they pay a decent dividend, and even if the company eventually comes good. It ties up your capital and prevents you from investing in performing stocks. At worst it can result in the loss of 100% of your investment, as GTP investors can attest to.


----------



## boff (18 May 2009)

johannlo said:


> OK sorry to be a pain but can someone explain to me what BEPPA is. Is it a stock that is actually a loan or something like that? e.g. its BBI's debt packaged as a security.
> 
> I'm a newbie (obviously) and I've only invested in FPO shares to date. Including BBI (doh), a painful knife cut and one for the lesson book.
> 
> thanks in advance




Dude - you can't be that sorry if you haven't read through some of the posts in this thread.
Have a read of the pages around here -> https://www.aussiestockforums.com/forums/showthread.php?t=8646&highlight=beppa&page=12
That should help get you up to speed.


----------



## johannlo (18 May 2009)

Thanks for that link. I didn't read through all 62 pages or whatever length, just started from around 6 months ago when the SP was already in the dumps


----------



## banska bystrica (18 May 2009)

bunyip said:


> I can see that value investing is the favoured approach of quite a few of you who own BBI, or are considering investing in it.
> 
> An entirely different school of thought is that performance, not perceived value, is a better basis for stock selection.
> 
> ...




You are entitled to your opinion. BBI has been a stellar performer for me. I first posted on here about BBI in November when I purchased 800,000 at 2.5c. I have exited my entire BBI holding and used the funds to buy BEPPA. This switching has been happening for months.
The last of my BBI's were sold at 11.5c on Friday morning after selling 1.5M at 12c about fifteen minutes earlier.
The net result is I hold a large quantity of BEPPA at average price 3c. This includes the cash I have taken off the table in selling the remaining 2.5M BBI's over the past fortnight. I have not paid more than 12.5c for BEPPA.
I think the rewards of doing the hundreds of hours of research are tremendous. To have a very sizeable position in BEPPA at such a low average sure beats putting my money in CBA or WES.
It's all about risk/reward. If you wait until there is little risk, you will end up paying 30c+ for BBI and 50c for BEPPA. There are still risks (Euroports, PD Ports) but that's why the stock is under 8c.


----------



## hardyakka (18 May 2009)

bunyip said:


> I can see that value investing is the favoured approach of quite a few of you who own BBI, or are considering investing in it.
> 
> An entirely different school of thought is that performance, not perceived value, is a better basis for stock selection.




Every viewpoint is welcome as each provides a different perspective on a stock.

Whether you are a value or growth investor, isn't the end objective performance? To my mind performance is simply the end measurement of an investing strategy. 

You should never invest on the basis of past performance, ASIC's standard required warning is "past performance is not indicative of future performance".

Cheers


----------



## bunyip (18 May 2009)

banska bystrica said:


> You are entitled to your opinion. BBI has been a stellar performer for me. I first posted on here about BBI in November when I purchased 800,000 at 2.5c. I have exited my entire BBI holding and used the funds to buy BEPPA. This switching has been happening for months.
> The last of my BBI's were sold at 11.5c on Friday morning after selling 1.5M at 12c about fifteen minutes earlier.
> The net result is I hold a large quantity of BEPPA at average price 3c. This includes the cash I have taken off the table in selling the remaining 2.5M BBI's over the past fortnight. I have not paid more than 12.5c for BEPPA.
> I think the rewards of doing the hundreds of hours of research are tremendous. To have a very sizeable position in BEPPA at such a low average sure beats putting my money in CBA or WES.
> It's all about risk/reward. If you wait until there is little risk, you will end up paying 30c+ for BBI and 50c for BEPPA. There are still risks (Euroports, PD Ports) but that's why the stock is under 8c.




Well done on your success with BBI. You got in and you got out again.....in other words you traded it. 
My warning was against sticking with the stock long term in the face of its high debt levels and generally poor fundamentals.
Investors who did that with GTP are now paying dearly.
BBI has the potential to dish out a similar outcome.


----------



## banska bystrica (18 May 2009)

I wouldn't call 7 months a trade. I am also heavily into BEPPA as I believe the NAV of 92c is realistic. For BEPPA to be worthless, there has to be impairments of $3.2BN. Looking through the assets and their performance to March 31 inspires confidence to me that the assets can be sold at book value or above.
BBI is basically an investment on whether DBCT can sell for $2.5Bn or more. It's a great investment on a risk/reward basis.


----------



## bunyip (19 May 2009)

hardyakka said:


> Every viewpoint is welcome as each provides a different perspective on a stock.
> 
> Whether you are a value or growth investor, isn't the end objective performance? To my mind performance is simply the end measurement of an investing strategy.
> 
> ...




Yes, performance is the end objective.
I was referring to the practice of selecting stocks on the basis that they're performing strongly right now, as opposed to buying non-performing stocks because they've fallen far enough to appear cheap, then you stick with them in the hope they'll perform well over the long term. 
Such a strategy might be sound enough if the company has decent fundamentals and you can afford to go for lengthy periods with little or no return on your money.  
But it has to be a risky practice in stocks that are drowning in debt.
There are many examples of debt-ridden stocks that brought investors undone when they followed that strategy. TIM and GTP are recent cases. I wonder if BBI will be another.


----------



## hardyakka (19 May 2009)

bunyip said:


> Yes, performance is the end objective.
> I was referring to the practice of selecting stocks on the basis that they're performing strongly right now, as opposed to buying non-performing stocks because they've fallen far enough to appear cheap, then you stick with them in the hope they'll perform well over the long term.
> Such a strategy might be sound enough if the company has decent fundamentals and you can afford to go for lengthy periods with little or no return on your money.
> But it has to be a risky practice in stocks that are drowning in debt.
> There are many examples of debt-ridden stocks that brought investors undone when they followed that strategy. TIM and GTP are recent cases. I wonder if BBI will be another.




If you adopt a strategy of selecting stocks on the basis that they are performing strongly now and hence I would assume this performance is reflected in the price (which would be toward the stocks highs) arent you making the mistake of buying high on the assumption that current performance is reflective of future high performance?

To my mind this exposes you to significant downside risk as you are buying at a high on the above noted performance assumption. Whereas by buying a stock which your research indicates has been oversold by the market then the downside is minimal and upside significant.

You have to also consider each stock on its merits eg BBI regulated income stream, quality assets, significant NTA etc as against GTP where investment was driven by tax considerations, high front end fees, no real title to assets etc.

Cheers


----------



## fureien (19 May 2009)

gargh bbi back up near 9 cents again, i sold too early lol
wonder if this will hold up, but at least we know the support is around 8 cents


----------



## awg (19 May 2009)

banska bystrica said:


> The net result is I hold a large quantity of BEPPA at average price 3c. .




Hi BB

is this a typo?

lowest price for BEPPA ever was 4c

cant figure out how you could have that average buy price


----------



## investorpaul (19 May 2009)

fureien said:


> gargh bbi back up near 9 cents again, i sold too early lol
> wonder if this will hold up, but at least we know the support is around 8 cents




The whole market is up today, BBI and BEPPA have dropped like a stone over the last couple of days so a relatively small bounce today is nothing to get excited about.

Still alot of selling pressure on both BBI and BEPPA IMO


----------



## mark_au (19 May 2009)

investorpaul said:


> The whole market is up today, BBI and BEPPA have dropped like a stone over the last couple of days so a relatively small bounce today is nothing to get excited about.
> 
> Still alot of selling pressure on both BBI and BEPPA IMO




Not enough though LOL.. its getting hard to get beppa under 10 c today.
i havent had much luck in that yet... looks like 10c is holding quite well


----------



## nathanblack (19 May 2009)

awg said:


> Hi BB
> 
> is this a typo?
> 
> ...




he means by converting BBI to BEPPA as BBI rises and parity is achieved, he has managed to convert into BEPPA at an average of 3cents("net result")

cheer


----------



## banska bystrica (19 May 2009)

awg said:


> Hi BB
> 
> is this a typo?
> 
> ...




I originally bought BBI at average 7.5c. 
Arbitraged BBI/BEPPA in 2009.
Never paid more than 12.5c for BEPPA and subsequently sold the remaining BBI securities from 17c down to 11.5c. These sales have netted cash which I am sitting on.
Total outlay on BBI/BEPPA investments is now at a level which equates to 3c per BEPPA.
Only holding BEPPA.


----------



## fureien (19 May 2009)

investorpaul said:


> The whole market is up today, BBI and BEPPA have dropped like a stone over the last couple of days so a relatively small bounce today is nothing to get excited about.
> 
> Still alot of selling pressure on both BBI and BEPPA IMO




ah right, i hadnt looked at the volume yet. yeh there are indeed still more sellers than buyers. but i will keep an eye on it nevertheless. i need that 40% of my portfolio back lol

or do you reccommend that if i put my money into antyhing it wud probably be beppa over bbi? this is kinda what ive inferred from reading all these pages


----------



## investorpaul (19 May 2009)

fureien said:


> ah right, i hadnt looked at the volume yet. yeh there are indeed still more sellers than buyers. but i will keep an eye on it nevertheless. i need that 40% of my portfolio back lol
> 
> or do you reccommend that if i put my money into antyhing it wud probably be beppa over bbi? this is kinda what ive inferred from reading all these pages




We cant give advice on the forum but most people prefer BEPPA because it is owed past interest payments and ranks higher in the event of a wind up of the company.

BEPPA is tied to BBI and requires BBI to survive to see the gains most on here are aiming for.


----------



## awg (19 May 2009)

banska bystrica said:


> I originally bought BBI at average 7.5c.
> Arbitraged BBI/BEPPA in 2009.
> Never paid more than 12.5c for BEPPA and subsequently sold the remaining BBI securities from 17c down to 11.5c. These sales have netted cash which I am sitting on.
> Total outlay on BBI/BEPPA investments is now at a level which equates to 3c per BEPPA.
> Only holding BEPPA.





Thanks,

I should have understood that from the post.

I have done a similar thing, except my prices are not nearly as sweet as yours.

I only hold BEPPA now too. 



fureien said:


> ah right, i hadnt looked at the volume yet. yeh there are indeed still more sellers than buyers. but i will keep an eye on it nevertheless. i need that 40% of my portfolio back lol
> 
> or do you reccommend that if i put my money into antyhing it wud probably be beppa over bbi? this is kinda what ive inferred from reading all these pages




Hi Fury, 

no one can recommend, as against ASF policy.

If you read even some recent posts, they explain that BEPPA has less risk than BBI, and IMO a better likely return.

nevertheless, this is a risky investment, as reflected in the SP discount to NAV, things could turn very sour with just one announcement


----------



## fureien (19 May 2009)

investorpaul said:


> We cant give advice on the forum but most people prefer BEPPA because it is owed past interest payments and ranks higher in the event of a wind up of the company.
> 
> BEPPA is tied to BBI and requires BBI to survive to see the gains most on here are aiming for.






awg said:


> Thanks,
> 
> Hi Fury,
> 
> ...





hi sorry, i think i shud have rephrased my question better. i know its against rules for advice.

i was after the risk levels of the two stocks. which u guys have pretty much summed up for me =) thanks
but yes, from what i understand, as traderpaul said, beppa ranks higher than bbi in the event of a windup. thats what i was looking for.

i held both beppa and bbi, but got rid of bbi, for the risk reasons and because it moves way too much. i still hold beppa, but my average price is high. so i kinda wanted to know if its worth loading up more beppa to lower my average price, or just sit and hold with what i got.


actually i have another question. why does beppa move past 10 cents in strange increments? as i understand you have to increment by 0.005 once ur stock price hits 10 cents. but beppa moves in 0.001 or 0.002 increments


----------



## random (19 May 2009)

fureien

Don't take this as gospel but if you trade with commsec as your broker you can not bid or sell in .001 increments past 10c. You have to move in .005 increments.
If you are with other brokers i guess you can.
I have tried with commsec but it won't register.

Just from my own experience.


----------



## nathanblack (19 May 2009)

random said:


> fureien
> 
> Don't take this as gospel but if you trade with commsec as your broker you can not bid or sell in .001 increments past 10c. You have to move in .005 increments.
> If you are with other brokers i guess you can.
> ...




i mentioned this a couple weeks ago when i tried to buy beppa at 10.4c through commsec(the last traded price) but was forced to bid 10.5c

at those levels, when it hits you at buying and selling time it can affect your margin a bit. if sp is 10.3c you need to either bid 10.0c and not get the buy or up your bid to 10.5c and lose 0.2c margin. same at sale time.

not sure if its just a commsec thing or others too, or maybe if its only restricted to the non-prefered $29.95 account. perhaps over the phone or through prefered account at $19.95 other increments are possible.

anyway i sold the 10.5c batch for 16 and 17c and since bought back under 10c, so all worked out. hoping for a good dow this week.

beppa and bbi holding up well. no real news only waiting to see impact of sparcs sellers. so far they either arent selling or just waiting. volumes steady.


----------



## ricee007 (19 May 2009)

Don't take this as gospel... but.

*MOST* shares, once they hit 10c, you have to trade in .5c increments.

However, you can trade BEPPA in .1c increments.

However, Commsec have a blanket webrule which prevents *ANY* share from trading at < .5c increments once it hits 10c. Seemingly their system is not capable to handle allowing only some shares to trade at .1c. I've emailed them about it, and it's been 'passed on', but...

You can, however, ring up and do a phone order at a .1c increment. If you whinge that you can't do a web order at .1c, it is likely that they will just charge you online brokerage instead of phone brokerage.


----------



## bunyip (19 May 2009)

hardyakka said:


> If you adopt a strategy of selecting stocks on the basis that they are performing strongly now and hence I would assume this performance is reflected in the price (which would be toward the stocks highs) arent you making the mistake of buying high on the assumption that current performance is reflective of future high performance?
> 
> _*A stock trading near its highs is not necessarily a strong performer. It could be as flat as a lizard drinking, with little or no gain for months or even years on end....a non-performing stock.
> Buying such a stock would certainly be a case of buying high...it's not something I'd do.
> ...


----------



## mcahn1 (19 May 2009)

Hi guys,
FYI BBI in Street Talk section of FR today. 

I am seeing couple of members here i.e. BB and Hardyakka suggesting DBCT would likely sell for 2.4bn - 2.8bn - could you kindly advise on the basis of this valuation? Looks bit optimistic to me. 

Would I be wrong in saying that - at this moment BBI is under considerable pressure to sell DBCT and there is an high possibility that DBCT would more likely go for around 220 (FY10 EBITDA forecast) x 9.5 multiple = 2bn? Kindly correct me if my calculation is flawed or absurd.

I've always been concerned about PD Ports and WestNet Rail. I've got a feeling bulk and container throughput in UK would be slowly improving now and also iron ore demand out of WA would too be improving. Anyone know if this is true?


Thanks guys.


----------



## Tysonboss1 (19 May 2009)

nathanblack said:


> i mentioned this a couple weeks ago when i tried to buy beppa at 10.4c through commsec(the last traded price) but was forced to bid 10.5c
> 
> at those levels, when it hits you at buying and selling time it can affect your margin a bit. if sp is 10.3c you need to either bid 10.0c and not get the buy or up your bid to 10.5c and lose 0.2c margin. same at sale time.
> 
> .




your Half right,

yes you are limited to placing bids in incriments of 0.005 but that doesn't mean it can't go through at a lower price.

For example I placed a bid at 0.10 but when i checked after it had gone through i noticed my buy price was actually 0.097,


----------



## banska bystrica (19 May 2009)

9.5X EBITDA??? On which planet does one of the largest coal terminals with protected regulated income sell at 9.5X?
EBITDA 2009/10 $224M
Multiple = 12X
Enterprise Value: $2.7Bn.


----------



## bellenuit (19 May 2009)

Tysonboss1 said:


> your Half right,
> 
> yes you are limited to placing bids in incriments of 0.005 but that doesn't mean it can't go through at a lower price.
> 
> For example I placed a bid at 0.10 but when i checked after it had gone through i noticed my buy price was actually 0.097,




Yes, that happened to me using CommSec when beppa was on its way up a few weeks ago. The two lowest offers were 50K at .133 and 100K at .134. I placed a buy order for 200K at .135 and my order executed as 50K @ .133, 100K @ .134 and 50K @.135.


----------



## Amor_Fati (19 May 2009)

> I just bought a bunch of these securities, hard to see anything but a total bargain at the current prices, with distribution guidance at 15 cents per security (tax deferred).
> 
> I have to disagree with Nicks, I don't see any short term financial mismanagement. Their reports and distribution guidance are consistent and the company line has barely changed. Their debt/equity ratio is 70:30 and that what the regulators allow for I'm sure.
> ...
> I'm not claiming I understand their business model completely but it is not a traditional company with everything hingeing on profit & loss. Would be good to find a guide comparing traditional P&L business with an infrastructure fund. Sure, returns will never be spectacular but you will always get one I reckon.




From the first page. Do people think we have seen that infrastructure funds are not exempt from the same requirements as "traditional" businesses? Or is this financial crisis/recession just a special case where the normal laws don't apply?

Actually I'm going to remove the poster's name because he had nothing but good intentions and I feel badly for him (or her). And it's completely irrelevant, just an example of the sort of thinking that becomes popular in a lengthy boom. I'm definitely not having a go at them, just trying to learn from experience.


----------



## ricee007 (19 May 2009)

mcahn1 said:


> Hi guys,
> FYI BBI in Street Talk section of FR today.



Does anyone have a link or scan of the BBI AFR Street Talk article that they could PM me or post to this thread...?

It would be much appreciated.



> I am seeing couple of members here i.e. BB and Hardyakka suggesting DBCT would likely sell for 2.4bn - 2.8bn - could you kindly advise on the basis of this valuation? Looks bit optimistic to me.



2009-2010 Forecast Earnings 224M.
2010-2011 Forecast Earnings 240M.

VERY VERY conservative multiple of 10X = 2.24Bn
Very conservative of 11X = 2.4Bn
Conservative but plausible multiple of 12X = 2.69Bn
More realistic, 12.5X = 2.8Bn
Slightly optimsitic but very plausible of 13 X = 2.91Bn
Quite optimsitc of 14 X = 3.14Bn
Very optimistic, but certainly not impossible, multiple of 15 X = 3.36Bn. This is higher than pretty much anyone would dare mumble...but this is only a P/Earnings multiple of 14 using the 2010-2011 EBITA estimation...which is merely 'quite optimistic'.

There's no reason at all that 12.5 X Fy2010-2011 = $3Bn can't be done.

You are saying $2Bn...after one year the Price/Earnings ratio would be (forecasted) 8.33. This is ridiculously low.

Having said that, I am a bit more hopeful on the sale price of DBCT than BB and Hardyakka... the seem to think $2.4B-$2.8Bn, I see more $2.6Bn-$3Bn being most likely.

Remember this asset is in the books for $1.9Bn, and has $1.7Bn of debt attached to it.

VERY optmistically, but definitly possible would be 15X 240M = $3.6Bn. Again, this is just *VERY* optimistically... but much more surprisng things have happened.

In my mind, I would be surprised if DBCT got 100% sold and the price was OUTSIDE of $2.46Bn - $3.14Bn. Again, I believe a bit higher than BB/Hardyakka seem to think, so take my thoughts with a grain of salt.



> Would I be wrong in saying that - at this moment BBI is under considerable pressure to sell DBCT



Realistically, a 49% sale would be sufficient. IMHO, not ideal. But certainly sufficient.



> Tysonboss1;437010]your Half right,
> 
> yes you are limited to placing bids in incriments of 0.005 but that doesn't mean it can't go through at a lower price.
> 
> For example I placed a bid at 0.10 but when i checked after it had gone through i noticed my buy price was actually 0.097,



See my post a couple up explaining this ^^.

BankSA... I know you are going to hate to do this, but I'm sure it would be entirly appreciated by the forum. As such, I'll be rude enough to ask.

Can you please explain what the deal with SPARCS reseting / converting are? When and how many of the remaining 120M SPARCS can convert to BBI in the future? At whose option is this? Is it a case of SPARCS holders have to elect by September 2009 to convert, and then they (and only they) will be converted in May 2010?

Thanks all.


----------



## ricee007 (20 May 2009)

Furthermore, If anyone can get a copy for me of Page 45 of todays AFR about BBI... I would much appreciate it...


----------



## banska bystrica (20 May 2009)

ricee007 said:


> Can you please explain what the deal with SPARCS reseting / converting are? When and how many of the remaining 120M SPARCS can convert to BBI in the future? At whose option is this? Is it a case of SPARCS holders have to elect by September 2009 to convert, and then they (and only they) will be converted in May 2010?




25.8M SPARCS can elect to convert in Nov 2009. Conversion price will be determined by the "20 day average price prior to conversion date" as it was on Monday.

The remaining 120M SPARCS have to wait until May 2010 where the process will be identical to what happened this May. They can elect to convert or reset for another 12 months.


----------



## ricee007 (20 May 2009)

banska bystrica said:


> 25.8M SPARCS can elect to convert in Nov 2009. Conversion price will be determined by the "20 day average price prior to conversion date" as it was on Monday.
> 
> The remaining 120M SPARCS have to wait until May 2010 where the process will be identical to what happened this May. They can elect to convert or reset for another 12 months.



Thanks BB,
I'm confused though...

Do these 25.8M people *HAVE* to convert in November? That seems to make sense, but you have said "can elect to convert"...

If it's "can" elect... then how come only these 25.8M "can" elect to convert, and the others can't?


----------



## investorpaul (20 May 2009)

There is also an article in todays AFR.

Basically saying they would achieve a better price selling 100% rather than a minority. 

They expect a sale within the quarter. BHP, RIO, Xstrata have expressed interest in the past and still could be among the potential buyers.

There was more but I read it quickly in the coffee shop before work. All up it was a pretty positive article.


----------



## fureien (20 May 2009)

wow bbi up 10% in 10 mins lol
all due to the announcement about gascan.

pardon my ignorance, but what relation is gascan and IEG to bbi?



(edit)
ok wait its kinda going a bit nuts 0.095 already....
do you reckon this is a pump and dump from the news.
(edit2)
haha its only been a minute, ppl dumping already


----------



## investorpaul (20 May 2009)

fureien said:


> wow bbi up 10% in 10 mins lol
> all due to the announcement about gascan.
> 
> pardon my ignorance, but what relation is gascan and IEG to bbi?
> ...




The gascan announcement is a bit of a non event.

The price is probably up because long term holds are accumulating again after the large price drop last week.

And there hasnt been any more bad news, lol


----------



## ricee007 (20 May 2009)

investorpaul said:


> The gascan announcement is a bit of a non event.
> 
> The price is probably up because long term holds are accumulating again after the large price drop last week.
> 
> And there hasnt been any more bad news, lol




And the article in todays AFR...

And, to some extent, possibly the article in yesterdays AFR... but that wasn't overly positive. Today's seems nice and positive though.

BEPPA has gone from 1 buyer per 1 sell to 2.2 buyers per 1 seller
BBI has gone from 1 buyer per 2 sellers, to 2 buyers per 3 sellers...

Both up over 7% today.

Perhaps BEPPA will never hit 10c again...?


----------



## fureien (20 May 2009)

i guess your right, but still alot more selling going on than buying.

could i just ask, the sale of DBCt or whatever its called. theres no specific slated date right? just a generic indicator it would be in june, before the end of june?

i expect there to be a bit of rallying in june. now that ive stupidly sold my bbi, upon reflection i regret it lol. now its a matter when to get back in


----------



## skyQuake (20 May 2009)

Just daytraders and bargain hunters churning to each other, its fallen pretty hard so its garnered some attention.

Similar thing yesterday.


----------



## investorpaul (20 May 2009)

ricee007 said:


> And the article in todays AFR...
> 
> And, to some extent, possibly the article in yesterdays AFR... but that wasn't overly positive. Today's seems nice and positive though.
> 
> ...




Could post a summary of yesterdays article?

Or perhaps someone else will be able to post it.

Im just glad to see some green hopefully at the very least, it finds support around these prices and doesnt move lower unless more bad news is forthcoming


----------



## ricee007 (20 May 2009)

investorpaul said:


> Could post a summary of yesterdays article?
> 
> Or perhaps someone else will be able to post it.
> 
> Im just glad to see some green hopefully at the very least, it finds support around these prices and doesnt move lower unless more bad news is forthcoming



Many recent asset sales start off at 49% and end up at 100%
"participants are now certain ... Macquaire Capital has a mandate to flog the whole port"
"still some way to go before a deal is reached"
"holding talk with the terminal's main users"
possible deal of 40% to miners, 60% to investors [like QIC]
If that doesn't work the "logical next option is to move forward with a straight 100 per cent sale"
"In the past, JPmorgan analysts have fixe a $2.8Bn enterprise value on the asset"

The Australian Financial Review
Page 27
Tuesday 19th May 2009
Offer of Stake in Dalrymple Morphs Into Full Sale
Edited by Jemma Whyte.


----------



## banska bystrica (20 May 2009)

The SPARCS related selling will probably start hitting the market in a couple of days. The new BBI certificates have been posted and once they hit the homes of ex-SPARCS holders, I would imagine some pretty heavy selling pressure on BBI. We can expect weakness for the next few weeks I would imagine. After that selling is mopped up by the market, the focus will return to the sale of DBCT.
Short term I am negative. Long term very positive.


----------



## fureien (20 May 2009)

banska bystrica said:


> The SPARCS related selling will probably start hitting the market in a couple of days. The new BBI certificates have been posted and once they hit the homes of ex-SPARCS holders, I would imagine some pretty heavy selling pressure on BBI. We can expect weakness for the next few weeks I would imagine. After that selling is mopped up by the market, the focus will return to the sale of DBCT.
> Short term I am negative. Long term very positive.




ah i forgot that the sparcs holders have yet to do anything with their conversion. the whole market reacting to the news made me think "this is as worse it can get" oh well. if they put enough pressure on bbi. hopefully i can mop some up at bargain prices 

i guess my only concern right now is that it might affect BEPPA. its done so well today i dont want it to be affected and drop down again.


----------



## nathanblack (20 May 2009)

beppa closed near its high for the day. bbi closed at its low. the closing auction seems to kill bbi everytime. afternoons in general are weak.

good to see beppa holding onto its gains, perhaps the gap between the two SP will widen.

people are mentioning the downward pressure the sparcs conversions may have in coming days, but will this be compounded by end of financial year? locking in tax losses?


----------



## cbrendan (20 May 2009)

If the gap between BEPPA and BBI widens it'll be a damn tough decision wherether or not to switch 50% (or maybe even higher ) to bbi.

Imagine a 11 cent / 6 cent swap, and then switching back again at close to parity once asset sales are announced!






nathanblack said:


> beppa closed near its high for the day. bbi closed at its low. the closing auction seems to kill bbi everytime. afternoons in general are weak.
> 
> good to see beppa holding onto its gains, perhaps the gap between the two SP will widen.
> 
> people are mentioning the downward pressure the sparcs conversions may have in coming days, but will this be compounded by end of financial year? locking in tax losses?


----------



## prawn_86 (20 May 2009)

cbrendan said:


> Imagine a 11 cent / 6 cent swap, and then switching back again at close to parity once asset sales are announced!




Dont you mean IF the asset sales are announced? Nothing is certain especially when it comes to debt laden companies.


----------



## banska bystrica (20 May 2009)

cbrendan said:


> Imagine a 11 cent / 6 cent swap, and then switching back again at close to parity once asset sales are announced!




cbrendan,
back in November I was lucky enough to buy 75,000 BEPPA at 5c (they closed at around 10c the same day) when BBI were around 2.8c. I then sold those BEPPA at 11c and bought 235,000 BBI at 3.5c the next day.
Nice way to convert 75000 BEPPA into 235,000 BBI.
Then on Dec 24 (Christmas Eve..... I remember it well) I sold those 235,000 BBI at 9c and bought 250,000 BEPPA at 8.5c.
I also sold other BBI's I had on Christmas Eve and converted to BEPPA at a half cent discount. Money for jam back then when all the panic was on.

I will be selling some BEPPA and buying BBI if this current gap widens anymore. When/if BBI have another run, the opportunity will probably be there for another switch at parity or close to it.


----------



## banska bystrica (20 May 2009)

prawn_86 said:


> Dont you mean IF the asset sales are announced? Nothing is certain especially when it comes to debt laden companies.




You are correct prawn_86, however, the probability of BBI not selling DBCT is very remote.
We know there are multiple buyers (the port users have been eyeing it off for a year now) and this coal terminal is one of the larhest in the world. The income is regulated by the Qld Govt so there is downside protection in times of recession. Have no doubt, there is enormous interest.


----------



## cbrendan (20 May 2009)

banska bystrica said:


> Then on Dec 24 (Christmas Eve..... I remember it well) I sold those 235,000 BBI at 9c and bought 250,000 BEPPA at 8.5c.
> I also sold other BBI's I had on Christmas Eve and converted to BEPPA at a half cent discount. Money for jam back then when all the panic was on.




Remeber that day well.

It was the day i swapped 100% of my holding from BBI into BEPPA.

Better than any of the gifts i got the following day


----------



## nathanblack (21 May 2009)

they miscounted the sparcs conversion requests. subsequently more sparcs have been converted then originally announced and more BBI were issued(more dilution).

beppa is definately the one to hold these days


----------



## ricee007 (21 May 2009)

nathanblack said:


> they miscounted the sparcs conversion requests. subsequently more sparcs have been converted then originally announced and more BBI were issued(more dilution).
> 
> beppa is definately the one to hold these days



Totally.

10M more BBI on issue. Will totally dilute the 2.6Bn BBI shares on issue.

(Though, in the next couple of days, it MIGHT affect the SP as most of these 10M people consider selling (to put it into comparison, 55M BBI sold yesterday), but not really total dilution)


----------



## nathanblack (21 May 2009)

ricee007 said:


> Totally.
> 
> 10M more BBI on issue. Will totally dilute the 2.6Bn BBI shares on issue.
> 
> (Though, in the next couple of days, it MIGHT affect the SP as most of these 10M people consider selling (to put it into comparison, 55M BBI sold yesterday), but not really total dilution)




im just happy because the balance sheet has improves with every conversion, bring on more conversions i say. NTA per share will fall a little again, thats why i think the gap between BBI and BEPPA will not close now


----------



## ricee007 (21 May 2009)

nathanblack said:


> im just happy because the balance sheet has improves with every conversion, bring on more conversions i say. NTA per share will fall a little again, thats why i think the gap between BBI and BEPPA will not close now



Well, yea, as a 100% BEPPA holder I want all SPARCS to convert. Now. Immediatly. I don't care at what price (higher would be nice, but I'm not fussy).

Having said that... BBI has around $12Bn in debt.
This 'extra conversion' was $1.3M.

$1,300,000 less debt
$12,000,000,000 total debt.

Kinda puts it into perspective.


----------



## nomore4s (21 May 2009)

ricee007 said:


> Totally.
> 
> 10M more BBI on issue. Will totally dilute the 2.6Bn BBI shares on issue.
> 
> (Though, in the next couple of days, it MIGHT affect the SP as most of these 10M people consider selling (to put it into comparison, 55M BBI sold yesterday), but not really total dilution)




lol, there are already 2.6b shares on issue and you are worried over a new issue of 10mil. That is only an increase of less then 0.5%.

My prediction is it will have no effect whatsoever on the SP.


----------



## nathanblack (21 May 2009)

nomore4s said:


> lol, there are already 2.6b shares on issue and you are worried over a new issue of 10mil. That is only an increase of less then 0.5%.
> 
> My prediction is it will have no effect whatsoever on the SP.




but in context, these 10mil are in addition to the 205mil odd that were initially said to be converted on friday. i still think all the conversions will add downward pressure as we head into a new tax year.


----------



## ricee007 (21 May 2009)

nomore4s said:


> lol, there are already 2.6b shares on issue and you are worried over a new issue of 10mil. That is only an increase of less then 0.5%.
> 
> My prediction is it will have no effect whatsoever on the SP.



10M new shares issued for people who bought into SPARCS at about 30cents........

Have the chance to sell immediatly for 90cents.

Means, that I would expect, 7.5M extra BBI for sale ASAP.

7.5M extra sellers *WOULD* probably have an actual, immediate, effect on the share price.

Long term, dilution is negligble and shouldn't affect anything. Short term. Extra pressure to sell at any price.... 10M is a lot of shares (around 20% of one day trading)...

SPI pretty much even, BBI down 4%...

EDIT:-Finally more BEPPA buyers than sellers.
Still > twice as many sellers than buyers for BBI.

I'm glad i'm 100% BEPPA.


----------



## fureien (21 May 2009)

ricee007 said:


> 10M new shares issued for people who bought into SPARCS at about 30cents........
> 
> Have the chance to sell immediatly for 90cents.
> 
> ...




i think that sums it up quite well (the 20% of daily volume bit)
and i think its starting to take effect already. 7.3 cents, one month low already. so glad i sold out early.

the question is when to buy back in again. 5 cents doesnt seem that improbable now though there is heavy support at 7 cents.

and with beppa there are more buyers than sellers, but its not very significant. and i think beppa is still being affected by BBI. which is very annoying, pretty much lost all of yesterdays gains


----------



## ricee007 (21 May 2009)

fureien said:


> the question is when to buy back in again. 5 cents doesnt seem that improbable now though there is heavy support at 7 cents.
> 
> and with beppa there are more buyers than sellers, but its not very significant. and i think beppa is still being affected by BBI. which is very annoying, pretty much lost all of yesterdays gains



That's one question...

Another would be 'should I just buy BEPPA now and be happy that I expect it to be $1.20 in June 2012'.....

Hmm...


----------



## fureien (21 May 2009)

seeing as how the world is supposed to end in 2012
http://en.wikipedia.org/wiki/2012
short term for me


----------



## nathanblack (21 May 2009)

ricee007 said:


> That's one question...
> 
> Another would be 'should I just buy BEPPA now and be happy that I expect it to be $1.20 in June 2012'.....
> 
> Hmm...




And another...
How low will BEPPA go in sympathy with BBI? i think with the announcement end june, you need to have your position locked in by mid june or you may miss the boat. Perhaps wait a week for SPARCS selloff to stabilize then buy in.


----------



## nathanblack (21 May 2009)

fureien said:


> seeing as how the world is supposed to end in 2012
> http://en.wikipedia.org/wiki/2012
> short term for me




i noticed no mention of BEPPA redemption on the calender of events for 2012. Look on the bright side, the scheduled end is December 21, BEPPA payout in june, so we can enjoy the proceeds for a few months before the end. so still long term for mine.


----------



## fureien (21 May 2009)

nathanblack said:


> And another...
> How low will BEPPA go in sympathy with BBI? i think with the announcement end june, you need to have your position locked in by mid june or you may miss the boat. Perhaps wait a week for SPARCS selloff to stabilize then buy in.




locked in beppa or bbi?

doesnt everything (well a major part) depend on how things turn 


nathanblack said:


> i noticed no mention of BEPPA redemption on the calender of events for 2012. Look on the bright side, the scheduled end is December 21, BEPPA payout in june, so we can enjoy the proceeds for a few months before the end. so still long term for mine.




lol web.bot (google it) predicted massive stock crash in the periods before 2012 lol. but i digress.

long term still depends on whether bbi can manage its debt in the short term.


----------



## nathanblack (21 May 2009)

fureien said:


> locked in beppa or bbi?
> 
> doesnt everything (well a major part) depend on how things turn




yes, it depends on how things turn, but every indication is that they have firm offer above book value for 100% control of DBCT.

if your a believer and think that a sale announcement or update will be forthcoming by end june, and you believe from your own research and facts available at this time that the numbers add up, i think its safe to say a re-rating will occur at this time. so you must hold a position before this time.

me personally, im beppa only at this time, but i think both will go upwards after sale of dbct and be rewarding. i just think beppa has less risk(long and short term) and dont think bbi will be above $1 in 2012 if more dilution occurs.

if your a non believer and think the sale will not be in favour of BBI, then obviously sit out until the announcement and buy after downward rerating. but if ur not a believer that bbi can sell asstes on good terms then i suspect u dont believe in bbi survival.

your obviously a believer in dbct, so i guess we just need to wait and see if a re-rating occur in late june/early july, and either hold or accumulate until them.

but i honestly believe we will wake up one morning and read of an imminent sale of dbct and SP will double. i want to hold before that happens.


----------



## fureien (21 May 2009)

nathanblack said:


> but i honestly believe we will wake up one morning and read of an imminent sale of dbct and SP will double. i want to hold before that happens.




dont we all hate that

ill be keeping an eye out on bbi over the next few weeks for buying opportunities. i dont tink theres a need to wait till june to buy in again.


----------



## RodH (21 May 2009)

Westnet rail bad news;
http://fw.farmonline.com.au/news/st...work-future-hangs-in-the-balance/1518312.aspx


----------



## nomore4s (21 May 2009)

nathanblack said:


> but i honestly believe we will wake up one morning and read of an imminent sale of dbct and SP will double. i want to hold before that happens.




Or you could wake up one morning and BBI has been put into receivership due to it's high debt levels. Remember there are real downside risks to this stock atm.

The speed of its fall form 19c has been pretty quick, needs to find some support soon or we could see it testing its lows,


----------



## nathanblack (21 May 2009)

nomore4s said:


> Or you could wake up one morning and BBI has been put into receivership due to it's high debt levels. Remember there are real downside risks to this stock atm.
> 
> The speed of its fall form 19c has been pretty quick, needs to find some support soon or we could see it testing its lows,




Certainly agree on that point. Many investors manage risk by not investing prior to major announcements and wait for a level of certainty before investing. Thats a safe and smart approach. Otherwise your really just relying on luck.

If a successful sale cant be achieved in a satisfactory timeframe then receivership is a real possibility. 

The speed of the fall from 19c was quick, but so  too was the rise. And for mine, the volumes around 19c were so low, infact the only sales at that price were in the closing auction of that day. A more true reflection is the weighted average which  is much lower, so the fall is not as significant. and the gains over 2 or 3months still quite nice.


----------



## banska bystrica (21 May 2009)

RodH said:


> Westnet rail bad news;
> http://fw.farmonline.com.au/news/st...work-future-hangs-in-the-balance/1518312.aspx




This could have a very negative impact on WestNet Rail's revenues going forward. If major customers are using road instead of rail, the business is in trouble.
I have tried to contact BBI about this but they are in meetings. This news will have to be announced to the market as it is price sensitive, just like PD Ports.
The "news" is in the public domain so people can act on it legally. I'm holding BEPPA. I don't hold any BBI.


----------



## hardyakka (22 May 2009)

banska bystrica said:


> This could have a very negative impact on WestNet Rail's revenues going forward. If major customers are using road instead of rail, the business is in trouble.
> I have tried to contact BBI about this but they are in meetings. This news will have to be announced to the market as it is price sensitive, just like PD Ports.
> The "news" is in the public domain so people can act on it legally. I'm holding BEPPA. I don't hold any BBI.




BB,
A few points that should be noted here that were made across the road are:
a) grain revenue contributes about 15% of WR revenue, ie about $15M.
b) in an article posted there was commentary that WR considered many grain routes uneconomic and may look to closing them down, this implies reducing grain routes may be profit accretive. The link courtesy of a poster across the road is:
http://www.abc.net.au/rural/wa/content/2006/s2476557.htm

I would tend to think that it is more a case of WR trying to position themselves for a handout as part of the nation building exercise. It is in BBI's interest that they plead doom and gloom to extract as much as possible from Canberra.
My final thoughts are that if the WR matter was material BBI have an immediate notification requirement under ASX LR 3.1, so the fact nothing was announced tends to imply it is not material.
Cheers


----------



## fuzzie (22 May 2009)

I'm too cheap to pay for the full report but this abstract from Standard and Poor's rates DBCT at BBB+. That places DBCT in the middle medium grade, well above questionable risk status.

Waiting for the play offs.....

http://www.alacrastore.com/storecontent/spcred/720906


----------



## Jez (23 May 2009)

fuzzie said:


> That places DBCT in the middle medium grade, well above questionable risk status.




We know how good DBCT is, but when it is no longer owned by BBI, is BBI still worth the money from the rest of it's income producing assets?


----------



## ricee007 (23 May 2009)

Jez said:


> We know how good DBCT is, but when it is no longer owned by BBI, is BBI still worth the money from the rest of it's income producing assets?



BBI has around $15Bn in assets.
Selling $1.9Bn (Book Value) won't ruin the company.

Next FY forecasted EBITA for DBCT is $224M... (less this year).

If DBCT sells for $2.8Bn (my best guess...)...$2.8Bn of debt can be wiped out.

$2.8Bn * 8% interest payments  = $224M.

So, DBCT can "save" a similar amount of interest as they lose in EBITA... (A post on HC used *actual* interest numbers, and depending who you asked, it was around about -$10M to +$50M).

DBCT is (IMHO) BBI's second best asset....losing it will hit revenues... but if we can save the same amount in interest (at least short-term), than that is just dandy.

When dividends return, I think it's a safe bet to assume they won't return immediately to the same levels. What, with asset sales and SPARCS (/BEPPA ?) dilution...

But, BBI can still make a good profit without DBCT.

EDIT:-DBCT EBITA of $224M (next year. forecasted)...
$1.7Bn in DBCT debt (IIRC)...
@ 8% thats $136M
Thats $88M EBTA
Tax rate of 30%.
Leaves EBA of $61.6M......

2.6Bn shareholders...
About $0.024 less per year per shareholder.


----------



## mcahn1 (24 May 2009)

bbi has huge selling pressure but seems to also have decent buying. ive noticed some big buyers and its holding up (for now) pretty well around 7.2 cents. and then i just realised that DB became a substantial shareholder.

surely this is a good news?


----------



## ricee007 (24 May 2009)

mcahn1 said:


> bbi has huge selling pressure but seems to also have decent buying. ive noticed some big buyers and its holding up (for now) pretty well around 7.2 cents. and then i just realised that DB became a substantial shareholder.
> 
> surely this is a good news?



Probably the biggest underestimation on this forum.

DB was a *SUBSTANTIAL* seller at 2.4c. A LARGE BUNCH.

To turn around and buy $10M+ (est.) at 8cents... someone has SERIOUSLY done some number crunching and became excited.

That trader must surely realise how bad stuffing up $10M on another "Babcock" would be (esp. one that has already BURNT DB!). He obviously must be very confident... and have giant cohonas...

Or all of the above *AND* know something we don't... but, there are many of us here that would buy $10M of BBI if we could...

Theres a thought skidding around the internet that DB could try and onmarket take-over of BBI (NTA of $2BN++, total equity value of $200M or so)... however, I think there are too many long-term holders for that to be successful. I don't believe DB would throw *THAT* much money into BBI at this stage.

But hey, if DB offered, say, 30cents, I'm imagining that there would be an AWFUL lot of sellers....$780M would give 50%, and considering NTA are probably about $2.5Bn...


----------



## investorpaul (24 May 2009)

ricee007 said:


> Probably the biggest underestimation on this forum.
> 
> DB was a *SUBSTANTIAL* seller at 2.4c. A LARGE BUNCH.
> 
> ...




You raise a good point, with DB being a seller at 2.4c to now turn around and buy at 8c something must have changed.

As you mention the company would also be cautious due to the "babock" name and their run of failures.

What interests me though is the position in BEPPA, in the event of a take over of BBI at say 30cents would BEPPA continue until 2012 or would DB be required to pay out the $1 plus interest, or would they offer 30cents for BEPPA as well?


----------



## ricee007 (24 May 2009)

investorpaul said:


> You raise a good point, with DB being a seller at 2.4c to now turn around and buy at 8c something must have changed.
> 
> As you mention the company would also be cautious due to the "babock" name and their run of failures.
> 
> What interests me though is the position in BEPPA, in the event of a take over of BBI at say 30cents would BEPPA continue until 2012 or would DB be required to pay out the $1 plus interest, or would they offer 30cents for BEPPA as well?



As far as I'm aware, BBI owe me $1.20 30th June 2012, per my contract with them...Doesn't matter who owns BBI... I get my money.

DB could offer to pay 30cents for every BEPPA ($233.4M)... but I sure as crap aren't agreeing to sell mine for 30c!

If DB owned 50% of BBI, surely this would improve their credit rating... which would be a SUBSTANTIAL boost for BBI share price (and in my mind, guarantee BBI survival, and my $1.20 payout)

I doubt DB could force me to sell BEPPA (could offer me $1, and I would agree)... but I'm not sure what would happen if they obtained 90%+ of BEPPA (I doubt they could force me to sell, but I don't know).


----------



## investorpaul (24 May 2009)

Im sure BB will now the answer re: BEPPA in the event of a take over.

I would imagine that a company would try and buy BEPPA holders out for less than the dollar, but if they couldnt/didnt want to it would continue to run until 2012.

Anyway we dont have to worry about this now because its all rumours. lol, it is however good to see some more posiive news for BBI with DB buying up more shares


----------



## bellenuit (24 May 2009)

investorpaul said:


> What interests me though is the position in BEPPA, in the event of a take over of BBI at say 30cents would BEPPA continue until 2012 or would DB be required to pay out the $1 plus interest, or would they offer 30cents for BEPPA as well?




I'm not sure if this addresses that particular question, but this is from BBI's website:

ISSUE OF EQUIVALENT SECURITIES TO EPS ON CHANGE OF CONTROL
EVENT
In light of the current uncertainty surrounding the Babcock & Brown Group, the directors
of BBI EPS Limited have resolved that if a Change of Control Event occurs in accordance
with the EPS terms as a result of the Responsible Entity of Babcock & Brown
Infrastructure Trust ceasing to be a member of the Babcock & Brown Group, it is their
current intention to redeem the EPS and issue Equivalent Securities as consideration for
the redemption rather than have EPS redeemed for cash or convert into Babcock &
Brown Infrastructure stapled securities.

Equivalent Securities are defined in the EPS terms as:
“securities issued by the Company or the BBI Group having economically similar
terms to EPS from the perspective of a Holder, and where BBI receives advice
from a reputable investment bank, accounting firm or other professional financial
adviser that the terms of the securities are not materially adversely different from
the terms of EPS from the perspective of a Holder.”
Copies of the EPS terms are available on the website of Babcock & Brown Infrastructure
Group: www.bbinfrastructure.com.

http://www.bbinfrastructure.com/media/387354/bbi eps ltd redemption on change of control.pdf


----------



## snowfree (24 May 2009)

Could it be possible that DB become a large shareholder due to converting SPARC? Was DB a major holder/debter of SPARC?


----------



## Largesse (24 May 2009)

snowfree said:


> Could it be possible that DB become a large shareholder due to converting SPARC? Was DB a major holder/debter of SPARC?




there is a break down of all their purchasing in the announcement.

they did pick up one enormous parcel of 42m at one stage... if i'm seeing that correctly


----------



## wesleysnipesjr (24 May 2009)

ricee007 said:


> Theres a thought skidding around the internet that DB could try and onmarket take-over of BBI (NTA of $2BN++, total equity value of $200M or so)... however, I think there are too many long-term holders for that to be successful. I don't believe DB would throw *THAT* much money into BBI at this stage.




Could it be that DB are buying BBI script on behalf of clients? This would suggest that DB are not making a corporate play for BBI.


----------



## nathanblack (24 May 2009)

wesleysnipesjr said:


> Could it be that DB are buying BBI script on behalf of clients? This would suggest that DB are not making a corporate play for BBI.




yes i think so. as per there release:

768,411 shares were :
"in its capacity as investment manager. excersise of voting is subject to any client directions"

and a lot of smaller lots were purchased for various funds under the DB banner.

the buying dates back to january and continues until may 12. so overall they would have achieved an ok average buy price. dont think we can read much into the buying really, other than hope they buy up surplus sparc sales for clients in coming weeks.


----------



## ricee007 (24 May 2009)

nathanblack said:


> yes i think so. as per there release:
> 
> 768,411 shares were :
> "in its capacity as investment manager. excersise of voting is subject to any client directions"
> ...



Hmm.

holding at 15/01/09 was 11,858,440
holding at 15th May is 127,683,351

purchased 43,113,275 shares on 24/03/2009
purchased 15,330,945 shares on 12/05/2009
purchased 4,830,618 shares on 13/05/2009
purchased 9,340,510 shares on 15/05/2009

And, they haven't sold one single BBI share from 16th jan to the 15th may.

The ASX announcment is up until the 15th May, as such it is CLEARLY not because DB owned any SPARCS.

If 0.75M are due to DB acting as an investment manager... does that mean that about 0.5M are for other reasons... some of these just DB investing? For example, the very last box seems to show DB investing 174,333 BBI shares... but I could just be reading the announcment wrong.

PS: Fairly reliable rumour floating around that someone else has bought 60M BBI in the last month as well...

PPS: Fairly *UNRELIABLE* rumour floating around that a UBS analysts has apparently chucked a buy recommendation onto BBI.
UBS also raised $1.3Bn for B&B, advised on a $500M facility for BBI's acqusition of PD Ports,
And the UBS investment banking division raised A$1.3 billion in equity and equity-linked products for Babcock & Brown....advised on BBI on A$500 million acquisition bridge facility for Babcock and Brown Infrastructures acquisition of PD Ports.... advised BBI on termination of management contract with B&B, is advising BBP on asset sales... so, if true this is massive news. I can't find any information on Google (except on HC) though, which leads me to thinking it isn't true...


----------



## Largesse (24 May 2009)

ricee007 said:


> Hmm.
> 
> holding at 15/01/09 was 11,858,440
> holding at 15th May is 127,683,351
> ...




open an account with UBS, throw a couple of grand in it and you have full access to their research division.


----------



## ricee007 (24 May 2009)

Er, sorry. My post earlier was obviously incorrect.

I said 







> If 0.75M are due to DB acting as an investment manager... does that mean that about 0.5M are for other reasons




However, from the announcment, 768,411 have a Registered Holder as ANZ Nominees... which is what was pointed out in this thread.
_
This is immaterial when DB control 127,683,351 shares..._

Out of these 127.68M, 126.72M are "in the capacity as stockbroker, stock borrower, and/or in related capacities". All the other stuff (ANZ Nominees, etc) is largely irrelevant since they combined to hold less than 1M in other ways...

However, I am unable to decipher what the above paragraph means... is anyone able to do this?


----------



## cbrendan (25 May 2009)

Rice007, melua isn't sort of similar to BB, melua is BB!

lol

Here's hoping the sell pressure stays so we can pick up more cheap parcels.

Cheers


----------



## ricee007 (25 May 2009)

cbrendan said:


> Rice007, melua isn't sort of similar to BB, melua is BB!
> 
> lol
> 
> ...



Ohhhh thats why his posts on HC are (pretty much) the only ones worth reading...

I have $2,100 of BEPPA bought in at 10c (avg), and dont effectively reallly have loose funds till August to buy more...

I finish Uni July 2012... so, BEPPA maturing June 2012 works out perfectly well for me... and unless I was offered $0.90 + now I wouldn't sell. Even at 90c, at 5% interest for 3 years that only $1.04186... compared to $1.20ish I would get otherwise... or about $315 worse off... but, I guess, the peace of mind is worth $315 .

Long story short. I don't hope for low price  BBI being a fairly high price works best for me... that way, if my BEPPA matures to BBI we won't see such immediate downward price pressure. (as opposed to if it convereted 1 BEPPA for 100 BBI, an extra 77,800,000,000 BBI shares being issued and then most being sold immediatly wouldn't be good ). If say, 100,000,000 BBI were issued due to BEPPA, then the immediate selling of them probably wouldn't affect the shareprice as much...


----------



## Mitsimonsta (25 May 2009)

We have a notice of substantial holding today from Deutsche in BBI. Deutsche now holds 5.37% of issued BBI shares.

I believe this may just spark a bit of interest in BBI today, BEPPA included.


----------



## ricee007 (25 May 2009)

Mitsimonsta said:


> We have a notice of substantial holding today from Deutsche in BBI. Deutsche now holds 5.37% of issued BBI shares.
> 
> I believe this may just spark a bit of interest in BBI today, BEPPA included.



^^^^ Didn't read the thread ?

That news was released on Friday (after market close)...

holding at 15/01/09 was 11,858,440
holding at 15th May is 127,683,351

Being the key footnotes (and I only pasted that to hit 100charcs


----------



## Mitsimonsta (25 May 2009)

I am unwell today, not really with it. Soz all.

When sick, I watch but do not trade. Too easy to make a sickness-induced decision that will make you sick later on when you realise what you have done.


----------



## ricee007 (25 May 2009)

Mitsimonsta said:


> I am unwell today, not really with it. Soz all.
> 
> When sick, I watch but do not trade. Too easy to make a sickness-induced decision that will make you sick later on when you realise what you have done.



Oh, hope you feel better soon mate.

But, in other news... I've heard you can turn a good profit if you trade whilst you are drunk!...


----------



## Jez (25 May 2009)

ricee007 said:


> ^^^^ Didn't read the thread ?
> 
> That news was released on Friday (after market close)...




The Poor people using the basic Comsec site only got this info this morning.

It demonstrates what a great Broker the basic online Comsec site provides and delays like that could potentially cost the "poor people" big time through it's great service! In the end Comsec is the only winner!

In a purely speculative way, I'm thinking BBI has been undersold and market nerves will still holding it low for a fair time to come!


----------



## thelawyer (25 May 2009)

from what i can understand reading this thread..

beppa can be seen to be the more 'safer'/'secure' investment
beppa hinges on bbi's survival

ive got a lazy 4k to chuck into beppa or bbi.. what would have the potential to have a higher percentage growth in share price if bbi gets rid of all corporate debt through better than expected asset sales?

what is the more likely scenario?

not asking for a recommendation of sorts.. but a guide as to what people think.... now would be the time to buy? from my understanding as bbi are under the 0.08 zone and beppa were under 0.10 and before that announcement in this quarter...


----------



## ricee007 (25 May 2009)

thelawyer said:


> from what i can understand reading this thread..
> 
> beppa can be seen to be the more 'safer'/'secure' investment
> beppa hinges on bbi's survival



Yes.

BEPPA is a preference share, which makes it more safe and secure.

Technically... it doens't hinge on BBI surviving... but in reality, it laregly does.



> ive got a lazy 4k to chuck into beppa or bbi..



If only I was lucky enough to have:
A. $4,000 to chuck on BEPPA.
B. $4,000 to chuck on a share I know nothing about.



> what would have the potential to have a higher percentage growth in share price if bbi gets rid of all corporate debt through better than expected asset sales?



30th June 2012 BEPPA matures (assuming no reset votes, etc).
What BBI share price will be in 3 years time is anyones guess. BEPPA is effectively limited to $1.30 or so.



> what is the more likely scenario?



Your risk profile (thus investing strategy) is different to mine. Personally, I bought BEPPA at 10c... and I don't give a toss what BBI share price is in 2012.

BBI may be higher than $1.20/$1.30 in June 2012.... BEPPA is capped at that sorta price.....

My personal thoughts is that BBI may be around $1.50 or so 30 June 2012... however, my risk profile says to be happy turning my $2150 in BEPPA into about $26,230.



> not asking for a recommendation of sorts.. but a guide as to what people think.... now would be the time to buy? from my understanding as bbi are under the 0.08 zone and beppa were under 0.10 and before that announcement in this quarter...



IMHO the best time to buy would have been when BEPPA was 4c or so...

Having said that, if I had free cash I would very happily buy $3000 worth of BEPPA now. If BEPPA didn't exist, I would also be happy buying BBI now.

Short term, theres still both upwards and downward price pressure. Which one will win is anyones guess.

Most people here expect an announcment regarding Darlypman (SPELLING, I just woke up) Bay Coal Terminal (DBCT) in June... which will significantly improve the share price... As in, potentially triple or quadruple it. By then, I'm sure you would be dissapointed if you WEREN'T holding BBI or BEPPA (this would pretty much ensure BBI's survival, in a lot of peoples mind)....

However, if for whatever reason, DBCT doesn't sell. BBI *MAY* be in trouble.... and you'd be disappointed if you *WERE* holding BBI/BEPPA.

Overall:
BBI is an ordinary share, so obviously has unlimited potential.
BEPPA is locked to interest rates, realistically its *VERY* hard to see it above $1.30 30th June 2012...

However, what BBI will be doing 30th June 2012... and just how happy you are with being limited to receiving a (upto) 1200% return on investment is up to you.


----------



## thelawyer (25 May 2009)

assume that the dbct doesnt sell.. in this quarter.. does that mean the share price would drop significantly due to sellers pre-empting that bbi is on the road to adminstration.. or would that mean they just havent reached a final agreement on the sale of dbct. would u see a SIGNIFICANT drop in share price as in from 0.08 down to 0.01 or would u see maybe a 0.01 decrease? obviously u cannot predict future market conditions.. but what would the likelihood be of a huge sell by holders in response to no announcement on the sale? btw thanks for your info^^^ 

also if there is no confirmed sale or it doesnt happen.. if i read correctly.. will beppa holders be paid out before bbi holders?


----------



## nathanblack (25 May 2009)

thelawyer said:


> also if there is no confirmed sale or it doesnt happen.. if i read correctly.. will beppa holders be paid out before bbi holders?




CORRECT. SPARCS rank above BEPPA which in turn ranks above BBI. in the event of administration, NTA is about 90c/share atm so there is plenty of breathing room. But remember administration is a slow complicated process. it may take years to see anything and how much is unknown.

in response to the possible event after a june announcement, the announcement isnt necesarily a sale notificication. its an update on progress, interested buyers, structures of the deal and offered prices. any actual sale will occur later after due diligence and consideration.

a negative announcement would be that there was little or no interest, that the price is less than book value or that the payment and finalalisation of sale is deep into end year.


----------



## ricee007 (25 May 2009)

If no *firm* offer is received within the next 3 months...
AND:
Corus backs out of PD Ports.
Tesco doesn't use PD Ports.
BBI gets screwed with Euroports.
Westnet stops transporting most of its grain.
The annual report isn't as good as people hoped

BBI may be in trouble. I *doubt* they would crash, but they would probably get some very bad refinancing terms. This would EAT the share price alive.

I won't post a target... but if all that ^^ bad news happened.... I would guess much closer to 1c than 8c!

Then again, my research tells me DBCT is a world class asset with multiple interested parties that have enough cash.


----------



## Stakes (25 May 2009)

hey all,

i have been looking through a number of forums to find that there has been a slight change in the sentiment towards BBI even before the 2.78% increase today. There is a support level at 6.9 cents if worst came to worst so overall i believe we will not be dropping below that within the next two weeks at least. My buying average is higher at 8 cents sadly but i'm confident in BBI's short term potential at the minimum....

In my opinion from the volume that has been traded over the past days of trading;

25 May 2009 - 26,024,508 
22 May 2009 - 33,207,021 
21 May 2009 - 45,242,875 
20 May 2009 - 38,993,321 
19 May 2009 - 35,511,620 
18 May 2009 - 53,092,693 

That the santos issue is not over! There is a positive side to it though from what i see and that is that their shares will gradually be released into the market in the next couple of weeks for those that dont want to hold BBI. 

BBI's volatiliy and volume impress me and are one of the main reasons that i like trading BBI. But traders should not be deterred by the recent volatilily as signs of change within the sp. I think that BBI has reached its bottom and should continue upwards over this week and hopefully into next week as recovery from last weeks damage. I don't know what price it is likely to go to but 10.5 cents seems like a reasonable "estimation!!!!"....


What do you think?


----------



## ricee007 (25 May 2009)

Stakes said:


> In my opinion from the volume that has been traded over the past days of trading;
> 
> 25 May 2009 - 26,024,508
> 22 May 2009 - 33,207,021
> ...



But, the trading volumes over the last 6 days aren't much??? 35M, 38M, 33M, 26M are tiny. I remember 50M+ seemingly being normal....



> There is a positive side to it though from what i see and that is that their shares will gradually be released into the market in the next couple of weeks for those that dont want to hold BBI.



That's being optimistic, but may be true.



> BBI's volatiliy and volume impress me and are one of the main reasons that i like trading BBI. But traders should not be deterred by the recent volatilily as signs of change within the sp. I think that BBI has reached its bottom and should continue upwards over this week and hopefully into next week as recovery from last weeks damage. I don't know what price it is likely to go to but 10.5 cents seems like a reasonable "estimation!!!!"....
> What do you think?




Do you mean SPRACS, not santos? I am very bullish long-term on BBI, but I can't begin to guess next weeks price  If I had to... I guess 10c would be reasonable.

Since *ABOUT* 11th march, over 40M BBI have traded around 12 times... so the fact that 2 out of the last 6 days are above 40M means very little...


----------



## Stakes (25 May 2009)

sorry yes i did mean SPRACS, my apologies rice, very stupid mistake....

what i found with the trading volumes is that they are well below what they normally are but i;m not sure if that is a good sign or bad???

what message does it give you rice?


----------



## ricee007 (25 May 2009)

Stakes said:


> sorry yes i did mean SPRACS, my apologies rice, very stupid mistake....
> 
> what i found with the trading volumes is that they are well below what they normally are but i;m not sure if that is a good sign or bad???
> 
> what message does it give you rice?



Ohhhh thought you were implying trading volumes were high 

To be honest, it's about average since mid march... look at the last 6 months (asx.com.au works well enough)...

I would have thought that there would have been more SPARCS being traded, to be honest...

The fact that there hasn't been record levels could indicate:
SPARCS aren't being sold as much as I thought.
SPARCS will in the near future be heavily sold.

I don't have a guess as to which .

All I know is that, medium and long term I'm very bullish


----------



## fureien (26 May 2009)

wow some nice recovery with beppa and bbi today.
bbi seeing resistance at 8 cents
but the volume looks so strong throughout the 7 - 8 cents range. it might actually hold.
looks like it wont be dropping below 7 cents anytime soon

if you look at the 5 day chart for bbi (yeh i know thats a bit short)
it looks to be a slight uptrend.


----------



## banska bystrica (26 May 2009)

As I said over at HC, I'm back in BBI at average 7.4c and I have no idea if that will hold but what I do know is that at least one of the big buyers is back in action chomping away. By the course of sales data, they seemed to acquire about 10M today and they took out about 3M on the close and it finished at 7.9c.


----------



## fureien (26 May 2009)

if you dont mind me asking. how can you tell that its one of the big buyers that are buying? i can never seem to figure out these things


----------



## investorpaul (26 May 2009)

banska bystrica said:


> As I said over at HC, I'm back in BBI at average 7.4c and I have no idea if that will hold but what I do know is that at least one of the big buyers is back in action chomping away. By the course of sales data, they seemed to acquire about 10M today and they took out about 3M on the close and it finished at 7.9c.




Just out of interest BB how do you tell that from the course of sales?

Are you looking for a number of sellers being taken out within a couple of seconds of each other by a large buyer? or do you look for regular time gaps between orders of a similar size which could indicate someone buying x number of shares every x number of minutes.


----------



## investorpaul (26 May 2009)

fureien said:


> if you dont mind me asking. how can you tell that its one of the big buyers that are buying? i can never seem to figure out these things




ha you beat me to it, I just asked the same question.

Any way heres another one. Any ideas what the intention of the buy may be? just holding for long term value? either way it must be positive.


----------



## Largesse (26 May 2009)

unless its him doing the 'chomping', he doesn't KNOW, he is just guessing.

3 000 000 @ 7.8c is only about 230k. Not even a large position for some day traders.


----------



## fureien (26 May 2009)

either way the stock is moving slightly upwards a bit. all facts considered, especially now that we are nearing june, and assuming most of sparcs converters have sold out or decided to hold. maybe it might just be recovering?

im personally gunna wait a bit or it breaks 8 cents again before i assume anything though.


----------



## banska bystrica (26 May 2009)

Largesse said:


> unless its him doing the 'chomping', he doesn't KNOW, he is just guessing.
> 
> 3 000 000 @ 7.8c is only about 230k. Not even a large position for some day traders.




I don't know what Deutsche Bank are doing and they have bought over 100M this year and sold zero.
I do know what the other big buyer is doing though and they are back in today.
10M bought today is roughly $750K.... just a bit more than even the bigger day traders largesse. lol


----------



## Largesse (26 May 2009)

banska bystrica said:


> I don't know what Deutsche Bank are doing and they have bought over 100M this year and sold zero.
> I do know what the other big buyer is doing though and they are back in today.
> 10M bought today is roughly $750K.... just a bit more than the average day trader largesse. lol





DB's disclosed buying over the last month doesn't mean squat with regard to today's 'chomping'. Buying today could be anyone.
And you're 'other big buyer' hasn't yet cracked 5%.... so there is no evidence that this is true either.
Finally, please direct me to where you/I can see that a singular entity purchased 10m shares today.... there is nothing to prove or even suggest that the purchase on close was in anyway related to ANY buying through out the day.

Also, didn't say 'average' day trader. I have a 25year old friend that move's bigger blocks than 250k all day long, it isn't uncommon.

You clearly have a position again, and I appreciate all the work you have put into research over the past months, but enough with the BS innuendo.


----------



## banska bystrica (26 May 2009)

I suggest you re-read my post in full before you start having a go at me.

I may also know a lot more about the buyer than you think so I suggest you keep your "BS innuendo" references to yourself. We don't need garbage like that on this fine forum.

I'm hardly going to name the fund manager either. I have not been told WHY they are buying. All I know is they ARE buying.


----------



## Largesse (26 May 2009)

banska bystrica said:


> I suggest you re-read my post in full before you start having a go at me.
> 
> I may also know a lot more about the buyer than you think so I suggest you keep your "BS innuendo" references to yourself. We don't need garbage like that on this fine forum.
> 
> I'm hardly going to name the fund manager either. I have not been told WHY they are buying. All I know is they ARE buying.




Everything you are suggesting *still remains unsubstantiated* and could easily be classed as a thily veiled ramp. You should be moderated for it.


----------



## banska bystrica (26 May 2009)

Yeah sure. ASF and other forums really influence stock prices...NOT.
You must also think when the bell starts ringing it's Mr Whippy.
I couldn't give a rats sars whether BBI goes up or down short term.


----------



## Largesse (26 May 2009)

banska bystrica said:


> Yeah sure. ASF and other forums really influence stock prices...NOT.
> You must also think when the bell starts ringing it's Mr Whippy.
> I couldn't give a rats sars whether BBI goes up or down short term.




LOL! You couldn't give a rats sars if BBI/BEPPA dropped 25% tomorrow and then again on Thursday?
Sure..... 

But by all means, please, keep it up with all your unsubstantiated hearsay. Just oozes credibility.


----------



## banska bystrica (26 May 2009)

The forum can look forward to Largesse's magnificent coverage of BBI. I'm finished at this fine forum. Hope I've given you all enough to contemplate regarding BBI/BEPPA and you have enough research to make up your own minds whether BBI/BEPPA can go substantially higher in 2009.


----------



## eMark (26 May 2009)

Thought I'd catch you over hear BB. 

It's great that you can more or less say what you think over here without fear of retribution. 

I gotta hand it to you, getting out of BBI when you did, and subsequently getting back in was a stroke of genius (but clearly not just luck), well done!

Haven't seen you on the HFA thread for a while. Are you still holding? I sold out for a nice profit (I didn't think I would sell up initialy, but like BBI, I could see the opportunity). 

I have recently bought back in (for roughly the same amount of shares, and around the same price). Must be time for HFA to move on back up. 

With it's P/E, and even with the GFC, it's price should be in the 0.60-0.70 range.

Cheers

eMark


----------



## fuzzie (26 May 2009)

I must say from my POV it would be sad to see BB leave this forum, please leave a forwarding address. In any case I can't help but admire BB's timing. I dumped my last BBI holding at midday Thursday 15th for 9.7 because I figured the SPARCS reset wasn't going to get up. BB sold the next morning for 12 before it closed at 9, go figure. His timing is impeccable. I wouldn't even think of playing poker with him


----------



## investorpaul (26 May 2009)

Yer BB, if you do decide to leave these forums just know that 99.999% of people really appreciated all the effort and research you shared with us (even when you didnt have to).

You always argued your points with facts, which just highlighted the enormous amount of research you put in.

All the best with BBI/BEPPA and your trading in the future


----------



## ricee007 (26 May 2009)

Largesse said:


> DB's disclosed buying over the last month doesn't mean squat with regard to today's 'chomping'. Buying today could be anyone.
> And you're 'other big buyer' hasn't yet cracked 5%.... so there is no evidence that this is true either.
> Finally, please direct me to where you/I can see that a singular entity purchased 10m shares today.... there is nothing to prove or even suggest that the purchase on close was in anyway related to ANY buying through out the day.
> 
> You clearly have a position again, and I appreciate all the work you have put into research over the past months, but enough with the BS innuendo.



Buddy, I direct you to page 67.



> PS: Fairly reliable rumour floating around that someone else has bought 60M BBI in the last month as well...





> "Unfortunately you don't know who the buyer(apart form [DB])was. I do and they were not buying to do BBI holders a favour in bidding up the price prior to the SPARCS vote."





> "They would want to have big wallets. It was an insto buying.....100% guaranteed. Mid cap fund manager."




And there are a few other quotes (including the best one, which I CBF looking for at the moment).

We then have 







> I'm hardly going to name the fund manager either. I have not been told WHY they are buying. All I know is they ARE buying.





> I don't know what Deutsche Bank are doing and they have bought over 100M this year and sold zero.
> I do know what the other big buyer is doing though and they are back in today.




Do you think that MAYBE, just *MAYBE* he knows the fund manager personally?...

I can't believe you ran BB off. I'm terribly dissapointed in you. If you think BB is lieing (despite being right about nearly everything so far)... you STILL shouldn't react the way that you have.

This is a sad day, that will seriously reduce the quality of this thread.

Largesse, I really think that you should ..... ......

BB, thanks for all your effort...  feel free to just ignore any tools and stay on ASF.

Kind Regards,
Rhys


----------



## Largesse (26 May 2009)

ricee007 said:


> Buddy, I direct you to page 67.
> 
> 
> 
> ...




Stick to HC mate. They don't require you to actually back up any of your claims with evidence over there.

BB and his 'insto' mate will fit in perfectly.

Ramp to the heavens. 

Best of luck,

L


----------



## nathanblack (26 May 2009)

ricee007 said:


> BB, thanks for all your effort...  feel free to just ignore any tools and stay on ASF.




calling people "tools" doesnt help much, only really inflames things. Just let everything cool down, im sure everyone involved will calm down and move on and continue posting. If at some point in the future certain comments are vindicated im sure an apology will be forthcoming.

Largesses' question was valid, that from the course of sales it is impossible to connect a large purchuse in the morning with another later in the day. All BB had to say was:
a) from the trading paterns/volumes i "think/suspect" a major buyer is acting
b) its just a hunch; or
c) a source told me.

but in the case of c) it has nothing to do with the course of sales.

i *think* that on occasions BB responses can be short but sweet, those that are on the same page, have read the entire thread and done there own research can usually follow what hes saying.

but for the less informed newbies his responses can seem abrupt or not answer there questions. its nobodys fault. just the difference in experience of investors. we have students posting, mum and dad investors all the way up to professional traders.

We all know DB has been a buyer and "could" still be buying, and looking at the volumes and support there is "probably" atleast one other "large" buyer. As BB has said, the reason for there buying is unknown. But if its a fund manager, than its purely as an investment, not a prelude to a takeover or a JV partner. either way, buyers help hold prices firm or drive them higher.

I look forward to informative posts from both largesse and BB in the future, but thank BB for his past contributions if he choses not to return.


----------



## hardyakka (26 May 2009)

Largesse said:


> Stick to HC mate. They don't require you to actually back up any of your claims with evidence over there.
> 
> BB and his 'insto' mate will fit in perfectly.
> 
> ...




Largesse,

You are talking through a hole in your head. All I am going to say is that BB was spot on, except the ones that I know may be interested are likely different to BBs.

Also what is very clear is that you have no idea what you are talking about. If you think that even the holder of 25M plus BBI is able to influence the price or that instos take one iota of notice of information posted on these threads then you are only demonstrating to me a total lack of understanding as to how institutions and the market work.

I suggest you engage brain before opening mouth next time.


----------



## random (26 May 2009)

Largesse

I don't know if you have gone back and taken the time to read comments by BB and others over the last 20-30 pages but i must assume that you have (everyone should).
There can be no doubt of BB's knowledge and more importantly for us his ability to pass this detailed knowledge on in terms that many of us here would not fully comprehend otherwise. Once some of these facts were understood by myself further research of my own became easier and clearer.

Time and hindsight has shown that he is not a bag of hot wind.  

Of course you have the right to take issue with his comments and anyone elses but be cool. 

Track records like bb's deserve respect and gives him street cred on this forum at least.

I have been a holder of beppa's but this morning bought 120,000 BBI shares. I expect them to stay in this price range but even if they sink a couple of cents i'm truly ok with that.
Cheers


----------



## mark_au (27 May 2009)

fuzzie said:


> I must say from my POV it would be sad to see BB leave this forum, please leave a forwarding address. In any case I can't help but admire BB's timing. I dumped my last BBI holding at midday Thursday 15th for 9.7 because I figured the SPARCS reset wasn't going to get up. BB sold the next morning for 12 before it closed at 9, go figure. His timing is impeccable. I wouldn't even think of playing poker with him





I concur,

I have enjoyed BB's detailed and comprehensive analysis of this company.
it would be a real loss to the forum if he were to leave because of one jealous poster.

cheers


----------



## Mitsimonsta (27 May 2009)

A sad day indeed. And I owe him some sort of celebratory drinks as well.

Meantime, watch it run today. BEPPA up 17% today, and I think it has more in the tank. Last 13c, Offer at 13.5c.


----------



## hardyakka (27 May 2009)

mark_au said:


> I concur,
> 
> I have enjoyed BB's detailed and comprehensive analysis of this company.
> it would be a real loss to the forum if he were to leave because of one jealous poster.
> ...




I totally agree Mark, very simply I ( and I think the vast majority) would like to see BB return to this forum and continue to share his research and insight. There is an ignore button for persons like largesse.

Cheers


----------



## fureien (27 May 2009)

hmm im gunna watch bbi closely mite jump back in at 80 cents this afternoon. all indicators are suggesting a buy lol.

what worries me is that volume is still bad. still alot of sellers vs buyers


----------



## Mitsimonsta (27 May 2009)

Hmm, just seen this. Wonder how things bode for sale of DBCT with this news...

http://www.thebull.com.au/articles_detail.php?id=3347



> Billionaire Clive Palmer's Waratah Coal has unveiled a central Queensland thermal coal mining project, hailing it as the nation's largest.
> 
> The project, known as "China First", will mine 1.4 billion tonnes of coal in the Galilee Basin, southwest of Mackay in central Queensland.
> 
> ...


----------



## fureien (27 May 2009)

are u suggesting it might be negative becasue they are building their own. or positive because its port related...i cant tell lol


----------



## w.m.buch@bigpond (27 May 2009)

DBCT can do at least 81m tonnes per year.
Using the figures for the new terminal as a base to value DBCT gives a possible value of $3.426b, that would be nice!


----------



## Mitsimonsta (27 May 2009)

fureien said:


> are u suggesting it might be negative becasue they are building their own. or positive because its port related...i cant tell lol



I don't know.... I am asking all of you!

Could be bad in the fact that the new rail line could be used to send coal to another port.

DBCT is a regulated, 'take or leave' port, so the money is charged regardless.



w.m.buch@bigpond said:


> DBCT can do at least 81m tonnes per year.
> Using the figures for the new terminal as a base to value DBCT gives a possible value of $3.426b, that would be nice!



Nope, no such luck. We are looking at a 100 MTPA facility:
http://www.dme.qld.gov.au/media_centre.cfm?item=574.0


> "A new Australian coal port - the first in a quarter of a century - would be built near Shoalwater Bay between Rockhampton and Mackay with a capacity of up to 100 million tonnes of coal per annum.




I have taken an image of the proposal on the Waratah Coal, shrunk it and marked DBCT on it. It's about a 2.5MB PNG, so it is large! Note that the image shows the port to the north of Mackay, the link however talks about it being south of DBCT.

*Download image here*


----------



## random (27 May 2009)

Mitsimonsta,

Thanks for posting that info!

I am a little confused though.

When you look at the map the DBCT is geographically closer to the proposed mine than where the new terminal will be built. 
Is it simply that the volume of the new mine will be too much for DBCT even with its expansion programme? hence the building of the new terminal plus the added cost of the rail line?


Can anyone fill us in on this.

Thanks


----------



## Mitsimonsta (27 May 2009)

The previous image is not what I expected, this one looks a little more what I thought was going on: http://www.waratahcoal.com/galilee/images/RailRouteConceptPlan.JPG


----------



## random (27 May 2009)

So a new terminal is proposed.
The new terminal is to be more than 100km further away from the new mine than dbct currently is. Plus they have to build the rail line itself. (distance calculated by the scale listed on the map).

Don't get it!


----------



## fuzzie (27 May 2009)

New field, new business, new quantities to export. DBCT can't handle double the current throughput. The existing shippers can't stop shipping for 4 years until an optional loading facility is built with no guarantee it will be a cheaper outlet.

Seems to me Clive Palmer is the one carrying the major risk, not DBCT.

BTW. I think this time BEPPA is being rerated relative to BBI while there isn't a concurrent big market bounce on the other infrastructure stocks. My guess is the current prices will hold this time.


----------



## fureien (28 May 2009)

fuzzie said:


> New field, new business, new quantities to export. DBCT can't handle double the current throughput. The existing shippers can't stop shipping for 4 years until an optional loading facility is built with no guarantee it will be a cheaper outlet.
> 
> Seems to me Clive Palmer is the one carrying the major risk, not DBCT.




lol good point



fuzzie said:


> BTW. I think this time BEPPA is being rerated relative to BBI while there isn't a concurrent big market bounce on the other infrastructure stocks. My guess is the current prices will hold this time.




rerated relative to bbi? wat do you mean?
the prices might hold, but i wont count my eggs too soon. bbi went up today, but just as i guessed it didnt hold up but the thing is, its closing at a higher and higher price everday for the past week. volume is the only thing putting me off

mite still wait for june


----------



## ricee007 (28 May 2009)

fureien said:


> rerated relative to bbi? wat do you mean?
> the prices might hold, but i wont count my eggs too soon. bbi went up today, but just as i guessed it didnt hold up but the thing is, its closing at a higher and higher price everday for the past week. volume is the only thing putting me off
> 
> mite still wait for june



Before, BEPPA was worth, say 1.1 BBI.

He is arguging that now, BEPPA is worth, say, 1.5BBI 

(As valued by the market place).

Do you believe BBI will go down in price between now and mid June, then overnight double in price after an announcment is made?


----------



## fuzzie (28 May 2009)

fureien said:


> rerated relative to bbi? wat do you mean?




It looks to me like BEPPA has been traded purely as a proxy for BBI for some time. I think if you look at the buy and sell sides of BEPPA at the moment you will see quite a different picture emerging compared to BBI.

BBI has been trading lately with twice as many sells as buys. BEPPA has twice as many buys as sells. BEPPA is always going to be smaller in volume and given it's a preference share I would expect it to mainly attract a different type of buyer. 

That's not saying there won't be day traders willing to move money around via it as well as any other stock.


----------



## fuzzie (28 May 2009)

2 Hours later.... beppa down, equal # sells as buys

...Obviously don't trust my guesses.. 

... Still holding beppa long term


----------



## fureien (28 May 2009)

i think beppa has shown its resilience, for holding above 10 cents these two weeks. yesterday it was in the green for me for once. today the whole market is down and alot of day traders just selling out. so even if the volume is equal i have full confidence in it.

bbi on the other hand, just as i figured hasnt held out above 8cents. but i wudnt be surprised to see a close at 7.9 or 8 cents. remembering today is a bad day for the market overall

i dont think bbi will double over night. i think there will be a small ramp up before news announcement. and then it will double in that ramped up value lol.


----------



## nathanblack (29 May 2009)

what do people think the reason is behind the delay in name change? could it be they are waiting to see what key asset remain before changing the name? ie if euroports was there major asset a name like europort would be likely. if DBCT was the crown a name like Aus Coal Terminals.

seems to me a name change has no negatives and only neutral or positive results. BBI often get confused with other BB offshoots and the BB name stinks. Maybe this gap between major announcements is an excellent time to change name and keep interest in the company


----------



## ricee007 (29 May 2009)

nathanblack said:


> what do people think the reason is behind the delay in name change? could it be they are waiting to see what key asset remain before changing the name? ie if euroports was there major asset a name like europort would be likely. if DBCT was the crown a name like Aus Coal Terminals.
> 
> seems to me a name change has no negatives and only neutral or positive results. BBI often get confused with other BB offshoots and the BB name stinks. Maybe this gap between major announcements is an excellent time to change name and keep interest in the company



How much would it cost to buy new letterheads?
How much would the Web Designer charge?
How much would the front-signange charge?
How much would a new domain name / email address cost?
How much would you pay the guy to come up with the name?
What about the BBI branded mints, pens and ties?

BBI don't have the time (hoepfully everyone of importance is busy selling DBCT !).... or the cash to change the name.

As a BEPPA holder, I would be dissapointed if they wasted money to fundamentally change nothing.

When they *have* some money, then, and only then, would I be happy for  them to change names.... there CERTAINLY are negatives.


----------



## nathanblack (30 May 2009)

random said:


> So a new terminal is proposed.
> The new terminal is to be more than 100km further away from the new mine than dbct currently is. Plus they have to build the rail line itself. (distance calculated by the scale listed on the map).
> 
> Don't get it!




at the height of the boom and coals highest demand DBCT couldnt cope with the throughput. Ships were queing to be loaded, some up to three weeks. It was reported quite heavily at the time, and the delays were blamed on government not regulating BBI investment in the project and forcing expansions that would have exceeded $1bil to handle the large quantities. Considering it is essential infrastructure the government should maintain some control over maintainence and expansions.

So if DBCT is operating at capacity, another operator starting a similar terminal would only take the excess volume. ofcourse it could create compitition and downward pricing but i wouldnt be too concerned.


----------



## nathanblack (30 May 2009)

investorpaul said:


> What interests me though is the position in BEPPA, in the event of a take over of BBI at say 30cents would BEPPA continue until 2012 or would DB be required to pay out the $1 plus interest, or would they offer 30cents for BEPPA as well?




from my understanding of the complex structure of BBI, a takeover is very unlikely. the reasons being:
(1)part ownership of entities. in the event of a takeover, all existing part owners get right of refusal to buy BBIs stake at asset level.
(2)asset level debt. takeover triggers repayment of all asset level debt, so any takeover company must have alot of free cash or pre-arranged finance.
(3)management. whilst it was external and fees paid to B&B it would be near impossible to buy the company with the intent of breaking it up and selling individual assets to realise a profit, because B&B although not owning the asset had complete control over the running of that asset, and you couldnt enforce a break-free from management fee. B&B chose to accept a break-free fee. Although internalised now, there are still complex issues at play that could tie the hands of a takeover company.
(4)regulations. any takeover must get regulatory approval. due to being essential infrastructure and being in different countries, there are competition and security threats. not an easy task.

just my thoughts on why any takeover is unlikely, but not saying that minor stakes wont be acquired. individual asset sales is still the easiest and best option for BBI success


----------



## nathanblack (30 May 2009)

ricee007 said:


> As a BEPPA holder, I would be dissapointed if they wasted money to fundamentally change nothing.
> 
> When they *have* some money, then, and only then, would I be happy for  them to change names.... there CERTAINLY are negatives.




i disagree slightly. sure as a BEPPA holder, the SP of BBI is largely irrelevant. all that matters is survival. But i think a name change can change sentiment towards BBI and drive the price higher. 

a higher SP can only be a good thing for BEPPA too because it would give bankers more faith in BBI. also try raising funds through issuing new equity at 10c? imagine the dilution and backlask from existing holders. But if BBI were trading at say 30c post DBCT sale and name change??? perhaps raising funds throught share placement would be an option for working capital or to paydown debt.

if a sale and name change increases the SP, i would also propose a reconstitution of shares. perhaps a 1-10 swap. we all know penny stocks and $100 stocks have a smaller market than a $5 share(its purely pchycological) but HVN, Brambles and others have all done share splits to improve liquidity and gain access to a different category of investor.

i cant think of and example, but i know some companies do the opposite of a split. it opens the shares up to a new investor and can improve volatility, getting more insto's on the register and mum and dads and less traders.

just some mindless ramblings lol


----------



## fureien (1 June 2009)

hmm good overal market open pushing up bbi again

and i just notice BBP is no longer suspended? thats gotta be a good thing right. bbi back to 8c again as of now, but i dont think it will hold. still alot of selling pressure.

i dont mind lol, all my capital is tied up atm, so i dont wanna buy back in yet.


----------



## Mitsimonsta (1 June 2009)

Nice small rises in SP every day is a good thing. Today's BEPPA performance gives me a little more hope.


----------



## investorpaul (1 June 2009)

Not much activity in this thread lately, I guess there isnt really much to talk about, although we are getting closer to june 30 by which point we should have an announcement one way or the other on DBCT.

In the mean time it is good the see the SP holding ground/slowly moving forward  in amounts that are more sustainable compared to when it shot up a few weeks ago.


----------



## nathanblack (1 June 2009)

volumes have been pretty low today and end of last week(low by BBI standards). perhaps a combination of no news to get buys interested and the fact the bigger players will wait for DBCT news

but low volumes must be good, as it means SPARCS conversions are either being eased into the market or even held.

it wouldnt surprise me if some will be long term hold, after all SPARCS was a debt issue similar to BEPPA. That kind of investment INITIALLY would have been geared towards long term passive investors wanting an income.


----------



## fureien (2 June 2009)

urgh
i had a high sell order for beppa at 13 cents that got processed during pre open today. argh >< i didnt think it wud get that high.
im trying to buy back in

anyhoots great movement today with bbi. the number of buyers has substantially increased against sellers. very good sign. but 9 cents seems to be resistance again. and it got sold down again.
i think the next break it will hit over 9 cents. so im going to try buy back in


----------



## Mitsimonsta (3 June 2009)

QLD Govt will sell off the Abbot Point Coal Terminal (herein ABCT) at Bowen, in order to plug a $14b hole in the state budget.

This is the port slated to ship out the Watatah Mine project. The new port at Shoalwater Bay has been knocked on the head by Peter Garrett.

Should not have too big an impact on DBCT sale, as ABCT is only 25Mtpa and being expanded to 50Mtpa while DBCT is rated at 85Mtpa.

Xtsrata currently manage ABCT and is mooted as a likely buyer. Waratah Coal is also pretty likely to bid as they would want some control over the port that will be shipping the largest mine output in the state.

AFAIK, the port is not regulated at this time, but cannot confirm it. I should think that it would become regulated upon sale if it is not already.


----------



## nathanblack (3 June 2009)

Yes, Qld gov want $3bil for the port. kind of helps as a measuring stick for DBCT or atleast a comparison. the gov is also selling some toll roads and a rail network.
the only negative would be that a pension/super fund buying strictly as an investor and not as a user/cost saving , now has a choice of a few key infrastructure investments.

the positive is $3bil price tag validates the importance/value of ports.


----------



## mcahn1 (3 June 2009)

not a positive news at all.
the market is now flooded with infra assets. 
it would no doubt put pressure on valuation.


----------



## fureien (3 June 2009)

Flooded? Isn't thAt a bit too strong of a word to use? What other assets are there? And you still have to factor in quality of the assets. Although I see what you mean, there's more choice available to the limited buyers, isn't dbct meant to be a great asset. Quality over quantity


----------



## fuzzie (4 June 2009)

The announcement of the QLD Gov asset sell off also said it was planned for a staged sell down over 3 to 5 years. Many other things could happen in that timeframe. DBCT is on the auction block now.


----------



## mcahn1 (4 June 2009)

fureien said:


> Flooded? Isn't thAt a bit too strong of a word to use? What other assets are there? And you still have to factor in quality of the assets. Although I see what you mean, there's more choice available to the limited buyers, isn't dbct meant to be a great asset. Quality over quantity




no its not too strong of a word. let me put it in perspective for you.
besides bbi's dbct and westnet:
- asciano's patrick container port
- asciano's pacific national coal
- jemena's eastern gas pipeline, qld gas & vic gas hub
- mac infra group westlink m7
plus 16bn worth of qld assets:
- qld motorways
- port of brisbane
- forestry plantations queensland
- qld rail's coal network
- abbot point coal terminal 

all these infra assets in the market or coming into the market just in AUS. 

you say dbct is a quality asset. and what you think assets listed above aren't? its all relative to price.

put yourself in the shoe of potential buyer of these assets. utilities sector being the most leveraged sector of all - asciano, jemena, bbi and mac infra been trying to flog their assets since last year - more and more assets are coming into the market. as a buyer you would play this to your full advantage.


----------



## nathanblack (5 June 2009)

totally agree. in this economy and with the number of assets available, it is definately a buyers market. buyers can chose which asset they want and have more control over price. the longer negotiations take, the more desperate some companies will become as there bankers press on them harder. some companies are on the edge and a sale must happen sooner rather than later.

in BBI case, i think sales are the key to unlocking wealth and share price growth. but im not 100% satisfied that an immediate sale is required. they are meeting there debt obligations and i think if you look at the likes of ozminerals, banks can be forgivable and allow time to sort things out.

i do shudder to think what will happen to SP, IF come end of june there is no announcement on DBCT or the announcement is "still in negotiations with interested parties".

markets tend to panic.

on the flip side there does seem to be money floating around for infrastructure assets, so i guess it really is a wait and see approach.


----------



## hardyakka (8 June 2009)

mcahn1 said:


> no its not too strong of a word. let me put it in perspective for you.
> besides bbi's dbct and westnet:
> - asciano's patrick container port
> - asciano's pacific national coal
> ...




I agree with you that there are multiple proposed sales of quality infrastructure assets coming onto the market, however I do not think that this is going to affect the sale of DBCT materially. 

Consider the situation, the QLD assets are proposed to be sold over the next 3 to 5 years, but for arguments sake lets cut that back to 18 months to 3 years. Also remember that these are regulated income streams, ie consistent subject to usage, CAPEX, inflation etc, the income generated does not have the characteristics of a normal profit.

IMO these additional assets will be sold when we are out of the GFC, ie in a more normalised market environment and this fact will be reflected in their Enterprise Value (ie multiple of EBITDA). 

In the case of DBCT it is for sale in the GFC, and consequently there will be a discount built into its EV. If DBCT was sold when we were out of the GFC and BBI was not viewed as distressed then it would no doubt be able to command a higher EV.

So if you were a cashed up buyer knowing that the GFC is going to end in the next 12 to 18 months, inflation was going to increase due to the liquidity governments pumped into the system (and hence asset prices rise), what would you consider the more astute decision?

Would it be to buy in market circumstances where cash is king, the vendor is viewed as distressed and before the full impact of inflation hit and increased the price of the asset? Or would you wait and buy in a normalised market after inflation had taken off, this of course being reflected in the EV of that asset? 

When you consider the income flows are regulated and investors are sitting on piles of cash which is not generating reasonable returns I know what I would do.

Cheers


----------



## nathanblack (8 June 2009)

hardyakka said:


> When you consider the income flows are regulated and investors are sitting on piles of cash which is not generating reasonable returns I know what I would do.
> 
> Cheers




screw BBI on sale price and terms of settlement? BBI need a 100% sale at above book value, and in a timely fashion. how long do you think due diligence on a sale like DBCT would take? and what regulatory approvals would be required? would the chinese be welcome buyers?


----------



## mikes (8 June 2009)

prices regulated by whom for whom - the consumer or the supplier.

when the"regulator" assesses prices what interest rate is used - a rate near the rba rate for a prime borrower or a rate say rba + say 10% which would apply for a borrower where there were doubts as to complying with loan warranties etc.

eyes closed by all on this critical issue re values.

hold beppa


----------



## hardyakka (8 June 2009)

mikes said:


> prices regulated by whom for whom - the consumer or the supplier.
> 
> when the"regulator" assesses prices what interest rate is used - a rate near the rba rate for a prime borrower or a rate say rba + say 10% which would apply for a borrower where there were doubts as to complying with loan warranties etc.
> 
> ...




DBCT is regulated by the Queensland Competition Authority. Refer to the below link for the latest update annual pricing review and the structure of the pricing is dealt with in the second document.

http://www.qca.org.au/ports/2006AUAmend/AARroll0910.php

http://www.qca.org.au/files/DBCT 2006 Draft Access Undertaking_Decision Jun06.pdf


Nathan-The latest sale release on the sale process is that it will be completed by 1st quarter 09/10, or do you know something that the market doesnt?

As regards screwing BBI, re-read my earlier post. It was clearly stating that a sale in the GFC would be at a lower EV than if the asset was sold in 18 months and hence *would* be at a reduced price.


----------



## nathanblack (8 June 2009)

hardyakka said:


> DBCT is regulated by the Queensland Competition Authority. Refer tro the below link for the latest update on the pricing payable by *customers*. It is a pricing structure, interest rates is just one of many inputs.
> 
> http://www.qca.org.au/ports/2006AUAmend/AARroll0910.php
> 
> ...





The pricing regulations exist to protect the consumer of overpricing, particularly in monopolistic environments(ie ports and transmission lines). But it benefits the supplier too, because they have a certainty about there earnings. And being a monopoly certainly helps asset sales.

i dont know any updates on sale process, like you, im waiting for the announcement end june for guidence. my question, for anyone that may know, still stands. That is being a regulated asset and key infrastructure are there extra hoops to be jumped through, particularly would chinese company require any goverment approval?

im not disagreeing with you, i total agree with your logic regarding discount for the current market conditions. im just thinking more conservatively regarding who has the power in any sale negotiations, not just with the price, but wether they buy 100%, 50% or another stake. also, the condition precedences that are set will be favourable to purchaser and some form of delayed payment term.

by delayed payment, i mean a portion of the price may be dependent on certain performance figures. if targets are met a "bonus" is paid above agreed price, or if not met it is not paid.

im also more conservative with the settlement date, because you look at ozminerals or rio and a host of others including BBI powerco sale. hiccups do occur and renegotiations take place, thats why im particularly interested in any government approval that maybe required.

despite all this, my thoughts are ultra conservative and i still see tremendous value in the stock (both BBI and BEPPA) at current price. risk versus reward. im very bullish. my calculations say that if a sale fell through(no indication that it will) or is delayed(again no reason to think so, just being conservative) then earnings can meet interest repayments. not much debt is near term, and i think from ozminerals and BBP, it would be accurate to assume refinancing is likely if required.

disclosure: was 100% BEPPA. now 20% BBI


----------



## mikes (8 June 2009)

thanks for those price setting links

quick skim on price setting

basically initial for the first few years is 11.84 %  roi on base value $855 million ( note this is not $2.5bn being spoken of) as at 1/7/04 + cap ex since

hence value worth more to buyers having lower cost of capital, hence worth much more to chinese or japanese buyers or other buyers with low costs of capital than for dicy capitalised buyers where banks have concerns and charge like wounded bulls.

that is unless there is sig gaming and the customers or the suppliers sometime in the future capture the temporary appointed regulator and how change the major pricing parameters within the long total period.

all a question on effectiveness of accountants for the supplier and the gaming prowess of the providers and the consumers and the appointment of who is the temporary regulator from time to time on the whole period of the venture.

this future pricing looks like a real dogs breakfast over a period of many years to come and a stubborn shareholder return and bonus motivated supplier who has most to win or lose will win out on balance with the gaming on deferred maintenance, safety claims,likelihood of consumers defaulting on payment, availability, service efficiency and gaming for further cap exp and required rate of return etc etc.

future value more determined by future inflation, construction cost and maintenance cost price indexes which could take off with a big spending government printing cash  etc., and if construction /maintenance trade unions flex muscles etc etc.  i now feel more confident. gotto keep these carbon taxes away from the coal industry and get more foreigners mining coal., though a problem if interest rates take off upwards in a big way

just as well not shipping trees or wood chips from great southern or timbercorp out so no bad debts on that score.

couild be another telstra where price regulator (captured by consumers)agressive and will not permit telstra to dictate to its competitors on access or earn what telstra sees as a proper return on capital hence the strike on land line cap exp and probably minimum maintenance and service deterioration until the consumers get mad -  seen the price regulated tasmanian railways lately, service temporarily suspended for a long? time over derailment/safety etc issues and the employees stood down without pay asking the state tasmanian government to pay them whilst the service is not operating

hold beppa.


----------



## fuzzie (9 June 2009)

I would think the new BHP RIO alliance elsewhere will have some effect on the interested bidders list. If there is a BHP RIO consortium considering a DBCT purchase there a 3 new things in the mix. BHP may have $6 billion less cash on hand, RIO may have $16 billion more cash on hand. BHP and RIO will have other improving alignments of interest.

It all sounds to me like it would make a BHP RIO consortium a stronger bidder, but it could also be that the other deals may be an effective distraction from the $2 billion DBCT sideshow.


----------



## Stakes (10 June 2009)

hey,
Just curious of whether people are willing to say for what average they are positioned in BBI if they own it at all. I just jumped out thinking that BBI will be experiencing new low 7c levels again and thought i would consolidate current profits and pretty keen to average out at 7-7.2 cents???

Whats your position?

Stakes


----------



## Jez (10 June 2009)

Stakes said:


> Whats your position?




I think you are assuming everyone that reads your question is on the same strategy bus as you!

Better still, just come out with it and ask us what the price is going to be tomorrow at 3:45PM.

Best of luck with your trading!


----------



## ricee007 (10 June 2009)

Jez said:


> I think you are assuming everyone that reads your question is on the same strategy bus as you!
> 
> Better still, just come out with it and ask us what the price is going to be tomorrow at 3:45PM.
> 
> Best of luck with your trading!



BEPPA ONLY:

Bought $1000+ at 9.6c.
Bought $1000 + at 10.5c
Total, 21,500 at $2,150 = 10cents each.

Intentions? June 30 2012...

Despite others having serious doubts, I believe BEPPA is strong enough to be able to give me $1.20, or at least, close to it.... in a bit over 3 years.

I am not sure if I'll buy some more after the SP settles (currently, the MAK SPP, or the ANZ SPP would get my money before BEPPA does)... but, I'm not averse to it in like August 2009, assuming CP are met for Euroports, no bad news, and a good DBCT sale. Even then, if the SP is, say, 30c... I'd still be expecting $1.20 in 2012, or 400% ROI in less than three years.... Something I wouldn't mind chucking $2,500 on to pick up $10,000.

Failing that, if I'm sure I'll get $1.20 in June 2012.... I certainly would love to buy some January 2012 for 80c or so..... Pop $10,000 or so into, expect $15,000 back... which I see as a realistic hope.

In a perfect world, my $2,150 will turn into $25,800.
$2,500 in August will turn into $10,000
$10,000 in January 2012 will turn into $15,000.

=$36,150 profit, from an outlay of under $15,000.

In a perfect world ... (in reality, could easily only get $1/$1.10 instead of $1.20) (Hell, in reality, BBI could go belly-up, but I see that as unlikely...  even then, I could easily get paid paid out $1.06).

Realistically, I expect the first thing^ to happen (too optimistic??)
The second may be a touch optimistic, but certainly a decent chance of that being the case!
And, the third is just really numbers I pulled out.....and doesn't take into account BEPPA dividends being paid out before 2012... and so is a bit pie-in-the-sky.... but, is still my best guess.


----------



## nathanblack (11 June 2009)

great post ricee, i wish you all the best, and i see you put some thought into your strategy and you are backing yourself. and you have taken a relatively safe approach, buying more shares as the price /certainty increases, and buying less at the higher risk end of the scale. good financial management/captial protection.

for me its harder to determine the average buy price because of my stategy. ive been trading the stock somewhat, buying low, selling after 20-30% gain, then buying an increased stake when it falls back again.

i currently own about $45,000 BEPPA (avg about 10c) and $10,000 BBI(avg about 7.4c). but these averages are strictly for the current parcel. i will probably sell BEPPA at 13.5c and BBI at 10c if it happens soon, then buy back in at lower. or wait as i expect i will have to until the announcement and hopefully gain much more.

although my average is quite high, my current $55k portfolio has been achieved by trading through an initial $20k. i havent traded the highs and lows perfectly and got in above the 2.4c/4c lows. and often sell before it goes even higher.

the one thing im trying to make sure of is that all my money is in play overnight, incase the sale announcement comes through. could still get caught out though, but i expect it late june so still time.

at the moment BEPPA/BBI is about 20% of my porfolio, so im a bit heavier than i like, but once the price stabalisers post announcement, one way or another, i will probably reduce and move that portion into another spec stock. the rest of my portfolio is long term hold, mainly bluechips.

cheers


----------



## Mitsimonsta (11 June 2009)

I have 30,900 BEPPA @ 8.4c average. At the present time, I am happy to hold this amount against the rest of my portfolio (it's currently 30% of portfolio value) and wait for the announcements - good or bad.

As the price rises, you have flexibility. It all depends on your portfolios and financial goals. I am tempted to let BEPPA hit 25-30c, sell half and put that into something else. I may yet buy more if the SP stays where it is for another month.

Right now I am looking to invest elsewhere, and hopefully bring my holding of BEPPA to about 25% of portfolio value at current SP (12-13c range). That way when the SP rise comes, my weighting will not be quite so bad.

*I have only ever looked at BEPPA as being a vehicle to drive some big growth in my portfolio in it's early stages. This is about my financial goals within my portfolio only. If I can get some large CG now, then my portfolio will grow more in the future.*

Also holding CBA, FXJ, MAP, ORG and SHL.


----------



## ricee007 (11 June 2009)

As long as you noted the words:
'as long as CP for Euroports are met' .

Cheers, best of luck with yours as well.

I would have thought BEPPA was a long-term share... but, I guess if you can turn $20,000 into $100,000 (which is roughly what you will have done if BBI hits 16c and BEPPA 22c)... (possible if rumours of DBCT emerged, but no announcment), then it would be VERY tempting to take your profits, and I certainly can't blame you for doing so!

I'm in the UK, so day-trading is nigh' impossible for me-<and I have other things on my mind... which is a shame considering how good this opportunity is.


----------



## Mitsimonsta (11 June 2009)

ricee007 said:


> As long as you noted the words:
> 'as long as CP for Euroports are met' .



While it will not be nice if it goes against us, I think that the cost is a drop in the ocean compared to the DBCT sale in all honesty. Sure, it may push the SP down, but that is an opportunity to sell beforehand and then buy more units afterwards.



ricee007 said:


> I would have thought BEPPA was a long-term share... but, I guess if you can turn $20,000 into $100,000 (which is roughly what you will have done if BBI hits 16c and BEPPA 22c)... (possible if rumours of DBCT emerged, but no announcment), then it would be VERY tempting to take your profits, and I certainly can't blame you for doing so!




Actually, if BEPPA hits 25c, then I have a 200% gain on it. Using your example above, I would have turned $20K into $60K.

Even in the above case, if I have spent $20K and have $60K equity sitting there, best to sell $20K worth, and put it elsewhere. Then what you have has cost you nothing, and then you just let it ride (within reason, stops in place but possibly not as tight as previously etc)



ricee007 said:


> I'm in the UK, so day-trading is nigh' impossible for me-<and I have other things on my mind... which is a shame considering how good this opportunity is.




If I had 100K units then daytrading them would be a useful thing. Nathan has much more in it than I do, by a factor of 10. It definitely makes sense then, but with my piddly $2.5K worth then the brokerage eats up most of your profits.


----------



## nathanblack (11 June 2009)

im not so much day trading. but my holding time is more a week or twon rather than months. there has been the odd trade that has happened within a day or so. 

i typically manage to get back into the stock on the same day. sell in morning buy in arvo at discount, or switch from bbi to beppa and vice versa. but once i buy i hold until it gains 20-30%, maybe a day, week or month. sell. wait for drop, rinse, repeat. generally each susequent buy has been higher than the last, but still lower than my previous sell.

i actually didnt start out with the intention of trading the stock, just wanted to lock in some profit, then found myself in a position to re enter and profit.

i usually trickle my holdings onto the market in 100 and 150k parcels. i need very little % movement to profit including cost of brokerage, time cgt, etc

ofcourse there are time constraints and CGT payable.


----------



## ricee007 (11 June 2009)

Mitsimonsta said:


> While it will not be nice if it goes against us, I think that the cost is a drop in the ocean compared to the DBCT sale in all honesty. Sure, it may push the SP down, but that is an opportunity to sell beforehand and then buy more units afterwards.



BB notes that BBI may go into administration, and people, like him, are thinking 3c or even lower if Euroports falls.

Ideally, we go to the bank, whisper how much we expect from DBCT, they relax the sweep for us to do our think with EuroPorts, increase interest rate by 0.5percentagepoint, bob's your uncle....  but, will the ideal world work?

Then again, no-one knows what the CP are, and BBI aren't telling... so no-one knows what will happen.





> Actually, if BEPPA hits 25c, then I have a 200% gain on it. Using your example above, I would have turned $20K into $60K.



Sorry Mitsi, I was referring to Nathans:
"although my average is quite high, my current $55k portfolio has been achieved by trading through an initial $20k."



> If I had 100K units then daytrading them would be a useful thing.



Another valid point.


----------



## banska bystrica (11 June 2009)

ricee007 said:


> BB notes that BBI may go into administration




No I do NOT!!! although there is every chance the Euroports sale does not go through and then watch the BBI price get smashed.
Euroports may go into administration if the put option cannot be paid but I certainly don't think BBI will go into administration. Why would they? Their ICR is more than adequate. Admittedly a bit tight, but certainly a long way from breaching debt covenants.


----------



## nathanblack (11 June 2009)

banska bystrica said:


> No I do NOT!!! although there is every chance the Euroports sale does not go through and then watch the BBI price get smashed.
> Euroports may go into administration if the put option cannot be paid but I certainly don't think BBI will go into administration. Why would they? Their ICR is more than adequate. Admittedly a bit tight, but certainly a long way from breaching debt covenants.




Welcome back?

your right interest is being covered so i dont see administration in the short term. the bank sweep facility is what got euroports into that mess, but if you look what happend with BBP i think the banks will coff up the required money to avoid any issues. especially if it is short term debt until DBCT proceeds come through.

i think locally we are starting to see funds coming back into the market, in forms of available borrowings and equity raisings. perhaps the credit freeze is thawing a little.

my holdings in BBI in particular are stagnant. come on announcement.


----------



## Mitsimonsta (11 June 2009)

banska bystrica said:


> No I do NOT!!! although there is every chance the Euroports sale does not go through and then watch the BBI price get smashed.



I feel warm and fuzzy knowing that although BB is not posting, he watches over us.

Maybe Riceee meant something other than yourself BB? A different company? Anyway, I will still owe you a bottle of something eventually, just not Grange. 




nathanblack said:


> i think locally we are starting to see funds coming back into the market, in forms of available borrowings and equity raisings. perhaps the credit freeze is thawing a little.
> 
> my holdings in BBI in particular are stagnant. come on announcement.




My opinion agrees on these two points. Considering selling out in the future as the Euroports date grows closer, and then buying back in, otherwise it is hold steady.


----------



## ricee007 (11 June 2009)

Mitsimonsta said:


> I feel warm and fuzzy knowing that although BB is not posting, he watches over us.



Agreed. As long as he continues to hit me when I make a mistake.



> Maybe Riceee meant something other than yourself BB? A different company?



As much as I would love to pretend that..... I misstated BB's thoughts...


> Euroports may go into administration if the put option cannot be paid but I certainly don't think BBI will go into administration.



I always thought it was strange that he thought Euroports may see BBI into admin....it turns out he just thought *Euroports may go into admin, not BBI* .

Sorry for misrepresenting your thoughts BB ... but I'm glad it brought you out of the woodwork.



> Considering selling out in the future as the Euroports date grows closer, and then buying back in, otherwise it is hold steady.



Valid thoughts...but, we have very little information. Selling out (or staying in) because of Euroports seems like a pure gamble to be honest.

Not only are you risking missing out on GOOD Euroports news... you also risk missing out on a MaqCap DBCT leak... or pre-announcment.

I mean, you do lower negative downside risk....... 8c-3c is certainly possible due to Euroports...

But, for me at least, BEPPA is a nice little long-term speccy (and BEPPA *SHOULD* be less effected than BBI).

YMMV, espcially as you intend BBI/BEPPA being a base for future share acquisitions...your risk profile is clearly different.

Finally... this is one of those 1 in 100 chances..... BB, you don't happen to know much about HRR by any chance?

Cheers all,
With apologies,
Rhys


----------



## mcahn1 (11 June 2009)

AIO's update to the market on its progress will have positive/negative impact on BBI tommorrow.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


----------



## hardyakka (14 June 2009)

At the moment BBI & BEPPA holders are in holding mode pending an announcement on the progress of DBCT, PD Ports, Euroports and possibly the management rights. I have taken a bit of time to reflect and my opinion is as follows.

We are hearing in the press and I am beginning to see in my workspace positive signs of a recovery of sorts, I suppose a key indicator from the Australian perspective are the growth numbers released by China and the upward trend in markets, both domestic and offshore. Some may consider those movement a bit of a dead cat bounce, but I do not share that view. So lets look at BBI items separately.

I do not consider Corus a major issue from the PD Ports revenue perspective as this will be materially offset by the Tesco facility and if I recall Aldi are also considering similar. The Corus JV partners have effectively screwed themselves because the issue is now political. If they return to Corus IMO any government supply contracts they get will require material be sourced from the UK, ie Corus. For other contracts the government will not forget Corus and that IMO puts them behind the eightball. The party that comes in to take on Corus will be viewed as a white knight and accordingly may be given preferential treatment by the UK government in supply contracts. These overall considerations will be taken account of by any potential purchaser of PD Ports.

Regarding Euroports I do consider the lack of cash to deal with the option exercise and Euro deposit as giving rise to a problem. This is because the banking syndicates would make available this cash, otherwise they would be effectively shooting themselves in the foot, especially knowing a sale of DBCT is imminent. IMO the cash will be made available, albeit it at short term penalty rates. This I feel will just have to be sucked up by BBI, and of course taken account of down the track when and if they are back on an even keel.

There has been some speculation that the current plethora of infrstructure assets on the market, especially those put up by the QLD government may reduce prices. I do not buy into this argument because those assets are to be liquidated over a 3 to 5 year time frame, ie at post GFC EVs. DBCT will come on the market this once at a GFC affected EV, ie reduced EBITDA multiple and I would be surprised if it ever came onto the market again. So IMO the assets coming onto the market make a good news story but that is about it.

There has been discussion as to the impact of dilution from SPARCS etc etc. Well to be perfectly honest as a BEPPA only holder this does not concern me in the least. At the end of the day if the BEPPA issue is not suitably addressed then BEPPA holders will effectively end up in owning the bulk of BBI via conversion. Those BEPPA holders will still end up with their face value in BBI units at whatever the current market value is, this of course will be a discount to NTA. Hard and simple, but that is business. So am I as a BEPPA holder really concerned? No I am not.

I am certain that someone will be thinking the market will never accept that. Well if BEPPA coverts to BBI it will be post SPARCS etc and corporate debt will be minimal. The market will recognise a revitalised deleveraged BBI (or whatever it is called).

What about debt and interest rates, yes corporate debt is a problem. Remove that via conversion and/or utilisation of DBCT proceeds then you are left with asset level debt. Basically in summary when pricing is set for a regulated asset cost of capital and debt is taken account of in the pricing calculations. So in effect it is passed on to the end user, the same happens for your water supply, electricity etc. Refinancing asset level debt I do not see as being a problem, especially when the assets are not revalued to market annually as is the case for property trusts. Also remember asset level debt is asset specific only.

What about the inherent value in BBI that is not really recognised in its financials? Look at the value of DBCT in the books ($1.9B if I recall) and its expected sale price, anything from $2.5B to $3B (I personally consider its final sale price will be at the upper end of that range). Irrespective, in this one asset alone there is $0.6 to $1.1B in value not recognised in the financials, NGPL is bound to have similar unrecognised value. Now you may see why I have little faith in analysts when they are unable to appreciate such simple concepts.

What about the famous (or infamous) death spiral. Well in theory it is possible, but then in theory the price of BBI should reflect NTA and BEPPA face value. In theory people should be able to meet their mortgage payments.
In practice BBI does not reflect NTA, BEPPA face value and persons who took out mortgages in the US their payment commitments (maybe sub-prime?). So isolated theoretical situations are one of a host of considerations which can influence a given event such as the BBI price. I give the death spiral view the credence it deserves and flush it down the crapper.

I think I have ranted on way to long, so will close off by summarising:


Corus and Euroports are minor hiccups
BBI has massive unrecognized inherent value
BEPPA holders are in a win-win situation.
Indications are the end of the GFC is in sight and potential acquirers of assets recognise this.

I know that there are many points people may disagree with, but this my opinion summarised. 

Disc-Hold significant number of BEPPA, ie money where my mouth is 

Cheers


----------



## cpsharky (14 June 2009)

Nice one HY.

I agree with most of your points. I especially agree with the comments regarding finding money for the Euroports options. The banks only want the sweep to maximise the chances of getting all their money back. Letting Euroports slip into administration so unnecessarily would go against that principle as it cuts off a nice source of corporate cash flow (ie debt repayment).

I have been doing a lot of thinking about what will happen with Beppa come 2012 should it become obvious that BBI can't prevent conversion. I am convinced that this will mean the BBI sp will hit 0 or a very close approximation to it. I'm just not calling that effect anything in particular. The interesting thing for me is that effectively means BEPPA holders will divide up the company amongst themselves. For this reason, I think it is wrong to think you will receive $1 of value for each BEPPA in this case. The BBI price prior to conversion will bare no resemblance to fair value, and so $1 worth of BBI will be a meaningless concept. Converted BEPPAs will have to be re-valued by looking at the NAV and cash-flows etc. That value could be lower than or quite possibly a multiple of $1.

Not sure if anyone can understand what I just wrote??

I hold Beppa only.


----------



## nathanblack (14 June 2009)

cpsharky said:


> Nice one HY.
> 
> I agree with most of your points. I especially agree with the comments regarding finding money for the Euroports options. The banks only want the sweep to maximise the chances of getting all their money back. Letting Euroports slip into administration so unnecessarily would go against that principle as it cuts off a nice source of corporate cash flow (ie debt repayment).
> 
> ...




*i understand.

also 2012 is along way away. beppa is on the books as a liability. bbi may offer rollover terms, early redemption, borrow to fund conversion, equity raising or convert to bbi if SP is worthy.

hate this holding pattern, i wish the announcement would hurry up.*


----------



## bellenuit (14 June 2009)

cpsharky said:


> I have been doing a lot of thinking about what will happen with Beppa come 2012 should it become obvious that BBI can't prevent conversion. I am convinced that this will mean the BBI sp will hit 0 or a very close approximation to it.




Should it appear that conversion is likely to go ahead, what should a BEPPA holder do? This is something I have been trying to get my head around for some time. Won't the smart BEPPA holders try to sell BBI short prior to the conversion, with the shares acquired by conversion to be used as the replacement. If every BEPPA holder has the same idea and tries to do this before the VWAP calculation period, then you could very well end up with a VWAP significantly lower than say the average BBI price for the preceding month. As BBI spirals down, the incentive to short sell will increase. The dilution could be massive with a near zero price after conversion as you suggest.

Is there any mechanism built into the conversion process to prevent this happening?


----------



## nathanblack (14 June 2009)

i think it would be hard to prevent short selling or similar 'manipulation' from forcing the price down. but all that assumes a low bbi price. if bbi is say 50c then dilution would be alot less. and as i mentioned they would rather fund buyback with debt surely than do what your proposing.

personally if bbi was in the shape your proposing, nearing 2012, i would probably be out of my position by then. why would you hold?


----------



## cpsharky (14 June 2009)

bellenuit said:


> Should it appear that conversion is likely to go ahead, what should a BEPPA holder do? This is something I have been trying to get my head around for some time. Won't the smart BEPPA holders try to sell BBI short prior to the conversion, with the shares acquired by conversion to be used as the replacement. If every BEPPA holder has the same idea and tries to do this before the VWAP calculation period, then you could very well end up with a VWAP significantly lower than say the average BBI price for the preceding month. As BBI spirals down, the incentive to short sell will increase. The dilution could be massive with a near zero price after conversion as you suggest.
> 
> Is there any mechanism built into the conversion  process to prevent this happening?




The process you have described is exactly why the BBI price will hit zero soon after is clear that conversion can't be avoided. Massive dilution can only be prevented by a majority of holders agreeing to new terms (a restructure) or by the company having enough funds to prevent conversion by redeeming in cash. It doesn't make sense to suggest that the VWAP might happen to be high enough at the time - anyone holding BBI when it is clear that conversion can't be avoided should sell at _any_ price IMO.

My strategy at present in this situation is to simply hold onto BEPPA and collect my gazillion BBIs. If the company is still viable, then a parcel of BBIs converted from a BEPPA (lets call it a BEBBI) will have a value that can be calculated from NAV or FCF valuations. No need to panic sell. Just calculate (or wait for someone else to tell you) what your BEBBI is worth, and make your hold/sell decision based on that. In fact, BEPPA should trade at the BEBBI valuation prior to conversion as well if the market is being rational.

Please remember that this is all hypothetical and is only relevant if BBI can't sell assets to free up enough cash by 2012 or otherwise restructure BEPPA. I am confident that BBI will in fact be able to prevent conversion. Still, it highlights why I choose to hold only BEPPA even at current prices.


----------



## cpsharky (14 June 2009)

I think as 2012 approaches, BBI management will be increasingly desperate to ensure that conversion doesn't happen. They will fire-sale assets if necessary to get the cash they need.

The company has a responsibility to their shareholders to prevent dilution, so significant NAV destruction could be the result of the desperation to get the cash needed to prevent conversion. This would be great for BEPPA if they do in fact get the cash to pay out $1. It would be bad if even after the fire sale they could not prevent conversion. Post conversion, BEPPAs converted value will have been significantly destroyed. That is a real way in which BEPPA value could be much less than $1.


----------



## ricee007 (15 June 2009)

In 3 years, it's completly feasible that 1/2th BEPPA holders will want to convert to BBI... and half will want to restructure BEPPA with a greater interest rate (above 90 day rate)....

(Half is clearly a number I just made up, but.)

To pay out the half, it would require a $440M or so loan.... which sounds quite likely to get in an improved economy (three years) for a company with over $10Bn in assets....

Especially if BBI had, say, already $220M in cash.

$220M Cash
$220M Corporate Debt
$440M BEPPA rollover to new BEPPA2......

Even if share price is only around 30c, that doesn't lead to VERRRRRRRRRRY significant dilution (significant, yes... catastrophic...no.)


----------



## erasmus (15 June 2009)

Bellenuit's 'death spiral' scenario in 2012 could happen .I do  believe after everything i have seen in the last 18 months in the share market that management of pretty much any company regard shareholders and note holders in little regard and management will do what is necessary to safeguard their jobs and entitlements.
The proposal to SPARKS holders failed and what you ended up with was debt removal at the expense of shareholders, the proposal BBI made was very generous,it was rejected.There maybe more dilution to come.
I cannot say what things will be like in 3 weeks for BBI, let alone 3 years.
I have BEPPA as a speculative punt and if the price goes up i will start offloading till by 2012 i have minimum exposure.That assumes a lot will go right.
DBCT is the main prize,Euroports ,pdports and westnet rail  who knows,the next 3 months are going to be critical to the health of BBI.

They still have NGPL but it will take time to sell BBI's stake,they may use this asset to deal with BEPPA holders at a later date.There are a lot of possible scenarios to deal with BEPPA ,too far away and  BEPPA for now is cheap debt for BBI.
I hold very boring stocks in my portfolio,this is my one speculative punt.I bought in early march at 7c a BEPPA,i can only hope i have not done my dough in praise of folly.

Good luck to all holders


----------



## hardyakka (15 June 2009)

On a point of clarification regarding any dilution arising from the conversion of BEPPA to BBI in 2012 should this arise.

The key point is that if NTA is $2.4B, BBI shares on issue 2.4B and BBi is at 30 cents, then that would give a market cap of about $0.8B.

Without fiddling with numbers basically the existing BBI unitholders would be diluted out of existence as the whole market cap of BBI would be transferred to BEPPA holders on conversion.

That may leave you with a squillion units, but your units still represent the same percentage share of total BBI NTA. It is then a simple matter of consolidation via reconstruction, ie 1 BBI "New" for every 100 BBI Old units. Your % share in the company is unchanged.

So at the end of the day in the above situation there is no corporate BEPPA debt and the ex-BEPPA holders now own the vast majority of BBI whci is at a massive discount to NTA. How can you lose?

Anyway, whilst this demonstrates upside in BEPPA I do not think it will occur as I expect BBI to represent 50% of NTA by 2012.

As regards BBI going into administration, well it survived the GFC, albeit battered and bruised. Need i say any more.

Cheers


----------



## Tysonboss1 (15 June 2009)

cpsharky said:


> I think as 2012 approaches, BBI management will be increasingly desperate to ensure that conversion doesn't happen. They will fire-sale assets if necessary to get the cash they need.




By 2012 interest payments on beppa would have resumed so there would be alot of people happy to reset, IMO.

and I think that once corp debt is paid and the cash sweep lifted, BBI would be using any available funds to buy back beppa, at any price below 80c, it would probally be the best investment management could possibly make.


----------



## nathanblack (15 June 2009)

nice little gain today on strong volumes.

regarding beppa i think there will be several options for holders come redemtion time, and everyone will choose the one that suits them most. it might be a matter of choosing the best of several bad offers, or all options might be real winners.

looking at sparcs, i would certainly have converted last month. convert $1sparc into $1bbi at low price, then waith for dbct announcement. if the announcement is positive those bbi could double and you would have 2 people:
1. sparc holder. $1 face value, but worth significantly less on market, even post announcement. lets say 80c, or;

2. sparcs convert. $2 worth of bbi shares post announcement.

the risk v rewards for me, i would have converted.

cheers


----------



## hardyakka (16 June 2009)

IMO I can see the demand for BEPPA increasing significantly. This is because consider the following:

NTA is about $2.4B
value not recognised in the books is about $1B to $1.5B, this being the excess of EV over book of NGPL and DBCT. But if you are prudent and assume the book value of all other BBI assets is impaired by say $0.5B, then assume the net book value not recognised is the lower end of this range, ie $1B.
This gives total equity attributable to BBI after an impairment of $0.5 of $3.4B (1+2.4).
This $3.4B is the "safety cushion" available to BEPPA holders to absorb any financial issues before the financial outcome of BEPPA holders is affected. The lower the BBI price, then the greater % of these NTA that BEPPA holders will ultimately own in a conversion situation.

Even in a worst possible case scenario such as administration (which I think is unlikely) this safety cushion has to evaporate before the $1 face value of BEPPA is affected (I have ignored accrued interest).

Now if we can work simple numbers like that out on the back of an envelope, dont you think that market makers may also have looked at a similar situation?

Another reason why I am a happy longterm BEPPA holder.

Cheers


----------



## Mitsimonsta (17 June 2009)

*BEPPA SP:*
Ouch. Looks like people are jumping with Sell orders 'At Market' to fund their cheap RIO shares..... (traded at 10.0c as I originally posted this)

I'm holding long term and short term movements don't worry me
I'm holding long term and short term movements don't worry me
I'm holding long term and short term movements don't worry me
I'm holding long term and short term movements don't worry me
I'm holding long term and short term movements don't worry me
I'm holding long term and short term movements don't worry me
I'm holding long term and short term movements don't worry me

Yes, I am clicking my heels together, Tin Man, the Lion and Scarecrow all say HELLO!

OUCH!!!!!!   

EDIT: Back at 11.5c on edit, good to see there is strong demand for value accumulation on BEPPA


----------



## tracytop (17 June 2009)

think the 30th June report will not be impressive. No doubt BBI sp will be harmed, but Beppa will be affected as well. 

I am holding Beppa for long term


----------



## fureien (17 June 2009)

what june 30 report? i never saw any anouncement indicating a specific date


man ive had a buy order for beppa at 11 cents for weeks and i moved it up to 12 cents on monday no wonder it go processed so easily.

if i knew it was gunna get hit hard like this today i shudve waited ><


----------



## Tysonboss1 (18 June 2009)

It's all just white noise. people have the jitters and are getting cold feet leading up to the possible announcement date. 

I am not worried, If you have done your research and ran through the worst case possibilties, then just block out all the white noise over the next 14days


----------



## nathanblack (18 June 2009)

The fact that AIO decided not to sell there assets, due largely to lack of interest at the desired price, and instead decided on a cap raising must be of some concern.

BBI arent in a position at 8cent a share to raise capital in that way, and if interest wasnt strong in AIO then we must assume(i know,,,never assume or you make an a$$ out of you and me) that BBI will encounter similar difficulties.

that being said, it also means that interested buyers in AIO now must consider BBI assets instead because AIO is no longer on the market.

usually GREAT news has leaks, and end of june is nearing, and BBI said BY end of june, meaning earlier is possible. so the delay and lack of rumors must be of some concern.

the news could still be GOOD or OK, but i understand people wanting to sell before any news and then buy back in after the news is digested. it removes both upside and downside risks.

im still holding and still believe a sale will happen and BEPPA in particular will be re-rated. i think even a dissappointing sale result will see beppa increase but BBI probably need above expectations to really go up.


----------



## random (18 June 2009)

just to state the obvious that the stock market as a whole has been on a downward roll over the last three days. the pants havn't dropped out of bbi and although beppa has dipped also the volumes of beppa trading are tiny if not infinitesmal in the scheme of things.
So they have slipped..... so what.
If your in, your in, if your not go buy bhp, cba or some other safe haven. 
BBI - Be a Bold Individual
and bite the bullet. 

Even if you are not super confident with the figures adding up to survival (which i am ) and have said so on many occassions i would take a chance with this one because the return is well worth the punt. As with any share however don't go overboard in your weighting as per your portfolio.

Hold beppa only atm having had both in the past.


----------



## cbrendan (18 June 2009)

nathanblack said:


> The fact that AIO decided not to sell there assets, due largely to lack of interest at the desired price, and instead decided on a cap raising must be of some concern.
> 
> BBI arent in a position at 8cent a share to raise capital in that way, and if interest wasnt strong in AIO then we must assume(i know,,,never assume or you make an a$$ out of you and me) that BBI will encounter similar difficulties.
> 
> ...




If i recall BBI said 2-3 months just under 2 months ago.

I'd be expecting news between ~ 20th June / 20th July.

Also you have to remember in recent article it was stated that BBI have only started to receive first round offers.

Furthermore the BBI shareprice has largely followed the market in general despite the Euroports uncertainty just around the corner. Sure BEPPAs sunk like a rock, but someone buying/ selling 100k worth of stock can shift BEPPA 20% either way so BEPPAs recent movement is largely irrelevant. Personally i beleive that BBI would be SERIOUSLY tanking right now if someone new the BBI euroports was bad and DBCT offers are not up to a reasonable standard.

So the fact that its stationary leads me to beleive that some know news re: dbct but are waiting for the perfect entry point after bad news for euro ports or something similar.

Hopefully some of my ramblings makes sense


----------



## fuzzie (19 June 2009)

Also let's not forget we are in the last 2 weeks running up to the EOFY. There has to be a bit of tax time selling and trader account balancing going on.

In any event, when I checked BBI early yesterday there were a couple of buy orders in there for parcels over 1 million shares, so at least one entity with serious  money is seeing current prices as a buy opportunity. There is currently one sitting on the top of the buy queue for ~ 1/2 mil


----------



## hardyakka (21 June 2009)

Looks as things are not going well for PD Ports. It looks as though this will be the first impairment to affect BBI holders, so a few hundred million may be knocked off of the NTA. From my previous post I calculated on a scrap of paper that NTA plus $1B of inherent value after allowing for $0.5B of impairments would be $3.4B. As a BEPPA only holder I am not overly concerned about the below noted.

http://www.telegraph.co.uk/finance/...osure-of-steel-plant-hurts-PD-Ports-sale.html
Cheers


----------



## nathanblack (21 June 2009)

hardyakka said:


> Looks as things are not going well for PD Ports. It looks as though this will be the first impairment to affect BBI holders, so a few hundred million may be knocked off of the NTA. From my previous post I calculated on a scrap of paper that NTA plus $1B of inherent value after allowing for $0.5B of impairments would be $3.4B. As a BEPPA only holder I am not overly concerned about the below noted.
> 
> http://www.telegraph.co.uk/finance/...osure-of-steel-plant-hurts-PD-Ports-sale.html
> Cheers





As much as we often fret about the complex business stucture of BBI, its times like this that we can be greatful. After all PD Ports can fail and it only brings down that entity and not the mothership BBI.

There was nothing terribly new in that article, its still not 100% but certainly looking more and more likely that corus will pull out. thats about 20% fall in revenue. market had already been informed about the possibility so i doubt there will be an official update at this stage. my guess is its more or less factored into the current BBI price.

Probably of greater interest in the article is that BBI are pressing on with a sale. After dbct goes, corporate debt deminishes and interest payments on PD Ports can be made. I'd probably wait to get closure on corus and try drum up business from elsewhere, wait a year for better economic outlook, then sell if finances require.

they valuations mentioned in the article arent great, but they arent official numbers from BBI, but they seem ballpark figures if corus leaves a 20% hole in revenues.

overall, nothing new there. not great news, will probably have a slight negative impact on BBI once its official and depending on the exact sale price. Still fairly neutral for BEPPA, which is more big picture kinda stuff.

if the overall market trends lower (EOFY/ retrace) and PD Ports struggles, particularly if it went into admin, the market would over react and send BBI lower. combine that with possible issues at euroports which has more likely negative than positive outcome, you could get a snowball effect.

then if dbct is less than hoped for, the bbi sp would really get smashed. But i still see beppa rising post dbct.

thanks for that link


----------



## persistentone (21 June 2009)

Was there an official announcement of DBCT being for sale, or of a pending sale?   Can someone give me the timeframe of that announcement so I can go look it up?


----------



## nathanblack (21 June 2009)

persistentone said:


> Was there an official announcement of DBCT being for sale, or of a pending sale?   Can someone give me the timeframe of that announcement so I can go look it up?




back in about april from memory. the announcement was in regard to Maquarie being appointed to oversee the bidding/sale process. An announcement regarding the outcome is due late june/early july. no guidence has been given regarding price range. only info is that offers have been made for the 100% of dbct and lesser stakes.

cheers


----------



## hardyakka (21 June 2009)

nathanblack said:


> As much as we often fret about the complex business stucture of BBI, its times like this that we can be greatful. After all PD Ports can fail and it only brings down that entity and not the mothership BBI.
> 
> There was nothing terribly new in that article, its still not 100% but certainly looking more and more likely that corus will pull out. thats about 20% fall in revenue. market had already been informed about the possibility so i doubt there will be an official update at this stage. my guess is its more or less factored into the current BBI price.
> 
> ...




Nathan,

Fair comment and I basically agree with your comments. Bottom line is that the impact is not significant in the overall scheme of things and asset level debt is quarantined.

basically in a worst possible case situation if BBI tanks short term then irrationally BEPPA is likely to follow suit. That will be a very short term buying opportunity. It it tanked to 5 cents I would be first in line for a million or two.

Cheers


----------



## Mitsimonsta (22 June 2009)

hardyakka said:


> If it tanked to 5 cents I would be first in line for a million or two.



Get yourself a very large and nasty stick, you will need it to protect your position in the line from BB trying to buy....


----------



## persistentone (22 June 2009)

I am a foreign investor, and I have never purchased an Australian income security before.     Can someone tell me does the 12 cent quote mean this trades like a penny stock, or is the 12 cents on the dollar just the quote but the actual purchase if for a block of securities (similar to what they do in the U.S. with bond purchases or option purchases)?


----------



## bellenuit (22 June 2009)

persistentone said:


> I am a foreign investor, and I have never purchased an Australian income security before.     Can someone tell me does the 12 cent quote mean this trades like a penny stock, or is the 12 cents on the dollar just the quote but the actual purchase if for a block of securities (similar to what they do in the U.S. with bond purchases or option purchases)?




I presume you mean BEPPA?

For all practical purposes, when it comes to trading, it is just like any other stock. You can purchase as few or as many as you like, so long as you meet the normal minimum order value set by your broker.  There are no fixed block amounts that you must buy or sell in.


----------



## bellenuit (22 June 2009)

persistentone said:


> I am a foreign investor, and I have never purchased an Australian income security before.     Can someone tell me does the 12 cent quote mean this trades like a penny stock, or is the 12 cents on the dollar just the quote but the actual purchase if for a block of securities (similar to what they do in the U.S. with bond purchases or option purchases)?




Do you mind if I ask why you have chosen BBI/BEPPA as the first Aussie security to buy? Is it somehow related to your knowledge of their US asset NGPL?


----------



## roland (22 June 2009)

bellenuit said:


> Do you mind if I ask why you have chosen BBI/BEPPA as the first Aussie security to buy? Is it somehow related to your knowledge of their US asset NGPL?




Yes, bellenuit, I was sort of curious about that as well. I have to admit it probably wouldn't be my first choice of a 1st Aussie investment.


----------



## hardyakka (24 June 2009)

*PD Ports*

I had a chat with Helen at Investor Relations today regarding the numbers quoted in the press of BBI reducing the asking price for PD Ports from GBP 450M to GBP300M.
In summary Helen said that no financial data had been provided by BBI. This data had been originated and perpetuated by the UK press, despite BBI pointing out that they had not provided that information. (They cannot affirm or deny).Helen also noted that the supposed  reduction in price of GPB150M, were it true, would be a material amount and require  disclosure under the ASX Listing Rules. Helen also said that, as notified in April, negotiations with interested parties are continuing.
My view is that a price reduction of that amount would have been disclosed immediately by BBI under the listing rules so IMO someone in the UK press is telling porkies. Since when did the truth ever sell papers. Its the screaming headline, especially if the Aussies are getting hammered, and girl on page 3.
Cheers


----------



## mark_au (24 June 2009)

*Re: PD Ports*



hardyakka said:


> I had a chat with Helen at Investor Relations today regarding the numbers quoted in the press of BBI reducing the asking price for PD Ports from GBP 450M to GBP300M.
> In summary Helen said that no financial data had been provided by BBI. This data had been originated and perpetuated by the UK press, despite BBI pointing out that they had not provided that information. (They cannot affirm or deny).Helen also noted that the supposed  reduction in price of GPB150M, were it true, would be a material amount and require  disclosure under the ASX Listing Rules. Helen also said that, as notified in April, negotiations with interested parties are continuing.
> My view is that a price reduction of that amount would have been disclosed immediately by BBI under the listing rules so IMO someone in the UK press is telling porkies. Since when did the truth ever sell papers. Its the screaming headline, especially if the Aussies are getting hammered, and girl on page 3.
> Cheers




Thanks for finding out that info Hard Yakka, BBI sure has taken a hammering over the last couple of days.. Hanging out for ports sale information.......


----------



## persistentone (29 June 2009)

bellenuit said:


> Do you mind if I ask why you have chosen BBI/BEPPA as the first Aussie security to buy? Is it somehow related to your knowledge of their US asset NGPL?




First, I have not purchased BBI EPS yet; but I am very seriously considering it.   Second, my target buy price would be around six cents.   I wouldn't touch BBI if you paid me.   But the income securities are interesting only because they might get a good recovery in receivership.

I'm a subscriber to the Intelligent Investor, and they had a writeup on this one where they recommend it as a *speculative* interest security.   Their article had a very nice table showing all of the BBI debts, and all of their assets.  

The article argues that the sale of Powerco and cash on hand will pay all debts due through 2010, which leaves roughly $1B due in December 2011.

So what I am left to ask is can a sale of some combination of Westnet Rail, NGPL, DBCT, or PD Ports payoff that $1B?   Given they have two whole years to find buyers, I am thinking the odds of success there are high.

There are two cases as I currently understand it:

1) BBI goes into receivership in which case I guess we get a forced sale on all assets.   I think we cover the $1B in debt and probably see about a 20% to 30% recovery on the BBI EPS in receivership.   That might be a 20 cent recovery on a six cent investment.   I could live with that.  Is there something about how they do receivership in Australia I should know about that might make this unlikely?

2) BBI does partial or whole asset sales on any of the above and manages to continue as a viable entity.   In that case I hope something close to half the original distribution might come back, and I get back the entire investment in under two years.   Anything beyond that is just creme.

What worries me most here isn't the bad financial situation, but the fact that BBI appears to be a bad actor.   They gouge their shareholders with all kinds of nasty fees.   They seem to be working for themselves, not for the shareholders.   

So it's very high risk and very high reward.    I think you only buy this one if you get a chance to bottom feed.

I understand that BBI had some major debt obligation due in June 2009?  What is the status of that?

P.S., what are your favorite Australian income securities?


----------



## hardyakka (29 June 2009)

persistentone said:


> First, I have not purchased BBI EPS yet; but I am very seriously considering it.   Second, my target buy price would be around six cents.   I wouldn't touch BBI if you paid me.   But the income securities are interesting only because they might get a good recovery in receivership.




Persistence,

Interesting commentary, I suggest that you read through some of the earlier posts and that will give you a cross- section of views on BBI & BEPPA. For risk management reasons over the last 4 or 5 months I have always been a BEPPA only holder.

If BEPPA did drop to 6 cents (and I am not saying it will not) then you will find yourself with some reasonable buying competition, especially considering the minimal volumes of late.

Good luck anyway and if you want to look at some hybrids have a look at this schedule, it is updated daily and is self explanatory.

http://www.macquarie.com.au/macsecmc/codi/CodiServlet?nav=start&documenttosend=income_security_doc

Cheers


----------



## random (29 June 2009)

persistentone,

Just to be clear - you state that that you would not touch BBI but only BEPPA. 
But if you only buy BEEPA and BBI does offer a dividend you will not be entitled to any of that dividend, you do realise that?

Can you please tell me what fees you are referring to that BBI charges its shareholders and that they are working for themselves. I don't get where you are coming from here.

Cheers


----------



## cpsharky (29 June 2009)

"But if you only buy BEPPA and BBI does offer a dividend you will not be entitled to any of that dividend, you do realise that?"

Random, don't forget that BBI distribution can not be resumed until BEPPA arrears have been paid. All future BEPPA distributions, as they are declared must also be paid before BBI distributions. I would go futher to say that BBI distributions aren't likely to resume while there is the threat of dilution by BEPPA.  Persistence is right to avoid BBI while exposure to the BBI story can be had about 100 times more safely through BEPPA.

With regards to how the receivership situation works, I am no expert, but from what I gather the receivers wont be acting in the interests of BEPPA holders. Still, I agree there is a reasonable chance that BEPPA will see a return, albeit a long time down the track, in that situation.

I hold a bucket load of BEPPA and no BBI.


----------



## nathanblack (29 June 2009)

cpsharky said:


> I hold a bucket load of BEPPA and no BBI.




would you consider increasing to 2 or 3 bucket loads anytime soon?

i suspect with phase2/3 upgrade of DBCT due for completion by end June, an announcement with be forthcoming pretty soon. Just having that monkey off the back may stimulate some action in SP. Also i suspect its what bidders are waiting for before finalising there offers.


----------



## persistentone (29 June 2009)

random said:


> persistentone,
> 
> Just to be clear - you state that that you would not touch BBI but only BEPPA.
> But if you only buy BEEPA and BBI does offer a dividend you will not be entitled to any of that dividend, you do realise that?
> ...




As I understand it, BBI EPS is higher on the credit hierarchy than BBI common shares.   So BBI cannot pay a single cent to its shareholders until *all* dividends which are accruing to BBI EPS have been paid in full.   

The bigger point to make here is run through the exercise of what happens when BBI eats it.   The hierarchy of claims is:

1) Debt holders, and God knows there plenty of those for this one.

2) BBI EPS

3) BBI common

BBI only sees something in receivership if BBI EPS is paid in full.   My guess is that they pay the debt holders in full, and the only worthwhile discussion is what is the size of the remaining scraps that get fed to BBI EPS holders.   And I seriously doubt that BBI EPS holders would get paid in full.   BBI holders are at serious risk of losing it all. 

Someone correct me on that; I'm surmising what I can from various sources.

As one example of horrendous fees:  Babcock and Brown extracted from BBI a $40M fee for doing the Natural Gas Pipeline deal.


----------



## cpsharky (29 June 2009)

Persistence,

The fees have stopped now. Look at the announcement regarding corporate governance (late last year I think). BBI are looking at terminating the management agreement which I believe they can do at a shareholder meeting, so no need to buy out the agreement.

No doubt about it, BBI was created to make money for BNB, at the expense of ordinary equity holders. The result is a a company with a big debt problem and a smashed share price.

The question is has the market over-reacted?

I believe so, and considerably in the case of BEPPA.

Time will be the judge.


----------



## nathanblack (29 June 2009)

deutch bank ceasing to be a substancial holder. volumes have been so low later hard to see how anyone is accumulating or selling down large amounts.


----------



## fuzzie (29 June 2009)

I haven't added up the numbers, but it looks like the last transaction for DB London is the significant transaction. Perhaps this is the termination of DB as the broker for a hedge fund? It will be interesting to see if there is a corresponding pickup for a new broker.

In the meantime, will there be an update about DBCT sale process tomorrow?


----------



## Tysonboss1 (29 June 2009)

nathanblack said:


> volumes have been so low later hard to see how anyone is accumulating or selling down large amounts.




I think alot of people are just sitting on their hands at the moment waiting for DBCT news. 

Anyone planning on accumulating would have done it by now. So we have the situation where people aren't willing to buy in at higher prices till after the announcement. and sellers aren't willing to lower prices so close to possibly good news.




fuzzie said:


> .
> 
> In the meantime, will there be an update about DBCT sale process tomorrow?




I think there will probally be an announcement on completion of the bidding phase stating that bidding has finished, but firm details might not be for a week later. ( but who knows, I am just some nut with a lap top )


----------



## investorpaul (30 June 2009)

I was really hoping for an announcement this month. But it doesnt look like it will happen.

Price has been slowly dropping for a few weeks now, I guess traders can put their money to better use with other stocks at the moment.


----------



## Mitsimonsta (30 June 2009)

For me, the question now is when any announcement will come out.

Earliest date I can buy is the 10th of July (due to monthly salary going into my account by a certain date). The question is if there is an announcement (or general SP rise) before this date so I can top up a little more.

Holding ~31k units of BEPPA only.


----------



## hardyakka (30 June 2009)

persistentone said:


> BBI only sees something in receivership if BBI EPS is paid in full.   My guess is that they pay the debt holders in full, and the only worthwhile discussion is what is the size of the remaining scraps that get fed to BBI EPS holders.   And I seriously doubt that BBI EPS holders would get paid in full.   BBI holders are at serious risk of losing it all.




Persisitence,

I do not concur with your view, even in a worst possible case situation. If I recall there would have to be writedowns in assets of about $3.5B before the $1 face value of BEPPA is at risk.

Why $3.5B you ask when NTA is only about $2.4B? If you have a look at previous posts in the last month you will see that IMO conservatively there is $1B of inherent value in BBI not reflected in the financials. This being due to the fact assets are held at cost + CAPEX - Depreciation, and that is after allowing for a general impairment charge of $0.5B.

Now what is the writedown on DBCT going to be? Its in the books at $1.8B, sale price say $2.6 to $2.9B....hmmm...my brain just frazzled.

Cheers


----------



## Jez (30 June 2009)

Some mention of DBCT by Asciano, could help with the sale;

http://www.asx.com.au/asxpdf/20090630/pdf/31jb3pk7x51yf5.pdf


----------



## shallumstuart (1 July 2009)

Finally some sort of good news:



DJ Babcock & Brown Infra Completes Dalrymple Bay Coal Expansion
01/07/2009 10:01AM AEST



SYDNEY (Dow Jones)--Babcock & Brown Infrastructure Ltd. (BBI.AU) Wednesday said it completed an expansion of the Dalrymple Bay coal terminal in Queensland state, increasing its capacity by about 50%.

BBI, which is trying to sell the terminal, said it has expanded its capacity to 85 million metric tons per year, making it the third largest export coal terminal in the world.

Completion of the expansion has occurred on time and coincided with a marked increase in coal export demand, the terminal's general manager for operations, Greg Smith, said in a statement.

"After experiencing a considerable drop in exports of metallurgical coals in November 2008, the market trend reversed in late February and has continued to climb since then due to strong sales with China in both metallurgical and thermal coals," Smith said.

BBI said indications have been received from producers for further export capacity at Dalrymple Bay and studies are under way to consider the viability of more expansions of the terminal.


-by Ross Kelly, Dow Jones Newswires; 61-2-8235-2957;


----------



## investorpaul (1 July 2009)

Euroports deadline also extended until the end of this month.

Hopefully by 1 August we will have a much clearer picture of whats going on.


----------



## nathanblack (1 July 2009)

investorpaul said:


> Euroports deadline also extended until the end of this month.
> 
> Hopefully by 1 August we will have a much clearer picture of whats going on.




i think the euroports announcement was much more significant than the DBCT upgrade. We already new that DBCT upgrade was due for completion by end June(afterbeing revised due to delays) and at end of May it was over 95% completed. i was expecting the announcement almost in leui of any announcement regarding the sale process. i think most buyers were waiting for completion to make things go smoother. hopefully only a few weeks more and we should know more.

the europrts news is positive because it means the potential buyer hasnt walked away yet, they are still going throught the motions of condition precedence and maybe try get a little discount ala QIC/Powerco.

positive reaction thus far to the news, but cant move too much until DBCT sale is known.

cheers


----------



## investorpaul (1 July 2009)

nathanblack said:


> the europrts news is positive because it means the potential buyer hasnt walked away yet, they are still going throught the motions of condition precedence and maybe try get a little discount ala QIC/Powerco.
> 
> positive reaction thus far to the news, but cant move too much until DBCT sale is known.
> 
> cheers




With Euroports I saw a positive note in only a one month extension. This indicates to me that they are still talking to serious bidders but just need a little more time to nut out the deal/finalise terms.

If the extension was for 3 or 4 months then there would have been a problem as the deal would be a long way from being finalised. Furthermore given 1 month is a relatively short period of time it is unlikely BBI would announce an extension for only 1 month if they truely believed they would have to extend it again.


----------



## nathanblack (1 July 2009)

investorpaul said:


> With Euroports I saw a positive note in only a one month extension. This indicates to me that they are still talking to *serious bidders *but just need a little more time to nut out the deal/*finalise terms.*
> If the extension was for 3 or 4 months then there would have been a problem as the deal would be a long way from being finalised. Furthermore given 1 month is a relatively short period of time it is unlikely BBI would announce an extension for only 1 month if they truely believed they would have to extend it again.




its not about bidders. this announcement is regarding the $30mil deposit a "bidder" has already made. a firm offer has already been made and accepted, the condition precedence has taken longer than expected causing concern that the buyer might retract the offer thus requiring a return of deposit. its clearly just a delay tactic to slightly lower the end purchuse price in the same way powerco went down, but the amount will be imaterial. the important thing will be that it goes ahead and the deposit doesnt rquire refunding.

this announcement gives hope that the sale will go through and condition precedence will be met. 1 month is also great outcome.


----------



## investorpaul (1 July 2009)

nathanblack said:


> its not about bidders. this announcement is regarding the $30mil deposit a "bidder" has already made. a firm offer has already been made and accepted, the condition precedence has taken longer than expected causing concern that the buyer might retract the offer thus requiring a return of deposit. its clearly just a delay tactic to slightly lower the end purchuse price in the same way powerco went down, but the amount will be imaterial. the important thing will be that it goes ahead and the deposit doesnt rquire refunding.
> 
> this announcement gives hope that the sale will go through and condition precedence will be met. 1 month is also great outcome.




Nathan - I should have read the ann clearer. I must admit after the drop in price from 16 c + I have kinda tuned out of the whole BBI/BEPPA thing. I still hold and expect upside but have not really kept up to date with the news.

I cant see why a company would waste time submitting and offer, negotiating, etc and then withdraw (unless there was a material change in their circumstances). I therefore share your view that it is a delay tactic, hopefully they dont knock too much off the price.


----------



## hardyakka (2 July 2009)

Here is a quote from an article today.

"Coal queue to ease after expansion

Abstracted from The Australian Financial Review

    In early July 2009, up to 42 vessels are waiting to berth at the Dalrymple Bay Coal Terminal (DBCT). However, recent work at the terminal has doubled its capacity to 85 million tonnes and it is hoped that the congestion will ease over coming months. Babcock & Brown Infrastructure Group has announced the sale process for its 29.7% interest in the DBCT will be extended until 31 July"

Seems to me as if there is a distinct lack of understanding in the financial press of BBI's assets, this explaining the credence I give to press reports on BBI.

Cheers


----------



## Gunlom (2 July 2009)

How a trained professional business journalist can miss read 2 different announcements then merge them into one mixed up review is staggering. And they get paid to do that, and punters pay  for these so called expert reviews.....

one of the reasons I never believe anything in the media. Quality journalism is very far and few between.

just my 2 cent rave...


----------



## Mitsimonsta (3 July 2009)

Anyone know the amount of the September quarter distribution? Apparently it hit at 5.07pm but I cannot see it on the ASX site, nor the BBI site.


----------



## Mitsimonsta (3 July 2009)

Sept 09 Distribution: $0.0109 per unit of BEPPA.

At my current 8.4c average buy price, and an annual return of 4.36c (1.09*4) then that is a 51.8% annual return on investment.

Might be time to back the truck up again.....


----------



## drsmith (5 July 2009)

For the uninitiated the annual return on BEPPA is 0% while the distributions remain unpaid.


----------



## select (5 July 2009)

I wonder if there are many BBI holders on ASF who have been sucked into BBI by BB.

Has BB left the scene of an accident?


----------



## nathanblack (5 July 2009)

select said:


> I wonder if there are many BBI holders on ASF who have been sucked into BBI by BB.
> 
> Has BB left the scene of an accident?




BB is entitled to his opinions regarding bbi/beppa and ASF members surely arent so stupid as to buy with performing research.

Besides BBI isnt dead yet. is it? 

as far as i know AFR during the week mention the prospect of capital raising, and the Herald Sun today had an analyst "sell" recommendation based on possible dilution(from raising) and the general issues in BBIs way(beppa dilution, asset sales, debt).

i dont think people are going to get rich on this one, it will either be a slow death or an even slower recovery, but to blame BB is plain wrong and belittles the intelligence of forum members.

btw i think BB is on an overseas vacation.


----------



## hardyakka (5 July 2009)

select said:


> I wonder if there are many BBI holders on ASF who have been sucked into BBI by BB.
> 
> Has BB left the scene of an accident?




I think its naive to think that people acquired an exposure to BBI/BEPPA solely because of BB's comments. An individual alone is accountable for his own actions, no one else.

Cheers


----------



## hardyakka (5 July 2009)

drsmith said:


> For the uninitiated the annual return on BEPPA is 0% while the distributions remain unpaid.




There is a return on BBI and BEPPA.

The definition of "total return" is:

_The return on an investment, including income from dividends and interest, as well as appreciation or depreciation in the price of the security, over a given time period, usually a year._

Total return consists of the return from income and capital. So despite the fact that the return from distributions may be nil, there is a return based upon the movement in the BBI price relative to your cost.

Cheers


----------



## banska bystrica (5 July 2009)

select said:


> I wonder if there are many BBI holders on ASF who have been sucked into BBI by BB.
> 
> Has BB left the scene of an accident?




As you would know select or mccrae or fluffynymph or whatever name you go by, I am indeed posting from a little town called Zilina in Slovakia. Going to Prague by train tomorrow. You doubted me last time so go to the other site and check out the IP addresses.

Now, if any member did actually did follow me they would have been loading up in November at around 3c and they would have sold immediately the Corus news hit at circa 17c, maybe a tad higher. Now that is a mighty fine return in seven months by anyones standards. Even you would be happy with circa 500 percent.

BBI is not dead. Far from it, however, the equity holders are at extreme risk of being diluted to next to nothing. BEPPA holders sit tight, once DBCT is sold, you are home for the tea money.


----------



## shallumstuart (5 July 2009)

DJ Terra Firma To Bid For Babcock & Brown's PD Ports - Report
05/07/2009 09:11PM AEST



LONDON (Dow Jones)--Private equity firm Terra Firma will this week bid for Babcock & Brown Infrastructure's (BBI.AU) PD Ports unit, The Sunday Times says without citing sources.

Terra Firma will join HgCapital, CVC Capital, Carlyle and Star Capital in bidding for the group, the newspaper says. If bids fail to surpass the firm's GBP315 million debt, Babcock could postpone the auction, it added.

Terra Firma wasn't immediately unavailable for comment.


----------



## Viva_Las_Vegas (5 July 2009)

Pity to see a lot of the positive sentiment gone from this bbi thread.

Last post shows some promising news.

Lets see a show of hands how many members actually think BBI has a LT prospect of survival...hmmmm

"PUTTIN MY HAND UP"


----------



## Stakes (5 July 2009)

For the sale of the DBCT port, are they wanting to sell 100% or nothing. Or is it a matter of selling as much as peoplewant maybe 50% or less but to ensure that at least some debt is paid back? What type of reaction would we be looking at if the port sells completely for 2.5 billion?

Cheers for your time,

Stakes


----------



## ricee007 (5 July 2009)

Stakes said:


> For the sale of the DBCT port, are they wanting to sell 100% or nothing. Or is it a matter of selling as much as peoplewant maybe 50% or less but to ensure that at least some debt is paid back? What type of reaction would we be looking at if the port sells completely for 2.5 billion?
> 
> Cheers for your time,
> 
> Stakes



They originally stated 49%...
Later said 100% was possible with the right bidder...
Either is still possible. 

As a BEPPA holder, I want BBI to sell 100% at a good price as, IMHO, that will ensure BBI's survival. However, I do understand that if a good price can't be obtained, a 49% sale may be best.

It is INSANELY unlikely that a 50% sale would occur.
a 51% sale is VERY unlikely...
a 49% sale is very possible...
a 100% sale is most likely...
IMHO.

I BELIEVE the market would prefer a 100% sale, (would show that BBI believes that they got a good offer [and, therefore, it would be likely that BBI DID get a good offer])...

I am VERY sure BEPPA holders would prefer a 100% sale.

I don't think there is anyone in the world who doesn't believe in a SIGNIFICANT increase in SP if (assuming no other news) DBCT sells for $2.5Bn. This would be MASSIVELY positive news for BBI, and even more so for BEPPA.

I believe DBCT will sell for AT LEAST $2.4Bn (likely, more); if BBI chooses a 100% sale. (FTR, 2.6-3.0 is my best guess).


----------



## mikes (6 July 2009)

bb , holding his current beppa investment at the odds (net cost 2 cents) of est 60 to 1 is currently a declared top up buyer of beppa at the odds of est. 14 or 15   to 1, but he will not currently downsell his bets at odds as low as 11 or 12 to 1 - he is a holder of beppa at 11 or 12 to 1. and i assume is totally ungeared. if any one is nervous / pannicky they have the opportunity to get out of beppa at odds of 12 to 1 now. The original investors (punters)  in beppa at odds of 1 to 1 have done their dough.

my take is that it is currently a bet on the price regulator ticking off on usage prices of monopoly infrastructure at usage prices sufficient to suitably cover the prices paid ( after allowing for est overpayment and overcharging of fees etc of $700 million) by the bbi directors for the investments (punts) and ticking off on bbi cost of capital and borrowings as appropriate.  and the directors not unduly ripping off the beppa investors with unwarranted fees and charges from bbi to themselves, contracted managers, associates  and advisors.

also a bet that the finance providers will not panic, and will at least wait for the est $100 million sparcs conversion to bbi in est 4 months to increase their security.

in my opinion, with subordinated debt (beppa) currently priced for  full repayment at odds of  12 to 1), the bbi investors in bbi are in effect option holders in bbi and have done all their dough. 

and yet the bbi sharehoders have all the votes and beppa holders have nil votes.

hold beppa only


----------



## persistentone (6 July 2009)

nathanblack said:


> BB is entitled to his opinions regarding bbi/beppa and ASF members surely arent so stupid as to buy with performing research.
> 
> Besides BBI isnt dead yet. is it?
> 
> ...




I think you meant BBI dilution not BEPPA dilution?   BEPPA was a loan to BBI, so unlikely it gets diluted.   

It's true that BEPPA holders may end up taking a haircut, when / if BBI goes into receivership then BEPPA holders would expect less than 100% recovery.   But that's not dilution.

BBI holders on the other hand certainly have some dilution in front of them.   The very best scenario here is that they sell enough assets to clear their immediate refinancing issues, and then the BBI stock surges in value, at which point they do a secondary financing to further raise liquidity.


----------



## persistentone (6 July 2009)

banska bystrica said:


> As you would know select or mccrae or fluffynymph or whatever name you go by, I am indeed posting from a little town called Zilina in Slovakia. Going to Prague by train tomorrow. You doubted me last time so go to the other site and check out the IP addresses.
> 
> Now, if any member did actually did follow me they would have been loading up in November at around 3c and they would have sold immediately the Corus news hit at circa 17c, maybe a tad higher. Now that is a mighty fine return in seven months by anyones standards. Even you would be happy with circa 500 percent.
> 
> BBI is not dead. Far from it, however, the equity holders are at extreme risk of being diluted to next to nothing. BEPPA holders sit tight, once DBCT is sold, you are home for the tea money.




I agree with the last point you make relative to BBI and BEPPA.   I would like your opinion:  if you were looking to establish a new position in BEPPA would you be a buyer now or would you be holding for another dip below 9 cents?   

Probably it's not fair of you to look at a six month period and pick the low point and the high point.    But I wasn't here in November, so maybe you were indeed issuing specific calls for people to buy at 3 cents.


----------



## persistentone (6 July 2009)

BB, I went back and read your old posts on BBI, and you are very astute.  It's great to have someone like you here, and I hope you will become a regular here again.

Have you done any analysis to determine what percent recovery BEPPA holders might see if BBI goes under?  Since it is one of the key scenarios for BEPPA holders, it seems to me that use case has to be quantified.

What other markets are you chasing besides the ASX?   In the ASX, have you studied RHG and what is your opinion on that one?   I noticed you follow mining stocks.   I probably stay a little closer to things that have real revenue and positive free cash flow.

What other situations do you like now?


----------



## persistentone (6 July 2009)

Here is proof the market sometimes just gets it WRONG.   In March when BNB went under, the BBI and BEPPA suffered declines.   But in fact BNB dying HELPS all of these children, by removing the vampire bat that was sucking them all dry.  There should have been a tremendous rally because BNB went under.   The market got the dynamic all wrong.

Can someone familiar with the BNB ownership structure let us know what if any of BNB's rights or ownership in the children might transfer to their creditors under receivership?   Or is BBI likely to remain a completely independent entity even after BNB emerges?


----------



## nathanblack (6 July 2009)

persistentone said:


> Here is proof the market sometimes just gets it WRONG.   In March when BNB went under, the BBI and BEPPA suffered declines.   But in fact BNB dying HELPS all of these children, by removing the vampire bat that was sucking them all dry.  There should have been a tremendous rally because BNB went under.   The market got the dynamic all wrong.
> 
> Can someone familiar with the BNB ownership structure let us know what if any of BNB's rights or ownership in the children might transfer to their creditors under receivership?   Or is BBI likely to remain a completely independent entity even after BNB emerges?




BNB were forced by creditors to sell there stake in BBI(8.9% from memory) and BNB management rights have been terminated for one-off payment. with the exception of BBW who paid about $40mil termination fee, the other "children" got off lightly.

now its getting to the point were the assosciation with BNB is detrimental, yet there is no connection between the two anymore. but as mentioned on here a while back, the costs of changing name, letter heads, etc is a waiste of much needed funds right now and will have to wait.


----------



## nathanblack (6 July 2009)

persistentone said:


> *I think you meant BBI dilution not BEPPA dilution?   BEPPA was a loan to BBI, so unlikely it gets diluted.  *
> 
> It's true that BEPPA holders may end up taking a haircut, when / if BBI goes into receivership then BEPPA holders would expect less than 100% recovery.   But that's not dilution.
> 
> BBI holders on the other hand certainly have some dilution in front of them.   The very best scenario here is that they sell enough assets to clear their immediate refinancing issues, and then the BBI stock surges in value, at which point they do a secondary financing to further raise liquidity.




yes i meant BBI dilution as a result of BEPPA being converted to ord shares. but also there is a small chance that BEPPA itself can be diluted because BBI could chose to raise more funds via debt, and the BEPPA terms only allow for future debt to rank equally with BEPPA. Meaning BEPPA cant fall further down the food chain as a creditor, but could find themselves ranking on par with new creditors.


----------



## persistentone (6 July 2009)

nathanblack said:


> yes i meant BBI dilution as a result of BEPPA being converted to ord shares. but also there is a small chance that BEPPA itself can be diluted because BBI could chose to raise more funds via debt, and the BEPPA terms only allow for future debt to rank equally with BEPPA. Meaning BEPPA cant fall further down the food chain as a creditor, but could find themselves ranking on par with new creditors.




I seriously doubt that the BBI management would allow BEPPA to dilute BBI holders.  Fiduciary obligations aside, most BBI management probably get their incentive payments in the form of BBI stock.  I cannot imagine the management would decimate their  own shares.   It would be against their self interest to do so.


----------



## persistentone (6 July 2009)

Does anyone know the Australian legal system well enough to know if the non recourse nature of most of BBI's debt would carry into a receivership?  In other words, if they were in administration and one of the assets could not be sold for book value, would the lender have any recourse against the bankrupt estate?

One assumes the answer is no, and that the non-recourse nature of the loan carries through into receivership.   But better to ask now than find out otherwise later.


----------



## persistentone (6 July 2009)

banska bystrica said:


> There will no quick re-rating of the BBI or BEPPA share price. Have a look at what some listed REIT's are trading at and the similarities are obvious.
> 
> Fund Name Price-to-Net Tangible Asset
> Value per share (NTA)
> ...




BB, are there any REITs you like currently?  Have you studied the action in Goodman GMPPA?   This is a similar situation to BEPPA, where GMPPA is an income security that actually benefits from Goodman Group GMG doing a dilutive raising.   Goodman recently somehow got the Chinese to invest in him so there is a fortuitous credit spiral starting there that may help GMPPA a lot.


----------



## nathanblack (6 July 2009)

persistentone said:


> I seriously doubt that the BBI management would allow BEPPA to dilute BBI holders.  Fiduciary obligations aside, most BBI management probably get their incentive payments in the form of BBI stock.  I cannot imagine the management would decimate their  own shares.   It would be against their self interest to do so.




They let it happen with SPARCS didnt they? and its going to happen again in november with SPARCS. So i cant see how BEPPA is any different, wether its near term to get SPARCS and BEPPA off there books at a discount, to help straighten out there structure and pave way for capital raising. 

or sometime in the future, when beppa is due or near due for redemption. it would be naive to think that beppa and sparcs will be paid out only in cash and that dilution isnt going to occur, its more a matter or at what point in time and at what price(what will bbi sp be at conversion time and will they convert beppa for $1+ or say 50cents)


----------



## persistentone (6 July 2009)

It's different because they have TWO YEARS to plan for the BEPPA refinancing.  SPARCs is just coming due at the wrong moment.

I think the most likely scenarios in order are:

1) They sell assets and BEPPA become money good and get paid in 2012 by some form of replacement offering.

2) They make some kind of offer to BEPPA holders for a partial recovery or to transition to a new instrument.   In case of a partial payoff, they finance that through a replacement offering in 2012.

3) BBI goes bust in which case BEPPA gets partial recovery on asset sales (this is highly contingent on the non recourse nature of the loans).

4) BBI lets BEPPA dilute BBI shares.

So I'm viewing the dilution of BBI as less likely than BBI going bust, and given the interest rate coverage of BBI I don't think that is very likely either.


----------



## nathanblack (6 July 2009)

i would agreed with your list of scenarios and pretty much in that order of likelyhood until i read the Australian Financial Review and they hinted at rumour of a capital raising ala AIO. AIO went that route, and RIO did similar when the assets up for sale couldnt achieve a satisfactory amount. obviously in both those cases the share price was adequate to raise further funds via share placement.

Reading between the lines, most rumours have some foundations. i would SUSPECT that:
1. BBI knows DBCT is a great assets and wants to keep a stake
2. DBCT offers are either all unacceptable; OR
3.the offers for minority stakes value DBCT higher than 100% offers

for example maybe they have been offered $1.4bil for 49% interest, but only $2.6bil for 100% sale. so i think the rumours are there because at some point they have decided to explore there options regarding raising funds so that they can either keep all or part of DBCT.

to raise more capital at these prices is impossible, but if they sold 49% and price jumps to 20 odd cents, they could probably try then. but any instos would want sparcs and beppa gone. who would invest large sums in bbi knowing that sparcs/beppa rank higher in liquidation.

the more likely scenario is to convert sparc/beppa into a combination of cash/bbi script at a premium to the current market value but at a discount to face value. it will alter the NTA and EPS but will please bankers bcos the gearing will be lowered.

it will then allow new bbi script (on equal terms, nobody ranking ahead)to be floated if funds are required or a new debt security that ranks above bbi ala beppa.


----------



## persistentone (6 July 2009)

nathanblack said:


> i would agreed with your list of scenarios and pretty much in that order of likelyhood until i read the Australian Financial Review and they hinted at rumour of a capital raising ala AIO. AIO went that route, and RIO did similar when the assets up for sale couldnt achieve a satisfactory amount. obviously in both those cases the share price was adequate to raise further funds via share placement.
> 
> Reading between the lines, most rumours have some foundations. i would SUSPECT that:
> 1. BBI knows DBCT is a great assets and wants to keep a stake
> ...




I agree with the first part of your scenario.   BBI will sell enough of DBCT to relieve immediate financing pressures, and that sends BBI shares up significantly.   At that point they do a financing to try to raise some additional amounts to buy more breathing room.

That's where I lose you.  Why do you believe they would have a right to force BEPPA holders to convert immediately?   I thought the first conversion date was July 2012?   Does BBI have some option to force a conversion of BEPPA at an earlier date?  What are details on that?


----------



## persistentone (6 July 2009)

nathanblack said:


> They let it happen with SPARCS didnt they? and its going to happen again in november with SPARCS. So i cant see how BEPPA is any different, wether its near term to get SPARCS and BEPPA off there books at a discount, to help straighten out there structure and pave way for capital raising.
> 
> or sometime in the future, when beppa is due or near due for redemption. it would be naive to think that beppa and sparcs will be paid out only in cash and that dilution isnt going to occur, its more a matter or at what point in time and at what price(what will bbi sp be at conversion time and will they convert beppa for $1+ or say 50cents)




By the way, is SPARCS something we can invest in?  What is the symbol?  It would be interesting to see how that one is trading.   And I guess they are getting preference over BEPPA now.


----------



## nathanblack (6 July 2009)

persistentone said:


> I agree with the first part of your scenario.   BBI will sell enough of DBCT to relieve immediate financing pressures, and that sends BBI shares up significantly.   At that point they do a financing to try to raise some additional amounts to buy more breathing room.
> 
> That's where I lose you.  Why do you believe they would have a right to force BEPPA holders to convert immediately?   I thought the first conversion date was July 2012?   Does BBI have some option to force a conversion of BEPPA at an earlier date?  What are details on that?




No they cant force BEPPA holder to convert early. But a 49% sale wouldnt be sufficient and if your choice was to vote down a conversion, they can point out the very real risk of liquidation or that they threaten to issue more beppa to the point that your beppa will see very little in liquidation. Besides they'd be offering a premium to convert, i suspect most would accept 50cent this year rather than a POSSIBLE $1 in 3years. the likelyhood of a re-rating to 50cents this year is unlikely so its the quickest, biggest return possible. throw in a priority and discount to any new offering as a sweetner.

im not saying they MUST or WILL get rid of sparcs/beppa, but i think its more on the cards now than ever.


----------



## nathanblack (6 July 2009)

persistentone said:


> By the way, is SPARCS something we can invest in?  What is the symbol?  It would be interesting to see how that one is trading.   And I guess they are getting preference over BEPPA now.




its listed on the NZ exchange, so nothing stopping you but i guess your broker needs access and you need to be aware of different taxes that may apply. also they arent very liquid.


----------



## persistentone (6 July 2009)

nathanblack said:


> its listed on the NZ exchange, so nothing stopping you but i guess your broker needs access and you need to be aware of different taxes that may apply. also they arent very liquid.




Does anyone happen to know the Reuter's symbol for SPARCS?   

I guess the other thing to consider here is to wait until after any conversions take place, since a foreign holder of the security might not have a straightforward way of participating in any offers they make.


----------



## nathanblack (6 July 2009)

http://www.nzx.com/markets/nzdx/BBN010

thats the link for sparcs in nz but i need more words to get the post accepted


----------



## persistentone (6 July 2009)

nathanblack said:


> http://www.nzx.com/markets/nzdx/BBN010
> 
> thats the link for sparcs in nz but i need more words to get the post accepted




Yes I found the BBN010 link as well and I cannot believe it but they are trading around 19 cents on the dollar.

What do others here think about the reason for that?  Is it solely the liquidation preference in front of BEPPA?   The market foresees that in a BBI liquidation SPARCS gets paid and BEPPA does not?    I'm frankly surprised by the difference in valuation there.

And if you want to get really freaked out, in March the SPARCs were trading at 45 cents on the dollar in celebration of the BBN collapse.   So SPARCS soar on the same news that sends BEPPA crashing.  No rationality there?


----------



## nathanblack (6 July 2009)

im interested in others opinion too, but at a huntch i would suspect that SPARCS paying 8.5% versus BEPPA paying a bit above the current bank swap rate is the main factor. they are probably about 3% pa better off than us.


----------



## persistentone (6 July 2009)

dhukka said:


> This business is mediocre because of the extremely poor returns it generates on it's assets, a fact which is indisputable looking at their historical returns over the past 5 years. This has been mentioned numerous times and noone has disputed it. Until those returns improve significantly it will continue to be a dog of a business.
> 
> The share price on the other hand whilst it has been a dog, may do extremely well for those who bought in at the lows, if the company is able to survive and ekes out the the paltry returns projected by the likes of Wilson HTM.




Dhukka, maybe this is too old a post to bother responding to, but in going through old conversations I saw this and I have to respond.

You have a problem distinguishing what is a good *business* from what is a good *investment*.   I agree that as a business BBI isn't that attractive because return on equity of 5% is nothing to brag about.

But with net equity per share of even 80 cents and trading at 8 cents, that gives you a 50% compounded annual return on the investment if it continues to return 5% on equity each year!!   The business is a dog.  The investment is fabulous.   That's using your return on equity numbers.

Consider the opposite case.   Consider a wonderful business with a 30% return on equity.   Make equity per share $1, but the current trading price of the stock is $10.   In that case you end up with a 3% compounded return.   Wonderful business.   The investment is a dog.

Never examine return on equity in isolation.  It leads to empty discussions.  You always have to consider return on equity together with the book value to arrive at any kind of meaningful evaluation of the *investment*.


----------



## mark_au (6 July 2009)

nathanblack said:


> No they cant force BEPPA holder to convert early. But a 49% sale wouldnt be sufficient and if your choice was to vote down a conversion, they can point out the very real risk of liquidation or that they threaten to issue more beppa to the point that your beppa will see very little in liquidation. Besides they'd be offering a premium to convert, i suspect most would accept 50cent this year rather than a POSSIBLE $1 in 3years. the likelyhood of a re-rating to 50cents this year is unlikely so its the quickest, biggest return possible. throw in a priority and discount to any new offering as a sweetner.
> 
> im not saying they MUST or WILL get rid of sparcs/beppa, but i think its more on the cards now than ever.




Hmm 50C now  vs $1 in three years, now thats a tempting offer, i'll have to stay posted.
This thread seems to be picking up again, hanging out for the announcement, would be so good to be a fly on the boardroom wall


----------



## Mitsimonsta (6 July 2009)

persistentone said:


> I agree with the first part of your scenario.   BBI will sell enough of DBCT to relieve immediate financing pressures, and that sends BBI shares up significantly.   At that point they do a financing to try to raise some additional amounts to buy more breathing room.



This will end up as dilution by another name really. The fact is that they are increasing the number of shares exponentially for very little cash. You would need the BBI SP to be much higher than it is now.



persistentone said:


> That's where I lose you.  Why do you believe they would have a right to force BEPPA holders to convert immediately?   I thought the first conversion date was July 2012?   Does BBI have some option to force a conversion of BEPPA at an earlier date?  What are details on that?



BEPPA matures on June 30, 2012. Nothing changes that until a proposal is put forward by BBI EPS Pty Ltd and passes a vote of security holders.



nathanblack said:


> No they cant force BEPPA holder to convert early. But a 49% sale wouldnt be sufficient and if your choice was to vote down a conversion, they can point out the very real risk of liquidation or that they threaten to issue more beppa to the point that your beppa will see very little in liquidation. Besides they'd be offering a premium to convert, i suspect most would accept 50cent this year rather than a POSSIBLE $1 in 3years. the likelyhood of a re-rating to 50cents this year is unlikely so its the quickest, biggest return possible. throw in a priority and discount to any new offering as a sweetner.



I cannot see it happening any side of 17 November 2010. That is the next reset date for SPARCS. If no reset if offered (or terms are voted down) then SPARCS matures and conversion takes place. Until SPARCS is out of the way, you will see nothing happen with BEPPA. BBI may see a capital raising but I do not believe it to be in BBI holder's best interests until the SP is > 40c and even then it really should be more like 60c.



nathanblack said:


> im not saying they MUST or WILL get rid of sparcs/beppa, but i think its more on the cards now than ever.



I understand the idea you are promoting, but it simply cannot happen while SPARCS is in market. Once the cash sweep is gone, and SPARCS has converted (or been paid out), only then can BEPPA distributions resume. After BEPPA distributions resume, I think BBI will look to buy BEPPA back on-market at a discount.



nathanblack said:


> im interested in others opinion too, but at a huntch i would suspect that SPARCS paying 8.5% versus BEPPA paying a bit above the current bank swap rate is the main factor. they are probably about 3% pa better off than us.



The SPARCS rate is now 10% - the reset terms stated this. Look at the SPARCS meeting results release.

I offer this post to ASF that I posted elsewhere.



			
				Mitsimonsta in another forum said:
			
		

> One of the issues I have with BBI is the fact that they are likely to suffer massive dilution of their equity when SPARCS finally does convert, and yet the assets (and as a result of that, revenue also) is going to drop due to sales of the assets.
> 
> While it is too far in the future to speculate because we need to see how SPARCs converts first (I mean the conversion rate) and/or what other options are made available for that before we even contemplate BEPPA.
> 
> ...


----------



## persistentone (6 July 2009)

Stealing from one of BB's earlier posts, what is the status on repayment of the BBI debt we have due through end of 2009?  Here are the ones he listed:

Dampier to Bunbury May 2009 AUD 4 4
Natural Gas Pipeline September 2009 AUD 96 96
WestNet Rail June 2009 AUD 19 19
Multinet Gas June 2009 AUD 4 4
Network July 2009 AUD 27 27
PD Ports July 2009 £ 100 208
BBIPAL (WaterContainer Transport and Tarragona Port Services)
August 2009 EUR 51 102
Powerco August 2009 $NZ 109 90
August 2009 $NZ 67 55
WA Gas Networks September 2009 AUD 15 15
BBI Finnish Ports October 2009 EUR 88 175

How much of this can we pay out of cash flows and which ones will require asset sales to cover?

I assume the sweep agreement for corporate debt allows the principal on all of these debts to be paid first?


----------



## hardyakka (6 July 2009)

A few comments:
a) If additional BEPPA are issued that rank equally with existing BEPPA then they will cost the purchaser $1 cash for each BEPPA issued. I doubt anyone would pay $1 when they can be bought on market for about 10 cents.

b) If Sparcs convert to BBI in a few years you will have BEPPA outstanding to either be repaid or converted. If BEPPA converts then BBI holders (including those ex-SPARCS holders who now hold BBI from their conversion) will be diluted out of existence. The end result being existing BEPPA holders will own the vast majority of BBI.

c) There is unrecognised inherent value in BBI of over a billion.

d) IMO PD Ports is immaterial when compared with the implications of the DBCT sale. there is about $150M if I recall of debt related to PD Ports at the corporate level. I would like to see BBI retain this asset until markets pick up.

e) BEPPA holders have a "cushion" of about $3.5B, this being NTA plus a $B of inherent value not recognised in the financials, this $1B being after $0.5B general provision for write-offs.

So am I concerned about my BEPPA holding, simply no.

Cheers


----------



## Mitsimonsta (6 July 2009)

persistentone said:


> How much of this can we pay out of cash flows and which ones will require asset sales to cover?
> 
> I assume the sweep agreement for corporate debt allows the principal on all of these debts to be paid first?



If you are a BBI/BEPPA holder, then why not ring the Investor Relations line and ask?




hardyakka said:


> A few comments:
> 
> _-A big snip-_
> 
> So am I concerned about my BEPPA holding, simply no.



Agreed. There is $3.5B worth of writedowns that has to happen before my $1 of debt is at risk.

All rests on DBCT. If a great price ($2.8 Billion or more) results then I think the PD deal might be called off or delayed.


----------



## persistentone (6 July 2009)

How much does the recently completed expansion of DBCT capacity expand the free cash flow for that operation?  Is the added revenue already being realized now?


----------



## Mitsimonsta (6 July 2009)

I would believe that the extra revenues from the DBCT expansion would be realised from this financial year. I doubt that it will figure very much into last year's figures, although there may have been a slight bump from it.

I have not checked where the project was financed from. If it was via loan then this would need to be paid back, which would hurt operating profit. If it was from cash reserves, then theoretically yes, it would improve free cashflow, resulting in higher profits and more income for BBI.


----------



## persistentone (6 July 2009)

The events of the last few months almost make me believe in conspiracy theories.   For all of the bad news about PD Ports, Euroports, and the timing of the closure of the DBCT sale to come altogether at the same moment gives the buyers of these assets a lot more negotiating room.   

One thing I worry about:  could the buyers of each asset be deliberately stalling their purchases, hoping to push BBI into receivership?   The buyers have to know that the banks would probably conduct fire sales and give them better terms, so you cannot rule this motive out.   And we do indeed see press releases delaying Euroports more than once.

I want to see if I understand these three situations a bit better.


PD Ports
--------

Is it correct there is no imminent buyer for this asset?   

As I understand it, Corus may pull out from its Teeside plant, and this in turn could reduce EBITDA by 25%.   BB pointed out earlier that a 25% fall in EBITDA could trigger a debt covenant on the $75M of corporate debt that is committed to PD Ports.   That in turn could force BBI into receivership.

On the other side of this coin:  the Tesco facility at PD Ports will open and this will add to EBITDA.  But on what date does it open and do they have customers committed to start using it?  When does it start generating cash flow?

Does anyone know the particulars of the PD Ports debt covenants and what the EBITDA coverage for interest currently is, and what it would need to stay above to avoid triggering a covenant?

Let's assume that everything goes wrong here - We lose Corus, and Tesco is delayed - and that the corporate debt covenant is triggered.   In this case do others think that the banks holding the corporate debt would push BBI to make a fire sale of PD Ports to cover that debt?   And given the reduced EBITDA would the sale cover the debt?   Or would the banks be more likely to push BBI itself into receivership?    

An important question here:  does the corporate debt committed to PD Ports take precedence over the non recourse debt used for PD Ports?


Euroports
---------

BBI has a bidder that made a Euro 35M deposit, and apparently some condition to close the sale is not met.   Does anyone know what that missing condition is, and how easy will it be to satisfy it?

There is the additional problem of the $200M put option of some minority holder for Euroports.   This one is not very clear for me.   If we sell Euroports, do we clear both the debt on Euroports and this $200M put option from the proceeds?

If we don't sell Euroports, and if the banks refuse to let us use the proceeds of DBCT sale to clear the Euroports debt, then what happens?

First, is there any corporate debt committed to Euroports?  I guess that a DBCT sale will have its proceeds clear Euroports and PD Ports corporate debt first, to take pressure off those situations.   But if we cannot pay back the deposit or the put option, will the debt holders on Euroports be able to foreclose on it?    That would all be non recourse debt?   How much book value would we lose on that if it becomes a bankruptcy and fire sale?


DBCT
-----

I don't understand why BBI keeps talking about a 49% sale.  The way things are going even if they sell 100% they still have problems.

Let me make sure I get the numbers here.   We are expecting a sale for between $2.5B and $2.8B, which clears about $1.8B of debt (non recourse as well as corporate) and leaves us between $700M and $1B to clear other debt.   Unfortunately, we cannot count on being able to use that remainder for anything else than paying down corporate debt because of the sweep requirements imposed by the banks that hold the corporate debt.

How much of the $1.8B in debt on DBCT is corporate debt?

All-in-all, quite a mess.   There is so much debt and so many different cash flows and asset sales that constructing any real understanding of it is at least a few days of work.  After spending the better part of half a day trying to comprehend all of this, I'm barely skimming the surface.

BBI EPS still looks worthy of a speculation to me, but whereas before the Corus disclosure I was feeling very little chance of BBI imploding, now it feels to me like there is at least a 30% chance this all comes undone.

Our one saving grace here:  DBCT is on fire, with ships backed out to sea.   We have three bidders, and this could become a really competitive bid.   If you run a coal company, how can you let this one get away without taking your best shot at it?   We just might get a surprise on this asset's price.  On the down side, the bidders may try to stall the sale, hoping to get a better price and terms in receivership.


----------



## persistentone (6 July 2009)

I hate to hang on this issue, but I feel it is the one really important use case that no one has considered carefully enough:  what happens to BBI EPS if BBI goes into receivership?

BB says in one post that he thinks BBI EPS would end up worthless.   But what is the basis for that?   We have a surplus equity value of $2.9B and even if all assets are sold at a discount and we lose $2.5B of equity value, BBI EPS holders still get our money back and then some.   We have to lose more than $2.5B of our net equity in receivership for BBI EPS shares to be worthless?   Even without converting SPARCs to BBI common, there was only about AUD $114M of the New Zealand SPARCS and $119M in New Zealand bonds to cover before BBI EPS starts to get paid?  

BB also makes the point that in a receivership we would wait five years to get paid, but I have another scenario to consider.   If BBI is forced into receivership, can BBI management go to the trustee and just explain that a sale of DBCT and Euroports will clear all the corporate debt, and thus put them back in business?  In other words, could receivership in this case end up being a very short affair that simply extends by a few months the time that BBI has to finish the key asset sales?   One unknown here is how many of the non-recourse holders would try to demand liquidations for their specific assets.   And under Australian bankruptcy law, would such challenges / requests likely be accepted for non recourse debt when the company can clearly show an ability to repay that debt in normal course of business?

I'm at a disadvantage here because I don't understand Australian laws about bankruptcy.   How much control will the banks have here in forcing a full liquidation versus a limited one?   It seems to me that even in receivership the end goal should be to simply repay the corporate debt and not to liquidate every part of BBI and repay all debt?  And this more limited liquidation scenario should be doable in less than three months.

Perhaps these are questions for a good Australian bankruptcy attorney.   Does anyone here know one that they can run the facts by?   Heck, given the amounts of money some of us have / will commit to this, spending three hours with such an attorney might be a good insurance policy.

The key thing to find out is what circumstances would force a full liquidation in receivership versus simply giving more time for asset sales that would clear just corporate debt.   And how likely are those circumstances causing full liquidation likely to be?   

BB, if you can find such an attorney, maybe contact me by private message or email to persistentone AT spamarrest.com and I'll contribute something to cost?


----------



## drsmith (6 July 2009)

hardyakka said:


> There is a return on BBI and BEPPA.
> 
> The definition of "total return" is:
> 
> ...



Check the math on the post above mine and you will see that the annual return as defined by Mitsimonsta is the annualised distribution yield.

The distributions however are not being paid so it's very much a case of counting chickens before they are hatched.


----------



## banska bystrica (6 July 2009)

drsmith said:


> The distributions however are not being paid so it's very much a case of counting chickens before they are hatched.




That's why they are trading at 10c in the dollar. If/when BEPPA distributions are recommenced, you will not be able to buy BEPPA at 10c in the dollar.....more like 40c/50c.

The "best" investments are not necessarily the "best" companies. Off on the 11.37am to Prague from Zilina. Will arrive around 4.54pm so will try and post later tonight (Prague time).

Cheers.


----------



## drsmith (6 July 2009)

.....and if distributions are not recommenced, the only one that will have got a feed out of it will be the fox.


----------



## Viva_Las_Vegas (6 July 2009)

Mitsimonsta said:


> If you are a BBI/BEPPA holder, then why not ring the Investor Relations line and ask?
> 
> 
> 
> ...





Well PD Ports just got delayed for another month. Perhaps to allow time to settle DBCT matters which would give enough head room to allow BBI to retain PD Ports. That would make sense to me.....

On the other hand whilst posters are proposing capital raising etc, here is my own proposterous proposal with no knowlege of HOW their debt operates.

Here we go

1) Sell DBCT @ 100%

2) Pay off 70% of debt with proceeds of DBCT sale, THEN use remaining 30% of proceeds to buy up cheap BEPPAS off market (hence reducing their debt liability and look more attractive to banks for refinancing and extension of covenants).

3) With all the BEPPA's purchased off market they have bought back $1.20 worth of debt at a fraction of the cost. THEN they could offer a conversion to SPARCS holders to convert SPARCS to the limited number of BEPPAS available. In my mind (which is wacko at the best of times) this would reduce risk of dilution to BBI holders through switching SPARCS to BEPPA. Also it would allow SPARCS holders who do not want to convert to BBI shares to jump to a preference share instead.  Swapping SPARCS for BBI vs BEPPA... I know which one I would choose.

I hope my ramblings make sense to some of you, or otherwise give you a good laugh.

VLV over and out


----------



## bellenuit (6 July 2009)

persistentone said:


> PD Ports
> --------
> 
> Is it correct there is no imminent buyer for this asset?




There is according to this article:

_Terra Firma, the buyout firm controlled by Guy Hands, is set to bid for PD Ports this week. Rival suitors include HgCapital, CVC, Carlyle and Star Capital. Babcock & Brown Infrastructure was forced to slash its asking price after steel giant Corus decided to mothball its Teesside plant, which accounts for a quarter of turnover. If bids do not surpass the firm’s £315m debt, Babcock could postpone the auction until conditions improve._

http://business.timesonline.co.uk/tol/business/article6639834.ece

also here:

http://www.skynews.com.au/business/article.aspx?id=349412


----------



## bellenuit (6 July 2009)

Viva_Las_Vegas said:


> Well PD Ports just got delayed for another month.




It was Euroports that was delayed for another month. This was announced by BBI through the ASX. A reporter for the AFR (I think) erroneously stated it was PD Ports that was delayed.


----------



## hardyakka (6 July 2009)

persistentone said:


> Perhaps these are questions for a good Australian bankruptcy attorney.   Does anyone here know one that they can run the facts by?   Heck, given the amounts of money some of us have / will commit to this, spending three hours with such an attorney might be a good insurance policy.




When a company goes into receivership the rights and duties of the board are vested into the receiver whose primary duty is to liquidate assets in an orderly manner to met creditor claims. So in effect the RE board is powerless.

The interesting issue that your question has raised is whether or not BEPPA holders would fall within the definition of a creditor, subordinate to the senior debt holders. Were this the case then any receiver would have a duty to realise assets firstly for the benefit of senior debt holders, ie banks AND secondly for lower priority debt holders ie BEPPA.

Cheers


----------



## sdmartin10 (6 July 2009)

banska bystrica said:


> That's why they are trading at 10c in the dollar. If/when BEPPA distributions are recommenced, you will not be able to buy BEPPA at 10c in the dollar.....more like 40c/50c.
> Cheers.




Several Hybrids paying divs are currently trading well below 40c in the dollar, even investment grade hybrids are at big disc to face value.  An okay outcome on DBCT, Euroports and PD ports may still see BEPPA trading around 30c. That is still a great price from here,  but debt instruments will not trade near their face value for a while yet.


----------



## select (7 July 2009)

banska bystrica said:


> As you would know select or mccrae or fluffynymph or whatever name you go by, I am indeed posting from a little town called Zilina in Slovakia. Going to Prague by train tomorrow. You doubted me last time so go to the other site and check out the IP addresses.
> 
> Now, if any member did actually did follow me they would have been loading up in November at around 3c and they would have sold immediately the Corus news hit at circa 17c, maybe a tad higher. Now that is a mighty fine return in seven months by anyones standards. Even you would be happy with circa 500 percent.
> 
> BBI is not dead. Far from it, however, the equity holders are at extreme risk of being diluted to next to nothing. BEPPA holders sit tight, once DBCT is sold, you are home for the tea money.




BB,

Thanks for the kind words. I think people are aware that you were flogging the virtues of BBI from 40c+ all the way down to 3c.

I figure your many hours of research attracted you to BBI at 40c+ but there must have been a problem with your interpretation of your own research because your beloved BBI fell all the way to 3c. And now it appears you are no longer a holder of BBI. But you did advise us all just a short few weeks ago that you re entered at 7.8c. Maybe you joined the throng of sellers that drove it to 6.5c.

Good luck and I will watch with interest.


----------



## cbrendan (7 July 2009)

sdmartin10 said:


> Several Hybrids paying divs are currently trading well below 40c in the dollar, even investment grade hybrids are at big disc to face value.  An okay outcome on DBCT, Euroports and PD ports may still see BEPPA trading around 30c. That is still a great price from here,  but debt instruments will not trade near their face value for a while yet.




If and when BEPPA resumes paying 'divs', circa 10 cents of outstanding distributions will be owed.  

Beppa will not be 30 cents leading up to a 10 cent payment!

40/50 cent is a much more reasonable suggestion.

I would be first in line to buy a couple of hundred thousand BEPPA at 30 if i was guaranteed a 10 cent payment immediately. As for BBI to be in a position to pay BEPPA dividends, survival would be in the bag and BEPPA would simply be a waiting game to receive a $1 

Of course this is all hypotheticals until the money from these hoped for assets sales lands in the bank.


----------



## persistentone (7 July 2009)

Viva_Las_Vegas said:


> Well PD Ports just got delayed for another month. Perhaps to allow time to settle DBCT matters which would give enough head room to allow BBI to retain PD Ports. That would make sense to me.....
> 
> On the other hand whilst posters are proposing capital raising etc, here is my own proposterous proposal with no knowlege of HOW their debt operates.
> 
> ...




As others explained it, the AUD $800M to $1B net equity we might get from a DBCT 100% sale are required to be swept over to their corporate debt.   As long as that corporate debt hangs over them, they have lost control of their ability to act innovatively.    

One of the questions I asked earlier was how much of that $1.8B debt on DBCT is corporate debt.  It would be so nice if the DBCT sale could by itself at least wipe the corporate debt clean.


----------



## persistentone (7 July 2009)

Viva_Las_Vegas said:


> Well PD Ports just got delayed for another month. Perhaps to allow time to settle DBCT matters which would give enough head room to allow BBI to retain PD Ports. That would make sense to me.....
> 
> On the other hand whilst posters are proposing capital raising etc, here is my own proposterous proposal with no knowlege of HOW their debt operates.
> 
> ...




P.S., the essence of your idea isn't stupid in any way shape or form.   With their corporate debt extinguished, it would be very good management for them to start buying BBI EPS and any remaining SPARCs with every dollar of EBITDA they generate until it recovers to at least 70 cents on the dollar.   I'm positive the market would reward that in the BBI share price and it's just smart to buy $1 of debt for substantially less than $1.   The problem is they don't get to decide how to spend their own money now because the banks have a noose around their neck and are forcing every available dollar to go into corporate debt repayment.

Is their any regulation in Australia that would prevent BBI from buying BBI EPS directly on the open market?


----------



## banska bystrica (7 July 2009)

select said:


> BB,
> 
> Thanks for the kind words. I think people are aware that you were flogging the virtues of BBI from 40c+ all the way down to 3c.




There is a reason your username is "select". You selectively pick out tid bits of information and then use those as the basis for an entire story. Well "select", you would know that I indeed "dipped my toe" in the water in the 40's but as anyone with half a brain can see from my posts in November on here, I was loading all bases at prices under 5c and even snagged 800K at 2.5c. (See post in November). You see macrae/select, I stand by my research and as the price went lower, I attacked with all guns blazing. If you care to read all my posts, you would have noticed I exited ALL my BBI as soon as the Corus news came out at circa 16/17c. Now "select", how about you contribute something rather than "selectively" coming on here and bagging me.
Have you never bought a stock that dropped in price???? IMU perhaps? Good call that macca. Cheerio. I'm off to a nightclub down near Charles Bridge where the women are hot and the Czech beer is cold. Just the right combination "select". Do a bit of tarvelling select and you may just get that giant chip off your shoulder.


----------



## persistentone (7 July 2009)

hardyakka said:


> When a company goes into receivership the rights and duties of the board are vested into the receiver whose primary duty is to liquidate assets in an orderly manner to met creditor claims. So in effect the RE board is powerless.
> 
> The interesting issue that your question has raised is whether or not BEPPA holders would fall within the definition of a creditor, subordinate to the senior debt holders. Were this the case then any receiver would have a duty to realise assets firstly for the benefit of senior debt holders, ie banks AND secondly for lower priority debt holders ie BEPPA.
> 
> Cheers




You got it.  BEPPA was a *loan* to BBI.   BEPPA holders ARE CREDITORS to BBI, standing in line unsecured at the bottom of the creditor pecking order.   So I think it is really critical here to try to put some numbers on liquidation prices for assets because I really don't see how BEPPA holders wouldn't get something back.

Let's go with your statement that the company is liquidated for benefit of creditors.   So BBI goes into receivership.   The receiver sells DBCT, PD Ports, and Euroports, which were going to sell anyway.   From those proceeds, all corporate debt is repaid in receivership.   Now what?

Is there a way in receivership that BBI management can show their ability to continue as a viable entity from that point on and simply exit receivership without any additional liquidations?  In the U.S. we call such situations a Chapter 11 bankruptcy.

And the real question for me is in receivership would all of the non recourse lenders come out of the woods demanding liquidations of their assets?   One assumes they would not if they are banks, because unlikely they would get the best prices in a fire sale, and because BBI could easily show cash flow coverage for their debt with corporate debt extinguished.

I really encourage others here to take up this theme.   It looks to me like BBI is in a tough spot here and bankruptcy is a real possibility.    The buyers of the DBCT, Euroports, and PD Ports may be just playing stalling games with us now hoping to get the assets cheaper in receivership.    Let's start thinking about the end game and what BBI looks like in receivership, because BBI EPS might be a decent speculation even for that scenario.


----------



## persistentone (7 July 2009)

select said:


> BB,
> 
> Thanks for the kind words. I think people are aware that you were flogging the virtues of BBI from 40c+ all the way down to 3c.
> 
> ...




select, would you mind not nit picking every thought and action that BB takes?  I read through the last six months last night and he has consistently been the highest value contributor to this thread.   He does plenty of homework and shares that freely.  You to contrast provide almost no value at all.   If we put it up to a vote I am quite sure that this board would vote to keep him and get rid of you.  Everyone can get along just fine here, but there is no value in being petty.

Everyone who participates in the stock market understands that it is impossible to call a bottom on a value investment.   Intelligent Investor was recommending BBI EPS at over 60 cents.    RHG which was another deep value play they recommended at a very high price, and it went to four cents and then climbed back over 50 cents.   Bottoms are just tough to call and it's a fools game to try.   Value investing is about articulating the basis for value, not getting caught up like a hummingbird in every twitch in stock price.

BB, the vast majority of us value your research and input.  I feel there is probably a 20% to 50% chance that BBI might go into receivership at this point, and it's clearly a high risk and reward and each of us has to calculate the variables and make his own decisions.   I for one would like to see you participating, particularly in helping to calculate the potential values of BBI EPS in receivership of BBI.  I know select tweaks you, but I would recommend ignoring him, and the quality of the thread will improve.


----------



## persistentone (7 July 2009)

In Australia, are you allowed to trade on the stocks of companies that are in receivership?   In the U.S., it is quite common to see a company declare a Chapter 11 bankruptcy and have the stock get a new symbol immediately, but continue to trade for weeks or months.

What I want to know is if BBI put itself into receivership, and the price of the BBI EPS shares started to crash, would we even get a chance to buy them?  Or would the shares of both BBI and BBI EPS be immediately pulled from the market and no trading would be allowed?


----------



## Tysonboss1 (7 July 2009)

sdmartin10 said:


> Several Hybrids paying divs are currently trading well below 40c in the dollar, even investment grade hybrids are at big disc to face value.  An okay outcome on DBCT, Euroports and PD ports may still see BEPPA trading around 30c. That is still a great price from here,  but debt instruments will not trade near their face value for a while yet.




Having researched a few hybrids, i think the beppa terms are one of the best,

ie, cumulative distributions etc,

Some of them are trading at big discounts because there management have the right to cease distributions without having them acumulate.


----------



## Mitsimonsta (7 July 2009)

persistentone said:


> You got it.  BEPPA was a *loan* to BBI.   BEPPA holders ARE CREDITORS to BBI, standing in line unsecured at the bottom of the creditor pecking order.



That's it. BEPPA are on the Creditors side of the books, with SPARCS holders above them, then the senior debt above that (banks). BEPPA holders, while being at the bottom of the creditor ladder, whould have to be paid IN FULL (face value + any distributions owing) before vanilla BBI holders will see a cent.



persistentone said:


> Let's go with your statement that the company is liquidated for benefit of creditors.   So BBI goes into receivership.   The receiver sells DBCT, PD Ports, and Euroports, which were going to sell anyway.   From those proceeds, all corporate debt is repaid in receivership.   Now what?



The non-recourse lenders will have called in their loans. They will be due and payable, so the entire assets of BBI would be sold in liquidation.



persistentone said:


> Is there a way in receivership that BBI management can show their ability to continue as a viable entity from that point on and simply exit receivership without any additional liquidations?  In the U.S. we call such situations a Chapter 11 bankruptcy.



Chapter 11 is a completely American thing. There is no such option available in Australia.

What will happen is that BBI would go into receivership, and then all financiers would call in their loans as due and payable in full. This includes SPARCS and BEPPA holders (in a round about way).



persistentone said:


> And the real question for me is in receivership would all of the non recourse lenders come out of the woods demanding liquidations of their assets?



In one word, yes. They would do this to protect the capital they have lent.



persistentone said:


> Let's start thinking about the end game and what BBI looks like in receivership, because BBI EPS might be a decent speculation even for that scenario.



Even with 20c paid (10c Distribution deferred + 10c of face value) in the event of liquidation, it's not a bad return on my average buy price of 8.4c.

I think it would be higher than that - I think the face value of at least 50c should be able to be paid with the quality of the assets that are held by BBI. The question would be how long it would take to receive that money.



persistentone said:


> In Australia, are you allowed to trade on the stocks of companies that are in receivership?   In the U.S., it is quite common to see a company declare a Chapter 11 bankruptcy and have the stock get a new symbol immediately, but continue to trade for weeks or months.



No. Stocks are put into trading halt once they go into receivership, and IF they come through that without being liquidated, they can commence trading again.

If they do not make it through receivership, then they are de-listed and all shares are lost.



persistentone said:


> What I want to know is if BBI put itself into receivership, and the price of the BBI EPS shares started to crash, would we even get a chance to buy them?  Or would the shares of both BBI and BBI EPS be immediately pulled from the market and no trading would be allowed?



It could go into voluntary receivership, yes. I would expect that in most cases, the symbols would go into a trading halt.


----------



## persistentone (7 July 2009)

Mitsimonsta said:


> The non-recourse lenders will have called in their loans. They will be due and payable, so the entire assets of BBI would be sold in liquidation.
> 
> 
> Chapter 11 is a completely American thing. There is no such option available in Australia.
> ...




Put yourself in the position of the non recourse lenders.   Why would you prefer to have this asset sold rather than have BBI continue paying the loan?  You are in business to make loans, and you have a company that can make the loan payment.   

The Australian system cannot be this inflexible?   Doesn't the company have any ability to work out settlements with lenders to emerge from receivership intact?


----------



## Mitsimonsta (7 July 2009)

persistentone said:


> Put yourself in the position of the non recourse lenders.   Why would you prefer to have this asset sold rather than have BBI continue paying the loan?



I would want to protect the capital I have already loaned them, so I could get it back and loan it to someone else.



persistentone said:


> The Australian system cannot be this inflexible?   Doesn't the company have any ability to work out settlements with lenders to emerge from receivership intact?



The simple fact is that the lenders would call in the loans. I think you will find most loan documents will have a clause in then stating that if the borrower goes into receivership, then the loan is due and payable in full immediately.

Of course, settlements/offers can be made, however there would want to be a very good plan for going forward before that would happen. The main thing to remember is that there is no legal requirement to 'come to an arrangement'.


----------



## fuzzie (7 July 2009)

persistentone said:


> Put yourself in the position of the non recourse lenders.   Why would you prefer to have this asset sold rather than have BBI continue paying the loan?  You are in business to make loans, and you have a company that can make the loan payment.
> 
> The Australian system cannot be this inflexible?   Doesn't the company have any ability to work out settlements with lenders to emerge from receivership intact?




This appears to be what has happened in the case of another of the Babcock and Brown satellites. B&B Power (BBP) has its finances in more of a twist than BBI. It breached debt covenants in May and went into a trading halt. After 'discussions' with it's bankers they have been granted an extended renegotiation period to the end of July and the stock is trading again.

Many of the BBI bankers are probably the same as BBP's bankers.


----------



## persistentone (7 July 2009)

fuzzie said:


> This appears to be what has happened in the case of another of the Babcock and Brown satellites. B&B Power (BBP) has its finances in more of a twist than BBI. It breached debt covenants in May and went into a trading halt. After 'discussions' with it's bankers they have been granted an extended renegotiation period to the end of July and the stock is trading again.
> 
> Many of the BBI bankers are probably the same as BBP's bankers.




That's a very relevant insight, thanks.    

(That's really all I had to say but this silly bulletin board software makes me add filler text


----------



## persistentone (7 July 2009)

Mitsimonsta said:


> I would want to protect the capital I have already loaned them, so I could get it back and loan it to someone else.
> 
> 
> The simple fact is that the lenders would call in the loans. I think you will find most loan documents will have a clause in then stating that if the borrower goes into receivership, then the loan is due and payable in full immediately.
> ...




I am with you on most of this.   I agree the loan provisions for non recourse loans will all say the loan is due immediately in event of receivership.

Now in the real world, if you are a bank, and you think there is any chance the asset sale won't cover your loan amount, you are going to strongly prefer to find a way to keep that borrower paying off its loan.

And even if the asset sale would cover your loans, if you believed that BBI could continue to pay the loan why wouldn't you prefer that outcome to a lengthy asset sale process?   Better to make your interest, leave your books intact, and make money.  It's less hassle for the bank.

The case that is less clear would be if the bank thought it could steal the asset cheap and turn a profit reselling it.   I don't know enough about the loan documents or the assets to say how relevant that concern is.

In our case, BBI without its corporate debt has very good coverage for all of its non recourse loans.   I just cannot believe that those lenders would prefer to lose good business over preserving the loan, as long as BBI can demonstrate its liquidity.    And given the quality of the assets, BBI can demonstrate its ability to pay easily.   As a lender, I would get a lot of confidence from the assets as a pool, knowing that weakness in any one asset's operating cash flows is supported by surplus cash flows from the other assets.   I would feel secure with this group of assets.   And I would rather keep the loan intact and make money on it than introduce additional risks by selling assets, and guarantee that I lose my interest income.

This is why I want to find a good Australian bankruptcy attorney.   Maybe in the real world my idealism never happens.   Or maybe it is the most common case.   I just don't know, and for me this is the key question in evaluating what happens in receivership.    As a BBI EPS holder I *much* prefer to hold my BBI EPS loan through the receivership and have BBI come out functional on the other side.    I would hate to see them get broken up and then two years later get paid 20 cents on the dollar.   Yes, that's a profit, but it's less of a profit, and also would be a shame for BBI as a business when I strongly sense they are at the edge of a turn here and with those asset sales they can make it.


----------



## bellenuit (7 July 2009)

persistentone said:


> I am with you on most of this.   I agree the loan provisions for non recourse loans will all say the loan is due immediately in event of receivership.




I know we should plan for all contingencies, but isn't receivership only a remote possibility at this stage? 

As far as I know, Euroports is the only immediate concern and wouldn't any failure there only involve Euroports itself, not BBI as a whole. Isn't it all non-recourse debt, although I'm not sure about the 35M Euro loan and the put option obligation.

Otherwise we seem to be able to meet debt obligations, but BBI holders (I'm BEPPA only) may have to worry about dilution when SPARCS comes up for conversion later this year.


----------



## erasmus (7 July 2009)

Mitsimonsta said:


> That's it. BEPPA are on the Creditors side of the books, with SPARCS holders above them, then the senior debt above that (banks). BEPPA holders, while being at the bottom of the creditor ladder, whould have to be paid IN FULL (face value + any distributions owing) before vanilla BBI holders will see a cent.
> 
> 
> I thought that as SPARKS holders had voted no to BBI proposal that they have remained on an equal footing with BEPPA on creditor ladder.


----------



## hardyakka (7 July 2009)

There has been a lot of discussion about receivership etc, dont forget this is the worst possible case scenario and even in that situation I consider that BEPPA holders will come out of such a situation with at least 30% of their capital eventually returned.
The US and Australian systems are very different, the basic premise being Chapter 11 allows a company to trade out of difficulties, whilst the purpose of receivership is to liquidate assets to meet the claims of creditors. A company can continue operations, but only by agreement with the receiver.
But before BBI is "buried" by all this talk of receivership, step back a minute and look at the nature of the assets. Infrastructure assets are very long term investment propositions with effectively regulated read guaranteed income streams. This is to enable the service to be provided, maintained, funded and the return of a reasonable profit, not a super profit but acceptable profit to encourage investors. If a reasonable profit was not forthcoming then no one would invest and the burden would fall to the state/federal governments.
BBI has some blue chip assets and IMO the smart money will be evaluating these with a longterm investment horizon in mind, a firesale at any price is in no ones interest, especially that of the creditors. IMO whoever ends up with DBCT will be smiling over their beer in a few years time at having got the bargain of the century. 
When you look at PD Ports, its problems with Corus are short term. Only once have I seen the positive of Tesco and possibly Aldi mentioned of late. Nowhere in the press or any discussion on pricing do you see any indication of the NET  impact, ie loss of Corus less gain of Tesco.
I posted earlier a discussion that I had with Helen of IR. She basically said a material issue would be announced. Corus in isolation is material, but has anyone asked the question that it may not be material because of the NET impact. The same applies to press reports on the reduction in price of PD Ports. I am not even going to think of the positive that may eventually flow if Tata sues the Corus JV mob that walked, no doubt Corus has arrangements with PD Ports and it may eventually be entitled to compensation.
Now to turn back to receivership, I have posted before what I consider the inherent value of BBI is. Now I ask you, does anyone really see $3.5B of value (that is after allowing an impairment charge of $0.5B) evaporating from BBI? If this happens then the return to BEPPA will be less than a $1 per BEPPA.
My final observation is on the select/BB issue. Select, if you have something to constructive to contribute by all means post it. The next post I see of yours that is just petty sniping then I will just put you on ignore and would encourage others to consider similarly.
Cheers


----------



## hardyakka (7 July 2009)

Came across this:
_New duel SNCF-Deutsche Bahn-Trenitalia

07-06-2009 16:32

The Babcock & Brown Infrastructure (BBI) investment and consultancy company plans to offer for sale its 49% quota of Swiss-Belgian railway operator Crossrail. The reason for this action was the debt reduction of mother-company Babcock & Brown (B&B), which is currently having financial difficulties. According to the press, so far, five companies have shown interest in the acquisition of Crossrail, which has been negotiating with BBI. These five companies include Deutsche Bahn,   Ferrovie dello Stato (through Trenitalia) and SNCF, as well as Swiss private operator Hector Rail. Crossrail provides railway transport services between Italy, Germany, Belgium, Switzerland and Netherlands._

From what I can gather it seems to be a small part of Euroports.

Have a look at crossrail in the port of Antwerp news letter at the below.

http://www.havenvanantwerpen.be/portal/pls/portal/!PORTAL.wwpob_page.show?_docname=74003.PDF

Cheers


----------



## persistentone (7 July 2009)

bellenuit said:


> I know we should plan for all contingencies, but isn't receivership only a remote possibility at this stage?
> 
> As far as I know, Euroports is the only immediate concern and wouldn't any failure there only involve Euroports itself, not BBI as a whole. Isn't it all non-recourse debt, although I'm not sure about the 35M Euro loan and the put option obligation.
> 
> Otherwise we seem to be able to meet debt obligations, but BBI holders (I'm BEPPA only) may have to worry about dilution when SPARCS comes up for conversion later this year.




On paper, receivership should not be necessary.   In reality, what if the buyers of the key assets here (particularly DBCT) decide that they would just stall a purchase to put BBI into receivership, in order to obtain better terms from the receiver (who will care about the money more than the surrounding contract issues)?   Generally, when companies are near the line of receivership all bets are off, and the malevolent actions of other companies can push them over the line.

Delaying DBCT puts BBI in receivership.

Potentially the PD Ports situation if not resolved soon puts them in receivership as well, because 25% decrease in EBITDA there may end up violating a covenant on corporate debt of $75M associated with PD Ports.   The banks would then have an option to push them into receivership.

Yes, if everyone BBI is dealing with acts in good faith and pays quickly, we are going to come out of it fine.   But if they hold back and stall for time, I see a storm coming and I'm not sure BBI will make it out of that.

And NOW is the time to think through what happens in the worst case, not after they are already in receivership!


----------



## Mitsimonsta (7 July 2009)

erasmus said:


> I thought that as SPAR*C*S holders had voted no to BBI proposal that they have remained on an equal footing with BEPPA on creditor ladder.



They are actually ahead as it is the older debt and falls due before BEPPA.

The proposal that was voted down for reasons of conversion, it had nothing to do with the seniority of the debt. They are still subordinated convertible notes, but due to the vagaries of the Bank sweep, the undertaking not to pay any BBI EPS (BEPPA) or BBI dividends was waved as a carrot under SPARCS-holder noses in order to get them to vote for the first proposal. However, it was going to happen anyway as with the bank sweep in operation, they have no cash to pay it out anyway.

Please have a read though this PDF very carefully, and come back when you understand it.



hardyakka said:


> The US and Australian systems are very different, the basic premise being Chapter 11 allows a company to trade out of difficulties, whilst the purpose of receivership is to liquidate assets to meet the claims of creditors. A company can continue operations, but only by agreement with the receiver.



Close, but not quite.

Administration is bringing in outside management to go through the books to determine if the business is a going concern. It will determine Income & Assets versus Liabilities and debt, and try to trade out of the difficulties (similar to Chapter 11 but it has nothing to do with bankruptcy). A company can appoint administrators themselves, or a debtor can ask the Supreme Court to appoint an Administrator if the debt falls due and remains unpaid. The administrators will attempt to pay off all outstanding and out-of-terms debts, and is usually done by reaching agreement with debtors (payment plans, cashflow analysis & budgeting).

I know, I work in a business which has been using outside consultants in order to do alot of these things, plus formulate plans and budgets for the future. It's really the Administration you have when you are not under Administration. Hasn't been alot of fun.

Receivership is usually brought about senior debtors. The purpose of this is to try and sell off Inventory and possibly even parts of the business (divisions, particular sites, anything like that) to pay debt. There may be a point where parts of the business are sold and what is left is strong and healthy, where it can return to it's normal operation. Not often though.

Liquidation is where all assets are sold to pay off debts. This usually occurs when the liabilities far outweigh the assets of the business. The aim is to get as much payment for the debts as possible in a reasonable amount of time.



hardyakka said:


> My final observation is on the select/BB issue. Select, if you have something to constructive to contribute by all means post it. The next post I see of yours that is just petty sniping then I will just put you on ignore and would encourage others to consider similarly.



Don't even bother. Just report the post. If enough of his posts get removed and continues on his stupid and petty name-calling, hopefully the mods will ban his account(s).


----------



## persistentone (7 July 2009)

Mitsimonsta said:


> Close, but not quite.
> 
> Administration is bringing in outside management to go through the books to determine if the business is a going concern. It will determine Income & Assets versus Liabilities and debt, and try to trade out of the difficulties (similar to Chapter 11 but it has nothing to do with bankruptcy). A company can appoint administrators themselves, or a debtor can ask the Supreme Court to appoint an Administrator if the debt falls due and remains unpaid. The administrators will attempt to pay off all outstanding and out-of-terms debts, and is usually done by reaching agreement with debtors (payment plans, cashflow analysis & budgeting).
> 
> ...




Thanks for adding these distinctions, and it looks like I was using the wrong terms.   I guess in the worst case we would hope that BBI was put into voluntary administration, and that the administrator would see that BBI could function as a continuing business after corporate debt is paid.

What's not clear to me is whether the banks have clauses that allow them to put the company in receivership automatically if - for example - the company is in administration.   Is that kind of thing possible?

It's not clear to me who takes priority in such situations:  an administrator or a receiver?   Can the company even have the two at the same time?


----------



## erasmus (7 July 2009)

Thanks mitsimonster,appreciate pdf.
You are right,I cannot see any terms in the proposal were to do with seniority of debt with sparks and beppa.
Are you saying in the event of bbi going into receivership that because sparcs is the older debt that it will rank ahead of Beppa?


----------



## persistentone (7 July 2009)

Yes, New Zealand Sparcs and New Zealand Bonds are ahead of BBI EPS in credit order.   But that's only about AUD $250M between the two of them.   It's not much relative to BBI EPS. 

And if we get to the point where our seeing money return in BBI EPS during liquidation comes down to $250M, we are already in a serious world of hurt and would have shaved $2.5B off of equity.    

So in the big picture I wouldn't sweat Sparcs or New Zealand Bonds.


----------



## erasmus (7 July 2009)

Thanks persistentone.
if BBI goes belly up whether sparcs is ahead of me or not will probably be the least of my worries.

cheers


----------



## Mitsimonsta (7 July 2009)

Hey persistentone, just had a thought on your point about the banks holding out on BBI in order to get their hands on quality assets cheaply and sell later for a handsome profit:

It isn't liquid enough.

Banks right now need cash and cash flow in order to lend. You are not going to be able to lend a Coal Terminal.

For things to get better, we need liquidity in the credit markets. What they will do by taking up assets like DBCT/PD Ports/Euroports/WestNet Rail is tie up large amounts of capital which will COST them money in the short term when their balance sheets will hurt he most from it.

In the current climate, I can't see any bank doing something like this without some serious backlash from shareholders.


----------



## persistentone (7 July 2009)

Mitsimonsta said:


> Hey persistentone, just had a thought on your point about the banks holding out on BBI in order to get their hands on quality assets cheaply and sell later for a handsome profit:
> 
> It isn't liquid enough.
> 
> ...




I agree with that; banks don't want to speculate with assets.   That's why I am arguing that BBI comes out of any potential administration functioning, and hopefully with BBI EPS intact.   The non recourse lenders should probably prefer that outcome for reasons you specify and others.

What worries me is that the non-bank entities that are bidding for DBCT, PD Ports, and Euroports may try to stall their bids to pick up the assets cheaper.   Those entities do want to buy low and sell high later.   Stalling on those purchases could put us into administration.


----------



## Viva_Las_Vegas (7 July 2009)

Guys

A lot of bickering going on here.

Lets step back for a second and look at theses facts

1) Euroports is a minor hurdle in terms of the entire BBI asset portfolio. Up till now BBI has been repaying its debts with the sweep facility.

2) DBCT expansion is complete allowing for more volume

3) DBCT on the market with expansion complete and other expansions a possibility, with a 99 year lease DBCT is a ONCE IN A LIFETIME cash cow/golden goose.

4) Despite the GFC there are companies out there who are cashed up, passing up DBCT in this buyers market would be an oversight to say the least.

5) 100% sale of DBCT would cover debt, SP would go up, BBI could then capital raise. With that capital solve the BEPPA issue which is still 2.5 years away.


So despite sailing into a strong headwind and some choppy seas, I believe in BBI's LONG TERM survival. 

I hold BEPPA


----------



## persistentone (7 July 2009)

Intelligent Investor moved BBI EPS from Speculative Buy to Hold.   They are concerned about the delays in asset sales.


----------



## persistentone (7 July 2009)

Viva_Las_Vegas said:


> Guys
> 
> A lot of bickering going on here.
> 
> ...




No real bickering (here at least).   I think we are collaborating.

The assets are great.   Never questioned that.

The assets will get sold too.   Never questioned that.   But will they be sold before or after BBI is put into administration?   That's the question.

I'm maintaining that the asset buyers may be deliberately stalling these sales, knowing that buying the assets from an administrator will give them better terms and less strict contracts.   We are seeing lots of delays in these sales, so that is somewhat consistent with my theory.   BBI doesn't have unlimited time, and that gives buyers leverage.

Look at it this way, there are only two outcomes worth considering:  

1) BBI sells assets without going into administration.   In that case obviously BBI EPS soars and it is a great investment at today's price.   At this point that is so obvious to me it is almost not worth discussing.

2) BBI does not sell assets and is forced or volunteers administration.   In that case the assets will get sold anyway.   Then what?    Either:

2A) We are forced to liquidation and do not sell other assets at prices that allow BBI EPS any recovery.

2B) We are forced to liquidation and sell other assets at high enough prices that BBI EPS has some recovery.

2C) We pay all corporate debt and leave administration as a going concern with all other assets and non recourse debt and BBI EPS intact.

For me knowing the relative probabilities of the outcomes in 2) is really the only interesting question left to answer.

If we get to administration, then I strongly prefer 2C as the outcome.   I'm just trying to get some more certainty about probabilities.


----------



## nathanblack (7 July 2009)

theres no doubt that the purchaser of 29% stake in euroports is stalling. if they had euro30mill to deposit they are obviously serious buyer. the end amount always varies slighlty due to variables like exchange rate and current account recievable/payable. 

they can walk away at any point and say they arent happy with the books or the market has fallen since the initial offer or any excuse, but then they have waisted there time. QIC did it with Powerco sale, and the end result was an immaterial discount. if we threw in an extra 1 or 2% at no charge or a 5mil discount who cares? they get a bargain and we repay significant debt.

as for PD Ports, not really concerned. we either sell bellow book value and take the hit or we sell other assets which allows us to keep PD until recovery in value and certainty ov Corus.

DBCT, not officially a delay yet, although news should be out soon. ofcourse buyers are trying for the best price possible, but the real cause of the 'delay' is they same reason they hired macquarie. its a great asset with real value. onne they dont want to sell. Waying up all offers and determining what will best serve BBI is the delay.

They could sell 100% to one buyer for the best offer and move on, no regrets. or they could sell 49%, pay off some debt , keep controling interest and maintain an earnings stream. 

They could even be trying to unite several smaller buyers. Buyer A wants 15%, buyer B 25%, C 40% etc.

its a tricky sale because they want the best outcome because its a huge asset in comparisson to euroports/pd ports.


----------



## persistentone (8 July 2009)

If BBI were in perfect shape to repay BBI EPS, assume it would trade at $1.   Of course there are interest rate issues with any income investment, so it might trade at $0.95 or $1.05 to reflect interest rate expectations, but assume for simplicity it would trade at $1.

Doesn't the fact that it currently trades at $0.10 mean that the market feels there is about a 90% chance it will not be repaid?    Ignoring present value and accumulated interest in the calculations for the moment, 90% * $0.00 + 10% * $1.00 gives us the $0.10.

I'm not arguing the market is right or wrong.   I happen to think they are wrong.   I'm simply trying define what the market pricing at this level implies, statistically, about the percent odds of failure to repay that is priced in at the moment.


----------



## investorpaul (8 July 2009)

persistentone said:


> Doesn't the fact that it currently trades at $0.10 mean that the market feels there is about a 90% chance it will not be repaid?    Ignoring present value and accumulated interest in the calculations for the moment, 90% * $0.00 + 10% * $1.00 gives us the $0.10.




I have always looked at it that way in a very broad and general sense.

ie 10 cents equates to the market believing there is a 10% chance of success, however this is where the opportunity lies as the market is not always efficient/correct.  

The real chance of success may be 50 to 70% (ie 50 to 70c) those that believe the chance of success to be higher than 10% would be those who have purchased units at current prices and lower.


----------



## persistentone (8 July 2009)

persistentone said:


> If BBI were in perfect shape to repay BBI EPS, assume it would trade at $1.   Of course there are interest rate issues with any income investment, so it might trade at $0.95 or $1.05 to reflect interest rate expectations, but assume for simplicity it would trade at $1.
> 
> Doesn't the fact that it currently trades at $0.10 mean that the market feels there is about a 90% chance it will not be repaid?    Ignoring present value and accumulated interest in the calculations for the moment, 90% * $0.00 + 10% * $1.00 gives us the $0.10.
> 
> I'm not arguing the market is right or wrong.   I happen to think they are wrong.   I'm simply trying define what the market pricing at this level implies, statistically, about the percent odds of failure to repay that is priced in at the moment.




Technically, I guess you could express this as:

$0.10 = (1-x% ) PV($1 plus all interest payments)

where x% is the percent chance of NOT being repaid, and PV() is the present value of the stream of payments due through maturity.    You could easily calculate X% and it must certainly be above 80%.   Just too lazy to calculate it at the moment.


----------



## persistentone (8 July 2009)

investorpaul said:


> I have always looked at it that way in a very broad and general sense.
> 
> ie 10 cents equates to the market believing there is a 10% chance of success, however this is where the opportunity lies as the market is not always efficient/correct.
> 
> The real chance of success may be 50 to 70% (ie 50 to 70c) those that believe the chance of success to be higher than 10% would be those who have purchased units at current prices and lower.




So in that case, perhaps it is clearer why I am trying to stress that we should be spending more time to calculate what happens in administration, because the price says there are extremely good odds that this is where we are heading.

Personally I would give them 50/50 odds of escaping administration at this point.   But that's 50% odds that they are in administration, so even in my much more optimistic odds I want to understand what is likely to happen in administration.


----------



## investorpaul (8 July 2009)

persistentone said:


> So in that case, perhaps it is clearer why I am trying to stress that we should be spending more time to calculate what happens in administration, because the price says there are extremely good odds that this is where we are heading.
> 
> Personally I would give them 50/50 odds of escaping administration at this point.   But that's 50% odds that they are in administration, so even in my much more optimistic odds I want to understand what is likely to happen in administration.




Most of us on here have done our calcs on Risk/Reward and are happy with the outcome. My risk to reward is 1:10 approx and i am happy with that.

If BBI goes into admin, theres not a great deal we can do about it. At that point I will write my whole investment off (in BBI and BEPPA) if in the future I recoup something well that would be a bonus.

Our Administration laws are different to the US, there will be nothing left for equity holders (BBI) however BEPPA holders may receive something. Until it happens though I am not thinking/or worrying about it


----------



## fuzzie (8 July 2009)

I don't think "$0.10 = (1-x% ) PV($1 plus all interest payments) where x% is the percent chance of NOT being repaid" is correct.

I think there is a scare factor involved as well.

The distributions have been suspended for an indeterminate time, which scares off people who are looking for an income stream. The market is scared payback is not likely to be seen quickly which is stopping people taking up new positions, especially fund managers who might be aiming for good short term returns that can be published.

I think many potential investors would be sitting on the side lines waiting for a clearer picture, willing to miss say the first 15% of a pickup for the more certain 50% pickup once the outcome is more clear and the price is moving.

Picking random numbers, I think the x is 45% chance of not being repaid plus 45% scare factor = 90% discount. Somebody like BB is saying the figures are 5% chance of not being repaid 85% scare factor.

I get scared on roller coasters, even when I know the chance of one coming off the rails is really low.


----------



## persistentone (8 July 2009)

fuzzie said:


> I don't think "$0.10 = (1-x% ) PV($1 plus all interest payments) where x% is the percent chance of NOT being repaid" is correct.
> 
> I think there is a scare factor involved as well.
> 
> ...




You are substituting an objectifiable concept with a fuzzy one.   Sure, some people are afraid.   Others are eager.   Ultimately the sum of those fears and positive sentiments comes down to a number, and the number implies something about the overall market's assessment of the odds of getting paid back.

Again, I wasn't suggesting the market is right.   I agree with your 45% figure more than I agree with the market's number.   I'm simply trying to define what is the market's sentiment about the risk here.


----------



## persistentone (8 July 2009)

Can someone explain to me what is the HIN number that appears on Australian share statements?   As a foreign holder, I don't get the actual shares and they are held in a custody account.   Does anyone know if there is a way to find your HIN, or is it likely to be one HIN for all shares the custodian holds for more than one retail buyer?


----------



## persistentone (8 July 2009)

Does anyone have the contact email for Helen in investor relations at BBI?   The IR contact on the BBI web site goes to some third party outfit.


----------



## fuzzie (8 July 2009)

There are a lot of people who got burnt holding anything to do with Babcock and Brown. As a consequence they will not entertain any possible positive scenario for anything with a B&B association for far into the future, irrespective of the analytics.

B&B was built on being fuzzy about as much as it could, that's why this mess is here in the first place. 


re HIN, check out http://www.asx.com.au/products/shares/how/chess_faq.htm


----------



## fuzzie (8 July 2009)

Persitentone, I don't know if you can see the course of trade for beppa but you will see a lot of small lots being traded. This is most likely because the small beppa holdings originated from some wasteful takeover activity B&B was involved in relating to another energy utility (AGL) that resulted in these beppa being issued as part payment to mum and dad security holders.

Many would just want to get rid of them, but the brokerage costs would be greater than the parcel values.


----------



## persistentone (8 July 2009)

fuzzie said:


> There are a lot of people who got burnt holding anything to do with Babcock and Brown. As a consequence they will not entertain any possible positive scenario for anything with a B&B association for far into the future, irrespective of the analytics.
> 
> B&B was built on being fuzzy about as much as it could, that's why this mess is here in the first place.
> 
> ...




The whole Chess registration sounds complex, and I probably don't want to do that without getting an Australian accountant's advice.

By the way, if anyone knows a good Australian accountant who handles investment tax issues for non residents, it would be good to have that resource.


----------



## Tysonboss1 (8 July 2009)

persistentone said:


> Does anyone have the contact email for Helen in investor relations at BBI?   The IR contact on the BBI web site goes to some third party outfit.




Call her and ask,... (02) 9229 1800.

good luck getting info though, I get the feeling she is very good at poker.


----------



## persistentone (8 July 2009)

Tysonboss1 said:


> Call her and ask,... (02) 9229 1800.
> 
> good luck getting info though, I get the feeling she is very good at poker.




Most investment relations departments seem to make it their job to never share any information with anyone.     You kind of wonder why they don't just install an answering machine that says as much and save the salaries.


----------



## banska bystrica (8 July 2009)

Reporting in from Dubrovnik, the jewel of the Adriatic.

The simple fact is that right now, the NAV of BBI is roughly $2.4Bn. That includes a book value of 1.9Bn for DBCT. If we plug in a sale price of $2.7Bn for DBCT, an additional $800M hits the NAV. That brings it to $3.2Bn.
For BEPPA holders to receive nothing in administration liquidation, there has to be impairment of $4Bn over all their assets. On my figures, I just cannot see where impairment would come to anything like $4Bn.
BBI can take a hit on Euroports, PD Ports and Westnet Rail and still have enough equity for BBI holders and BEPPA holders. Remember, BEPPA holders receive $1.04+ interest before BBI holders receive one cent.


----------



## ricee007 (9 July 2009)

persistentone said:


> So in that case, perhaps it is clearer why I am trying to stress that we should be spending more time to calculate what happens in administration, because the price says there are extremely good odds that this is where we are heading.
> 
> Personally I would give them 50/50 odds of escaping administration at this point.   But that's 50% odds that they are in administration, so even in my much more optimistic odds I want to understand what is likely to happen in administration.



What do you base this on? Just the fact that the market thinks BBI is in trouble, and ASF thinks it should be okay? Or?

Reading the financial reports, I really do have a hard time seeing administration. They are covering their debts.... they have significant net assets... they have some awesome assets...???


----------



## persistentone (9 July 2009)

ricee007 said:


> What do you base this on? Just the fact that the market thinks BBI is in trouble, and ASF thinks it should be okay? Or?
> 
> Reading the financial reports, I really do have a hard time seeing administration. They are covering their debts.... they have significant net assets... they have some awesome assets...???




I base that on:

1) The fact that buyers have been stalling.   And my experience in the market and in real business suggests that when a company gets close to a bankruptcy potential buyers become vultures and deliberately do a death watch and do not close deals that would otherwise be easy to close.   I don't know why it would be different here than in nearly every other situation where I have watched the same thing happen.

2) The fact that PD Ports potential 25% decline in EBITDA might trigger a covenant default, and the banks could use that as an excuse to force administration.   That's a bit off at this point though.

3) Based on the fact that the current price factors in more than an 80% chance on the income instrument of not being paid.   I believe the market is wrong, but I'm not so arrogant as to believe that they are wrong by orders of magnitude.

Again, I wish people would stop talking about the assets.   I know they have great assets.  I know they will eventually sell the assets.  I know they will get a lot of money for the assets.   None of this has to do squat with whether they can escape administration.    Escaping administration is mainly about the timing of those sales.   TIMING OF SALES....   That's all I am focused on at this point.

And saying they have a 50/50 shot means I think they have even odds of NOT going through administration.   I think either scenario is equally probable at this point.   That's the way I am calculating my odds.


----------



## banska bystrica (9 July 2009)

ricee007 said:


> What do you base this on? Just the fact that the market thinks BBI is in trouble, and ASF thinks it should be okay? Or?
> 
> Reading the financial reports, I really do have a hard time seeing administration. They are covering their debts.... they have significant net assets... they have some awesome assets...???





I think talk of administration is just worst case scenario talk. I believe the chance of BBI going into administration is less than 5%. At the moment they are in quasi administration. That is, what would be happening in admin is happening now. No asset purchases and most assets for sale at book value or better, some a touch under book value ie PD Ports.
The banks have the sweep in place so there is no point in formally putting them into admin and remember, they have not yet breached any debt covenants.
Once asset sales eventuate, and they will, BBI will be leaner and meaner and BEPPA holders who bought at under 20c will be laughing all the way to the bank.
BEPPA is the outstanding play in the hybrid sector right now. I cannot find another hybrid that has more upside and the risk profile is not that great despite what the market might be trying to tell us. The market in BEPPA is just plain inefficient. Simple as that. The fear factor of anything BNB associated is huge. Without the BNB influence I am sure BEPPA would be trading at 20c+ now.


----------



## persistentone (9 July 2009)

My broker in the US is telling me that Australia is a scripless system where no physical stock certificates are ever issued.   They said everything is done through a registration entity named Computer Share.   Can anyone reflect on that for me?   Is it right?

The reason I care is in the event of an administration, I just would fear a situation where I hold shares through a broker who holds shares through a custodian, and somewhere along the way the symbol gets delisted and the custodian fails to connect my shares back to any any new entity that gets issued as a replacement for the originals.   Establishing clear ownership of the shares to my name becomes important, particularly when you consider that you could come out the other side of administration with something that is five to 20 times the value of what you paid.

Anyone have any thoughts on this?


----------



## cpsharky (9 July 2009)

Hi Persistance,

Correct that we use a scripless system here. The system is called CHESS which is run by the ASX. They keep a record of holders and allocate a HIN (holder identification number). They will issue a paper record of your transactions. Investigate the CHESS system on the ASX site and you should get the info you are after. 

The companies on the ASX generatlly use one of two third party companies to handle all of their share registry functions. BBI uses www.linkmarketservices.com.au rather than Computershare. You are able to check your holdings on this site.

All seems as safe as houses (errr... you know what I mean  ) to me.

By the way, if you do manage to find an Aussie lawyer (sorry I can't help), would be very interested in a summary.  

Cheers.


----------



## random (9 July 2009)

If you are a company, fund, institution  or other which happens to have some money to spend on buying a fine investment  piece of infrastructure you  would most certainly be having a deep and meaningful look at dbct.

Such animals still do exist and they are not as few and far between as many believe,DBCTwe here know is a great business especially with its phase 7 expansion completed. 
In this period of doom my understanding is that the coal companies are still at full capacity producing all the coal from Qld that they can mine. There is no shortage of production (or demand from the international community) even though we are in a sense not effected due the guaranteed income stream we have in place.
So if I have the do ray me to spend in my opinion now is the time to buy.
Yes,i would take the step forward _now_.
The theory that i would be able to screw the administrators is dreaming. 
It assumes that it is just me interested in buying or perhaps a handful of others and i personally don't believe this is the case for a moment. There would be great interest. In fact even more potential buyers would come out of the woodwork.
As "persistentone" states  it is the timing that is important. That works both ways you know!
Here today gone tomorrow. You can't assume it will be there tomorrow to buy.
This is an opportunity for many to buy at a good price and as i have said previously you don't have to screw the seller to purchase a property and be happy with it.
I for one am confident that a buyer will step forward and buy at a price which truly reflects the value of dbct.

Today i have topped up once again my holding in beppa.


----------



## Mitsimonsta (9 July 2009)

Nice to see a bit more strength in BEPPA today.

Random, you pushed the price up :

Volumes still rather low however.


----------



## nathanblack (9 July 2009)

persistentone said:


> Anyone have any thoughts on this?




Can i ask how did you get your name "persistentone"? you seem anything but persistent in your posts.


----------



## banska bystrica (9 July 2009)

random said:


> If you are a company, fund, institution  or other which happens to have some money to spend on buying a fine investment  piece of infrastructure you  would most certainly be having a deep and meaningful look at dbct.
> 
> Such animals still do exist and they are not as few and far between as many believe,DBCTwe here know is a great business especially with its phase 7 expansion completed.
> In this period of doom my understanding is that the coal companies are still at full capacity producing all the coal from Qld that they can mine. There is no shortage of production (or demand from the international community) even though we are in a sense not effected due the guaranteed income stream we have in place.
> ...




Spot on random. A great summation of the likely bidding process for DBCT. There are multiple interested parties and the super keen ones will not be trying to screw BBI on price. They will only end up shooting themselves in the foot. A price circa $2.8Bn is on the cards in my opinion. That would clear all the non recourse DBCT debt and $1Bn of corporate debt. That would make BEPPA home for the tea money and circa 30/40c.
The smart/right money was buying BBI at 15c a short time back but Corus put a spanner in the works.


----------



## persistentone (9 July 2009)

nathanblack said:


> Can i ask how did you get your name "persistentone"? you seem anything but persistent in your posts.




I guess it depends on your timeframe.   I'm definitely not like some annoying salesperson who grabs hold of you and will not shut up.   I do develop goals and never give up on those.   Think persistence in the long-term....


----------



## nathanblack (9 July 2009)

persistentone said:


> I guess it depends on your timeframe.   I'm definitely not like some annoying salesperson who grabs hold of you and will not shut up.   I do develop goals and never give up on those.   Think persistence in the long-term....




so your more ambitious than persistent, that makes sense. where in USA are you?

i think BBI is heading into over sold territory, not much downside but offers potential upside. but still a spekky, so i wouldnt expect too much large buying even at this level. thats why volumes are down.


----------



## random (9 July 2009)

Mitsimonsta said:


> Nice to see a bit more strength in BEPPA today.
> 
> Random, you pushed the price up :
> 
> Volumes still rather low however.




If only it was so that i pushed up the price mitsimonsta.

I am now happy with my lot though.
I am not a big player in this game but if the end game is anything like i feel it will be I will be able to fullfill my dream of going skiing whenever i want wherever i want. 
My life is a simple one these days.
I'll be a happy contented ski bum.

As nathanblack says bbi is definitely in oversold territory now. Although i don't have any anymore I suspect it will recover a bit even before we get any sale news.


Cheers


----------



## persistentone (10 July 2009)

nathanblack said:


> so your more ambitious than persistent, that makes sense. where in USA are you?
> 
> i think BBI is heading into over sold territory, not much downside but offers potential upside. but still a spekky, so i wouldnt expect too much large buying even at this level. thats why volumes are down.




Ambition just means you want something.  Plenty of ambitious people are impatient and give up too soon.   Persistence means you stick with something until you get it right.


----------



## cpsharky (10 July 2009)

persistentone said:


> Ambition just means you want something.  Plenty of ambitious people are impatient and give up too soon.   Persistence means you stick with something until you get it right.




Wise words.

Patience and persistence is needed with BBI I believe.

Smile. Blink. Smile. Blink. Smile. Blink... enough letters yet?


----------



## nomore4s (10 July 2009)

persistentone said:


> Ambition just means you want something.  Plenty of ambitious people are impatient and give up too soon.   Persistence means you stick with something until you get it right.






cpsharky said:


> Wise words.
> 
> Patience and persistence is needed with BBI I believe.
> 
> Smile. Blink. Smile. Blink. Smile. Blink... enough letters yet?




That's fair enough but I'm not sure how that applies to BBI or any stock for that matter. Patience and Persistance can lose you alot of money in this game.

There appears to be alot of unbridled enthusiasm on this thread for BBI & BEPPA but when I look at the chart all I see is a dog. There is also a very good chance this stock won't even be around in 12 months time, the risks with this stock are very real - so there is still alot more possible downside with this stock.


----------



## random (10 July 2009)

Enthusiasm for this stock....yes.
Unbridled enthusiasm ....no.

Most are well aware of its predicament and are riding the wave.


----------



## fuzzie (10 July 2009)

nomore4s said:


> There appears to be alot of unbridled enthusiasm on this thread for BBI & BEPPA but when I look at the chart all I see is a dog. There is also a very good chance this stock won't even be around in 12 months time, the risks with this stock are very real - so there is still alot more possible downside with this stock.




Most of the thread is about ascribing a value to a beaten down stock. It is not an exercise in charting.

Agreed the chart alone looks bleak, but if I squint I can see a double bottom forming as well as a head and shoulders. A little more bumping along the bottom and presto a big upswing is possible.


----------



## Mitsimonsta (10 July 2009)

You can make a chart say whatever you want it to..... 

Anyway, we've hit 10.8c for BEPPA. been a few weeks since I saw it that high. Volumes looks to be rising also.

Possibly some leakage from the Silver Doughnut?


----------



## persistentone (10 July 2009)

Mitsimonsta said:


> You can make a chart say whatever you want it to.....
> 
> Anyway, we've hit 10.8c for BEPPA. been a few weeks since I saw it that high. Volumes looks to be rising also.
> 
> Possibly some leakage from the Silver Doughnut?




The current rise seems to be an absence of sellers rather than a presence of buyers.   Volumes are very low today.   Look at July 7 and July 8, where there were 400K to 800K shares trading in narrow time windows, but the stock didn't rise significantly.

I would not make much of a price rise that doesn't have large volumes of buying behind it.


----------



## Mitsimonsta (10 July 2009)

There was quite a bit of buying early, but that early activity has now tapered off.

I'm actually not phased by the current rise. I mean it is nice and all, but the volume is definitely not following yet.


----------



## persistentone (10 July 2009)

cpsharky said:


> Hi Persistance,
> 
> Correct that we use a scripless system here. The system is called CHESS which is run by the ASX. They keep a record of holders and allocate a HIN (holder identification number). They will issue a paper record of your transactions. Investigate the CHESS system on the ASX site and you should get the info you are after.
> 
> The companies on the ASX generatlly use one of two third party companies to handle all of their share registry functions. BBI uses www.linkmarketservices.com.au rather than Computershare. You are able to check your holdings on this site.




So HIN tracks the individual or company that owns the shares.   What does the SRN number track?   Who issues the SRN, and why should I want one?


----------



## awg (10 July 2009)

The SRN is only issued to a holder if the shares were not acquired via a broker, such as in the case of a public float of a company, like CBA, or TLS.

In this case an SRN is issued.

If the shares are purchased via broker, a HIN is issued.

that is my understanding.

This should not be a problem for you, as you would purchase thru a broker and have a HIN, I assume.

to my understanding anyway, further details.

https://www-au.computershare.com/investor/faqs.asp?bhjs=1&amp;fla=0&Category=Issuer+Sponsored

https://www-au.computershare.com/investor/faqs.asp?Category=CHESS+/+Broker+Sponsored


----------



## nathanblack (10 July 2009)

what about the forms link sent me regarding US withholding tax. do i need to register? after all im australian and BBI arent even giving distributions and dont have many assets in US. i dunno if i should just complete the online registration or ignore it


----------



## persistentone (10 July 2009)

Sorry to divert the conversation directly from BBI, but who are the best capitalized brokers in Australia who work with foreign accounts?   I'm looking for one that is likely to still be standing in 15 years.   I know Citigroup is there, but I wouldn't want to promise they will be around in 15 days let alone years. :/

Maybe UBS?   

I'd like to stay away from the smaller discount brokers, for now anyway.


----------



## persistentone (10 July 2009)

nathanblack said:


> what about the forms link sent me regarding US withholding tax. do i need to register? after all im australian and BBI arent even giving distributions and dont have many assets in US. i dunno if i should just complete the online registration or ignore it




I thought that was strange as well.   Is BBI a partnership or a corporation?

The only theory I can come up with is their US investment(s) are partnerships, and there must be some pass-through elements to that income.  

If BBI is a corporation, then I am perplexed why they would expose their shareholders to a company they invest in.  I guess you have to call BBI and ask, and then be sure to share with your friends.


----------



## bellenuit (10 July 2009)

persistentone said:


> Sorry to divert the conversation directly from BBI, but who are the best capitalized brokers in Australia who work with foreign accounts?   I'm looking for one that is likely to still be standing in 15 years.   I know Citigroup is there, but I wouldn't want to promise they will be around in 15 days let alone years. :/
> 
> Maybe UBS?
> 
> I'd like to stay away from the smaller discount brokers, for now anyway.




Although I don't personally use them, I have heard good things about Interactive Brokers. I believe they are US based, but they allow you to trade many different markets including Australia. I also believe you can set your account up in whatever currency you chose. They frequently have a banner ad running on this site (just under the 2nd menu line above). This is their link to them from the ad displayed a few minutes ago.

http://individuals.interactivebrokers.com/en/main.php

I am very happy with CommSec and they are the largest Australian broker and owned by Commonwealth Bank. I don't know if they allow foreign nationals to open an account with them, but I am sure if you commence the online application, it will be apparent when you get to the section on entering address details.


----------



## persistentone (10 July 2009)

bellenuit said:


> Although I don't personally use them, I have heard good things about Interactive Brokers. I believe they are US based, but they allow you to trade many different markets including Australia. I also believe you can set your account up in whatever currency you chose. They frequently have a banner ad running on this site (just under the 2nd menu line above). This is their link to them from the ad displayed a few minutes ago.
> 
> http://individuals.interactivebrokers.com/en/main.php
> 
> I am very happy with CommSec and they are the largest Australian broker and owned by Commonwealth Bank. I don't know if they allow foreign nationals to open an account with them, but I am sure if you commence the online application, it will be apparent when you get to the section on entering address details.




I have heard good things about Interactive Brokers too, but I do worry about their going out of business.   They are not well capitalized and are running losses.

But the main point is that I already have a way to buy Australian stocks.   What I want in this case is the HIN number to prove ownership of the shares.   In event of Administration or Liquidation, I don't want to disconnect my ownership from whatever gets paid out later.   To get the HIN, I need a broker relationship directly in Australia.

HSBC might be a good candidate, since they have global reach.


----------



## Tysonboss1 (10 July 2009)

persistentone said:


> HSBC might be a good candidate, since they have global reach.




I would have to say commsec, they are the biggest broker in australia and as already stated they are backed by the cba bank.


----------



## fuzzie (10 July 2009)

The USA has some regulations that prevent some things that are published on Australian sites being read by American Nationals. I don't know what those regulations are, I just note that some documents I receive state they are not for release in the USA or may be transmitted to the US.

Notwithstanding those regulations, I cannot understand how your US broker cannot give you the Australian HIN or SRN number your holding is registered under. It isn't secret. If you want to pay for it, anybody is entitled to go and buy the list of registered holders for any listed company. If your number cannot be stated by your broker then you probably do not own the shares. The scriptless system registers all the owners and it's a fairly well tested system that allows settlement in 3 days and the likelihood of an owners record going missing are very very low. Transaction processing software is pretty good these days.

If you do not own the shares, but have given a third party the money to buy shares on your behalf, you must have significant trust in the third party. I would not be worried about the company (BBI) going bankrupt, I would be worried about the third party you are trusting to hold your money and hopefully assets on your behalf, but not in your name. The only way I can see that working is if you buy units in a third party managed trust (e.g. 401k fund) and you trust the fund manager to make the decisions and the shares are registered in the fund name. You do not then own the shares, you own units in a trust that owns the shares.

All of the big 4 banks here have either their own brokerage house or an association. Go to any of the bank sites and look for online brokerage links. 

Start here http://www.moneymanager.com.au/tools/compare/index.html
or http://tradingroom.com.au/apps/find_a_stock_broker.ac

The bank brokers include Commsec, Westpac, NAB and E*Trade(ANZ)


----------



## fuzzie (10 July 2009)

nathanblack said:


> what about the forms link sent me regarding US withholding tax. do i need to register? after all im australian and BBI arent even giving distributions and dont have many assets in US. i dunno if i should just complete the online registration or ignore it




Complete it, it's not hard. If you don't and BBI start paying divs again they will be obliged to take out American withholding tax. Working out how to claim that back will probably be 1000 times more effort.


----------



## nathanblack (10 July 2009)

fuzzie said:


> Complete it, it's not hard. If you don't and BBI start paying divs again they will be obliged to take out American withholding tax. Working out how to claim that back will probably be 1000 times more effort.




ok thanks, i will fill em out.

so, after i complete the US forms, if BBI/BEPPA pay a div will i need to fill in a US tax return? or everything is done at company level transparently and i just declare the div in my australian return? if its at the company level i dont see how my details are relevant but i'll fill em out just to be sure.


----------



## persistentone (11 July 2009)

fuzzie said:


> ...I cannot understand how your US broker cannot give you the Australian HIN or SRN number your holding is registered under. It isn't secret. If you want to pay for it, anybody is entitled to go and buy the list of registered holders for any listed company. If your number cannot be stated by your broker then you probably do not own the shares.




So you are starting to get it.   When a US resident buys through a broker in the US, that broker then goes to another broker in Australia and buys the securities through them.   All such securities and then put by the Australian broker into a "custody" account and that custody account has a single HIN.   All of the details of the actual holder's identity is hidden from CHESS.   I'm counting on both the custodian broker in Australia and my broker in the U.S. tracking my ownership by their internal accounting systems.   If push came to shove and the custodian wanted to insist that a delisted share meant my investment was lost, I might have problems later establishing legal claim to the shares/cash that come out of administration / liquidation.

I have no option in the above scenario to get an HIN.   The "custodian" has no relationship with me.   My broker doesn't have any process for me to get an HIN, and the custodian probably has no process for getting an HIN for a foreign indirect holder that it has no relationship with.

So my reasoning is that the only safe recourse for this case would be for me to have an account directly in Australia and a relationship with a broker there, so that I could obtain the HIN and establish firm ownership of the shares.


----------



## persistentone (11 July 2009)

fuzzie said:


> The USA has some regulations that prevent some things that are published on Australian sites being read by American Nationals. I don't know what those regulations are, I just note that some documents I receive state they are not for release in the USA or may be transmitted to the US.
> 
> Notwithstanding those regulations, I cannot understand how your US broker cannot give you the Australian HIN or SRN number your holding is registered under. It isn't secret. If you want to pay for it, anybody is entitled to go and buy the list of registered holders for any listed company. If your number cannot be stated by your broker then you probably do not own the shares. The scriptless system registers all the owners and it's a fairly well tested system that allows settlement in 3 days and the likelihood of an owners record going missing are very very low. Transaction processing software is pretty good these days.
> 
> ...





Thanks for those links.

Does anyone know if the HIN/CHESS system protects a stockholder from the failure/liquidation of a broker?

Here in the U.S. if a broker liquidates you are insured by the government up to some maximum dollar amount, but anything in excess of that you end up losing.    It would be wonderful if the Australian system gave the stockholders a mechanism for directly registering ownership so that the broker's failure could not harm your holdings.


----------



## persistentone (11 July 2009)

fuzzie said:


> All of the big 4 banks here have either their own brokerage house or an association. Go to any of the bank sites and look for online brokerage links.
> 
> Start here http://www.moneymanager.com.au/tools/compare/index.html
> or http://tradingroom.com.au/apps/find_a_stock_broker.ac
> ...




Speaking of bank brokers, what do others think of Macquarie Bank?  They have an online trade unit named DirecTrade.   One attractive thing about using them would be access to their analyst research for Australian stocks.   Given their reputation for evil fees, I do worry a bit about getting weird charges.


----------



## persistentone (11 July 2009)

persistentone said:


> Speaking of bank brokers, what do others think of Macquarie Bank?  They have an online trade unit named DirecTrade.   One attractive thing about using them would be access to their analyst research for Australian stocks.   Given their reputation for evil fees, I do worry a bit about getting weird charges.




The Macquarie website is quite amusing.   They haven't even met me and already they are trying to get me to a) borrow money; b) buy insurance; c) invest in their special finance offerings.    I guess I will want to register a voice mail number as a contact for these guys.


----------



## cpsharky (11 July 2009)

persistentone said:


> Does anyone know if the HIN/CHESS system protects a stockholder from the failure/liquidation of a broker?




My understanding is that the broker has very little to do with the ownership of the stock. I can't see how a broker failure would affect you unless they were holding the stock on your behalf. But that isn't the case normally (and shouldn't be). Link Market Services on behalf of BBI will keep a record of your holding along with your identity details and your HIN. The ASX will have a record of your transactions, but I am unsure if they keep a record of your holdings (although they could work it out from your transactions).

It is easy in Australia to swap your holder sponsor (ie broker) around. I don't think the original broker can even have any say in it. If your broker goes belly up then you simply change broker. If Link Market Services went belly up then BBI changes share registry companies. If BBI goes belly up then the administrator will no doubt retain Link Market Services to keep a track of holders.

If you are borrowing to buy the shares and need to register them as security, then that is a whole new ball game.

BTW If you are after good research on BBI, I quite like the ABN AMRO research. They also have a broking arm. 


Does anyone disagree with me?


----------



## nathanblack (11 July 2009)

the way im looking at the current bank sweep is like a qasi adminstration. but its not all together a bad thing. it keeps the purse strings tight and avoids waisting money. 

the bank sweep also allocates money everymonth to buyback the SPARCS nz bonds, thats a great thing for BBI/BEPPA because it instantly improves the ballance sheet, it moves $1 from the asset side of the ledger but removes almost $2 from liability side(bought back on market around 50-60c). a gain of nearly $1.

it also moves beppa up a step on the ladder should administraion take place.

Would BBI be doing anything different without the sweep? i dont think they would alter anything majorly, perhaps they would payback bank debt slower($1 for $1) and focus more on buying back first sparcs at a discount, and then move on to beppa. its partly why i view beppa as more of a short-medium term play.

if post dbct sale, the bank sweep is lifted and bbi chose to focus on buying back debt at a discount, sparcs will be first off the rank, followed by beppa. on market buyback will push prices up and dbct should have already increased price. so achieving 40 or 50c should be quite likely.

bank sweep or not, they wouldnt be buying assets and would still be in a sell position. the only difference being they would probably keep more cash on hand for things like refundable euroports deposit and be putting money aside for larger cap ex. 

so in away the sweep is helping them to be thrifty and save, and i have no doubt we are paying back debt faster than we would have, therefor saving future interest. would be nice to buyback more discounted debt, but that will happen sooner rather than later.

and whilst we will lose alot of revenue and earnings per share, think about all that interest on dbct alone we will be saving. with some assets not covering interest by so much(PD Ports), the actual profit wont dip much from there sale.


----------



## persistentone (11 July 2009)

cpsharky said:


> My understanding is that the broker has very little to do with the ownership of the stock. I can't see how a broker failure would affect you unless they were holding the stock on your behalf. But that isn't the case normally (and shouldn't be). Link Market Services on behalf of BBI will keep a record of your holding along with your identity details and your HIN. The ASX will have a record of your transactions, but I am unsure if they keep a record of your holdings (although they could work it out from your transactions).
> 
> It is easy in Australia to swap your holder sponsor (ie broker) around. I don't think the original broker can even have any say in it. If your broker goes belly up then you simply change broker. If Link Market Services went belly up then BBI changes share registry companies. If BBI goes belly up then the administrator will no doubt retain Link Market Services to keep a track of holders.




Well, viva Australia!  That system sounds more consumer oriented than what we have in the U.S.




cpsharky said:


> BTW If you are after good research on BBI, I quite like the ABN AMRO research. They also have a broking arm.
> 
> 
> Does anyone disagree with me?




ABN AMRO looks great, but it seems they were recently purchased by a consortium and are in some disarray:

http://www.group.abnamro.com/transition/transition.cfm

Which of these entities will ABN AMRO Australia become?   It looks like this purchase was really just a land grab for the customer base by different interests.   What will happen to the research arm of the company?


----------



## Tysonboss1 (11 July 2009)

nathanblack said:


> the way im looking at the current bank sweep is like a qasi adminstration. but its not all together a bad thing. it keeps the purse strings tight and avoids waisting money.




I am looking at it in a positive way also,

with all of BBI assets generating a positive cashflow each month, and that cashflow flowing directly into debt reduction BBI is getting stronger and stonger.

And with a few asset sales, we are going to see a much leaner and meaner company on the other side.

At the moment I hold, both BEPPA and BBI in a 4:1 ratio with Beppa being the larger holding.

I waiting with Baited breath for an annoucement on DBCT, 

Beppa is currently my second largest holding and I am flirting with the idea of increasing my  holding again but with it still being some what spekky, I am not sure wheather it is wise.


----------



## nathanblack (11 July 2009)

Tysonboss1 said:


> I am looking at it in a positive way also,
> 
> with all of BBI assets generating a positive cashflow each month, and that cashflow flowing directly into debt reduction BBI is getting stronger and stonger.
> 
> ...




agreed. leaner and meaner. the loss in earnings will be offset slightly by savings in interest, and BBI might start to focus on 1 asset class rather than ports, rail and energy. they will surely grow again with acquisitions in future. 

be interesting to see there dividend policy in a few years time(if they are healthy again). will they be happy to remain a leaner company and payout profits or look to lower dividends and become a growth company. i guess too far away to contemplate. i will probably be out before then anyway.

regarding increasing your BEPPA holdings, obviously we cant provide advice...however my thinking of how things might pan out.

BEPPA now 10.5c
BBI now 6.5c

assume 3x or 4x share price post dbct sale and few other issues(maybe few months down the road), reaps:

BEPPA 31.5c-42c
BBI 19.5c-26c

so if we assume 3x SP growth, we have a price differential of 12c and for 4x its 16c, about a 60% premium. personally, i dont see that big a gap, so either BEPPA will increase less or BBI will increase more. Either way, short term i see more reward(and more risk) in BBI. 

Long term, i still see BEPPA being safer and more rewarding. BEPPA will be worth $1odd, its hard to see what other positive news can increase BBI to that level post DBCT sale/debt reduction. Nothing major left to sell really. Perhaps only the handling of sparcs/beppa can increase BBI sp.

im about 2:1 in favour of BEPPA and am happy with that ratio. im accumulating again, but keeping that ratio.

my strategy will be to ride BBI til dust settles post dbct sale, then convert bbi to beppa and wait for redemption/conversion early or otherwise. this way i will get most of BBI growth (i think it will slow post sale) and still alot of beppas upside(if its 40c post sale it will still more than double after that).

i think alot of bbi holder will have similar ideas of selling out and either locking in gains(post dbct) by selling or buying beppa, which could push beppa up even higher.

at current prices and with news near, i favour BBI, but for risk minimisation i still hold beppa 2:1. i like bbi exposure.

not counting my chickens, could lose the lot, but thats my exit strategy.


----------



## Tysonboss1 (11 July 2009)

nathanblack said:


> [
> regarding increasing your BEPPA holdings, obviously we cant provide advice...however my thinking of how things might pan out.
> 
> BEPPA now 10.5c
> ...




I know that Beppa has a significant upside, But I have already invested an amount = to about a 1 years wage into beppa, when I get to holding an amount of this size I have little demons start to question whether I am going to far and perhaps taking to much risk,

However my current holding is part of my longterm portfolio, which I never withdraw capital or dividends from,

what I am thinking about doing now is investing $14,000 that I have sitting aside into Beppa, The catch is I have actually set this money aside for another purpose and need it back in about 9 months from now, so it would be a short term play of 6 - 9 months which is not what I usally do.


----------



## persistentone (11 July 2009)

Tysonboss1 said:


> I know that Beppa has a significant upside, But I have already invested an amount = to about a 1 years wage into beppa, when I get to holding an amount of this size I have little demons start to question whether I am going to far and perhaps taking to much risk,
> 
> However my current holding is part of my longterm portfolio, which I never withdraw capital or dividends from,
> 
> what I am thinking about doing now is investing $14,000 that I have sitting aside into Beppa, The catch is I have actually set this money aside for another purpose and need it back in about 9 months from now, so it would be a short term play of 6 - 9 months which is not what I usally do.




I guess the common wisdom would be that you never put money you need to spend into the stock market, let alone into a speculative investment.


----------



## nathanblack (11 July 2009)

Tysonboss1 said:


> I know that Beppa has a significant upside, But I have already invested an amount = to about a 1 years wage into beppa, when I get to holding an amount of this size I have little demons start to question whether I am going to far and perhaps taking to much risk,
> 
> However my current holding is part of my longterm portfolio, which I never withdraw capital or dividends from,
> 
> what I am thinking about doing now is investing $14,000 that I have sitting aside into Beppa, The catch is I have actually set this money aside for another purpose and need it back in about 9 months from now, so it would be a *short term play of 6 - 9 months *which is not what I usally do.




so its beppa or nothing? you disagree with my calculations, that on current price BBI 'may be' the better play over your time frame? i would be trying to average out the upside abit. what if beppa doubled and bbi trippled. i know beppa is safer downside, but they both have potential for nil value, so im more interested in best case and probable outcomes.

i just feel bbi is where i would put any extra dosh. then sell in 6months and either keep cash or invest in beppa at that point and gain further upside.

theres no rush with beppa. i would be shocked if it went much higher than 40c after dbct settles (leaving a further 60c + interest), so potentially you can get in then and still be rewarded handsomely. and at that point the risk will be close to zero for beppa. all you will need to consider is if they will be paid out early , or on maturity, and is it cash or shares. also i suspect they will be tighly held, so volumes might be low to accumulate large holding.


----------



## Tysonboss1 (11 July 2009)

persistentone said:


> I guess the common wisdom would be that you never put money you need to spend into the stock market, let alone into a speculative investment.




I guess it's the gambler rather than investor coming out in me,... thats the side I try to suppress.


----------



## Tysonboss1 (11 July 2009)

nathanblack said:


> you disagree with my calculations, that on current price BBI 'may be' the better play over your time frame? i would be trying to average out the upside abit. what if beppa doubled and bbi trippled. i know beppa is safer downside, but they both have potential for nil value, so im more interested in best case and probable outcomes.




I don't disagree with your calc's, I understand the idea you are putting forward, Both shares have to have their pros and cons weighed up separatly because the are different animals.

At the moment I am overweight Beppa because I believe that although the maximum possible upside is capped to $1 + interest where as BBI is in theory unlimited. I am happy to take the possibly smaller gain (albeit still massive gain) and have a bit less risk.

But yes I still do hold BBI for the reasons you mentioned


----------



## Tysonboss1 (11 July 2009)

nathanblack said:


> the bank sweep also allocates money everymonth to buyback the SPARCS nz bonds, thats a great thing for BBI/BEPPA because it instantly improves the ballance sheet, it moves $1 from the asset side of the ledger but removes almost $2 from liability side(bought back on market around 50-60c). a gain of nearly $1.
> 
> it also moves beppa up a step on the ladder should administraion take place.




I didn't realise this.

Is it true that BBI is buying out sparcs holders.

Do you have any details of how they are doing this, what terms are they doing it on and what sort of volume are they buying.


----------



## nathanblack (12 July 2009)

Tysonboss1 said:


> I didn't realise this.
> 
> Is it true that BBI is buying out sparcs holders.
> 
> Do you have any details of how they are doing this, what terms are they doing it on and what sort of volume are they buying.




Yes, its true. SPARCS are not like BEPPA, they are bonds. As such they rank higher than BEPPA, they are considered in the same way as bank debt. Therefor everytime a bank sweep occurs a portion of that sweep is allocated to paying back the banks and buying back sparcs.

At this stage only the one sweep has occured and another is due soon(quarterly sweep), only a small percentage 0.34% was acquired last sweep, all that the sweep allowed, at a price circa 43c. All purchases are on-market so no premium is paid.

see below announcements:
http://www.nzx.com/markets/NZDX/BBN010/announcements/4890454
http://www.nzx.com/markets/NZDX/BBN010/announcements/4883513

they have made it clear, although i couldnt find the latest announcement, that they are preparing to buy more. and one can only ASSUME that post dbct sale, most debt will be repaid, and the amount allocated for sparcs buyback will increase substantially.

obviously the more they buyback, the higher sparcs value will be (supply and demand). also obviously it moves beppa up the food chain, and we can expect when cash is available beppa will be bought back at discount on market.

so its good for beppa and potentially great for bbi. to get debt of the books at such a cheap price, especially if the target beppa in a few months circa 40c and can eliminate alot of the $780mil due 2012.

cheers


----------



## nathanblack (12 July 2009)

in total the april sweep bought back $1.65mil worth at about 40c, which would work out at about 4mil sparcs. so basically NZ$4mil was purchased for NZ$1.65mil. A geat return for beppa/bbi.

http://www.nzx.com/markets/NZDX/BBN020/announcements/4895028


the july announcement is here
http://www.nzx.com/markets/NZDX/BBN020/announcements/4895028

they intend to buy another $250,000 worth, all that the sweep allowed. not much but still positive. 

the reason i couldnt find the announcement at first is because sparcs are now listed twice, because some didnt agree to reset terms. the first batch of buybacks was before the vote on sparcs. this latest buyback is of the re-newed sparcs (expiry nov 2012), probably because the others convert in november anyway.

hope this info helps. bit stupid that as bbi investors the asx doent publish the announcement from nzsx. we need to regularly check both for announcements. i guess its not really price sensitive but it certainly helps Beppa/BBI.


----------



## banska bystrica (12 July 2009)

nathanblack,

Sorry mate but you are confusing SPARCS with NZ BBI Network Bonds. They are seperate listings. The two codes for SPARCS and BBI Network Bonds are

BBN010 and BBN020. 

The bonds (BBN020) rank higher than SPARCS (BBN010) and also rank equally with secured bank debt hence the sweep.


----------



## banska bystrica (12 July 2009)

nathanblack said:


> the reason i couldnt find the announcement at first is because sparcs are now listed twice




Hmm, nathan, have a rethink on that statement before you confuse everyone and yourself. SPARCS are listed ONCE.


----------



## nathanblack (13 July 2009)

banska bystrica said:


> Hmm, nathan, have a rethink on that statement before you confuse everyone and yourself. SPARCS are listed ONCE.




thanks for your clarification, and sorry to anyone for any confusion. still great news that BBI are buying back BBI Network bonds. 

the reason i got confused was an announcement back in april was released under sparcs but actually related to the buyback of bonds, all announcements after april regarding buyback are only listed under the bonds.

hope they keep snapping them up as much as they are allowed, it certainly increases value for ord share holders.


----------



## nathanblack (13 July 2009)

the lack of volatility is great for some, but im finding it frustrating. i like to trade in and out of this stock, each time making a profit which i use to increase my holdings on subsequent purchases. the last month ive basically been stuck holding, theres been some buying oportunities at lower prices than my previous buy price but no prices high enough to sell out at(to be worthwhile).

i still prefer only trading this one at this point in time, but i definately want to be holding come DBCT announcement. Havent really looked to 2012, but dont really expect to be holding by then.

if i can trade up to a biger holding over the next month, then recieve about 40c by years end, i'll probably exit. might keep a few beppa til maturity.


----------



## Largesse (13 July 2009)

i think it's time a lot of you guys had a seriously hard think about your holdings here.

it was fun on the way up, but don't get left holding the baby.


----------



## nathanblack (13 July 2009)

Largesse said:


> i think it's time a lot of you guys had a seriously hard think about your holdings here.
> 
> it was fun on the way up, but don't get left holding the baby.




are your concerns primarily BBI related or BEPPA too? or all of the BNB satalites?

is it in relation to administration/liquidation or dilution?

im interested in your comments?

i remember making a killing from onetel and HIH in the months prior to colapse, so profits can still be made. i guess the risk is there that your holding on the day it goes into trading halt never to return.


----------



## Largesse (13 July 2009)

Whilst there are always temporary miss-pricings in the market, they don't last long.

There is a reason why BBI and BEPPA continue to trade at these levels, and why, after the recent burst of excitement, continue to trade down.

For a second sit back and be truly objective about your investment.
Are you really smarter than all of those professionals out there?
Are you really seeing an opportunity where no else can?
Or are you kidding yourself, and are taking a gamble on an asset sale in a declining market?

Banksa will give you a list of reasons why to hold, but he had amazing market timing and perception to seize the opportunity at 3c and dump a large holding way up in the high teens. He made a killing, the bloke that bought his holding didn't.
That movement wasn't a result of news events either, more massaging an interested market. 

Does the current market for this stock still present you with the same opportunity? 


And my concern relates simply to BBI/BEPPA. I think the security in BEPPA is being severely overstated.

FWIW, I couldn't care less whether this went up down sideways inside out or purple in the face. I made 2 trades on this, one that made me good money, one which handed back about a quarter of that money. I'm happy.
But I have seen this before, post-excitement blow off, and there are always people who get left holding a crying baby.


----------



## cpsharky (13 July 2009)

Those very same "professionals" were buying BBI at over $3 not so long ago even though it was abundantly clear on fundamentals that they were over-geared. The time to panic was at $3, not sub 50c. If your only argument is that the market is basically always right and therefore choose to close your eyes to the fundamentals, then you should keep your money in the bank IMHO. Investing in any stock is a gamble, so it is a matter of weighing up risk and reward. In the case of BBI (Beppa to be precise) I see some very real risk, but we have to remember that BBI are easily able to cover their interest (2x) with largely regulated incomes and are trading at a tiny fraction of their NAV. Right there some powerful reasons why BBI has a good chance at survival.

The market has been wrong by several magnitudes on other occasions. I would like to find out if they are wrong this time.


----------



## stocksontheblock (13 July 2009)

cpsharky said:


> The market has been wrong by several magnitudes on other occasions. I would like to find out if they are wrong this time.




I have to agree!!!

In respect to Largesse: absolutely! I am as smart or smarter than the so called professionals you refer to. They know little more than I. Just because you call yourself a professional doesnt make you one. Just because you charge a fee for your advice doesnt mean it was worth it.

BBI may look like junk, yet what they do and what they offer is not, hence the banks and lenders will stay behind them, maybe a few bells and whistles will be tacked on, yet they will survive and the price will go up - by how much? who know's!

I'm happy to gamble on BBI, risk v's reward is not a bad one on this, providing you dont burn to many 000's trying for the reward. Look at RIO, worth $165, and all saying it was going going going going into the heavens price wise and a week later it was going going going going, yet not up. If I had a $ for everytime a professional made a recommendation and I did the complete opposite I would have made 10x what I have made on the actual market itself.

The lesson: do the research yourself, forget the professionals, and look after your own money, no one else will.


----------



## persistentone (13 July 2009)

Largesse said:


> Whilst there are always temporary miss-pricings in the market, they don't last long.
> 
> There is a reason why BBI and BEPPA continue to trade at these levels, and why, after the recent burst of excitement, continue to trade down.
> 
> ...




So how do you explain New Zealand bonds and Sparcs trading at 40 cents and 20 cents on the dollar, whereas BEPPA is at 10 cents.   It's difficult to see any one of these three as substantially more secure than the other when we have nearly $4B in net asset value.   A scenario that leaves BEPPA worthless in administration with high probability also impacts the New Zealand income securities.  

With such pricing disparities on instruments that are priced against nearly identical credit risks, it is difficult to see any rationality in the market's pricing of any of the three.


----------



## random (13 July 2009)

Largesse,

Find a nice comfy chair.
Chill out.
Open a nice bottle of red.
Have one glass only. (just for the moment)
Wipe your mind clear of all other entities with the name Babcock in it.
Rid your thoughts of those negative conotations you have built up on bbi and beppa in the past.
Put your brain in neutral gear and let it be open to new information.
Take another deep breath.

Now look at the fundamentals of what bbi , beppa have to offer and the price that they are currently trading at.
Is it really that outrageous that people are having a shot at this one?
I think not.

Another deep breath, exhale slowly now...... and another glass of red.
Now thats not so bad now is it?


----------



## random (13 July 2009)

I am astounded at the number of professional financial people who still have no idea of what Babcock and Brown Infrastructure is. Yes... still.

To this day they are confusing it with Babcock and Brown.
Hence they want nothing to do with it.

There are many ex shareholders in both entities who have been so badly hurt by the withdrawal of dividends and major loss in the actual shareprice that they don't want anything o with it in any shape or form regardless of any perceived upside.
Indeed i know of a few who can barely bare to mention the name Babcock.
Individuals and institutions have been hurt badly. 
Call it pride or revenge or disgsust they just don' want to know.

Whilst not saying that this is why its in the doldrums it is a reason some wouldn't put money in it if  "a professional" gave it a 5 star rating with a bullet.
A mistaken but totally understandable human response.


----------



## nathanblack (13 July 2009)

random said:


> There are many ex shareholders in both entities who have been so badly hurt by the withdrawal of dividends and major loss in the actual shareprice that they *don't want anything o with it* in any shape or form regardless of any perceived upside.
> 
> Indeed i know of a few who can barely bare to mention the name Babcock.
> *Individuals and institutions *have been hurt badly.
> Call it pride or revenge or disgsust they just don' want to know.




do you see this as a short or long term issue? and do you think it will impact the price going forward? the more buyers/potential buyers the better


----------



## skyQuake (13 July 2009)

random said:


> I am astounded at the number of professional financial people who still have no idea of what Babcock and Brown Infrastructure is. Yes... still.
> 
> To this day they are confusing it with Babcock and Brown.
> Hence they want nothing to do with it.
> ...




And because of this will that keep the retail buyers, instos and funds away for some time...?

Cheers.


----------



## random (13 July 2009)

Its definitely only a short term view nathanblack.
Just until we get a little momentum going.
Many will want to jump on once we have some runs on the board. Until then we will just wallow.

As for now we are all thinking the same thing.
When are we going to hear an announcement about a sale of one or more assets?

We need some street cred to attract new punters and revitalize existing ones.
Shoudn't be too far away.
We just have to wait for now i guess.


----------



## random (13 July 2009)

skyQuake said:


> And because of this will that keep the retail buyers, instos and funds away for some time...?
> 
> Cheers.




Time will heal all. And watching others benefit.

Also the fact that eventually (and this varies proportionally to the different egos and reservations of those involved) they will realize how much extra profit they missed out on before they jump back on.


----------



## nathanblack (13 July 2009)

Largesse said:


> Whilst there are always temporary miss-pricings in the market, they don't last long.
> *agree*
> 
> There is a reason why BBI and BEPPA continue to trade at these levels, and why, after the recent burst of excitement, continue to trade down.
> ...




*so you dont see the company surviving or you think it will just underperform? what is your main concern? asset sales not eventuating or poor prices? what if they refinanced all debt for longterm and kept all assets?*


----------



## Largesse (13 July 2009)

All I am suggesting is that all you converted out there take some time to objectively think about whether BBI or BEPPA are a good investments, or just mug punts praying that DBCT offsets the losses BBI is going to take on some of their other assets.

Now, most of you will find this task near on impossible with out even realising it.This is because you are stock holders with vested interests.

While you have a go at really objectively looking at your holding, repeat this in your head:

"If there is so much value here, then why does the share price keep going down? Why is no one else seeing it?"



To quote Donald Rumsfeld (read: genius.... regardless of his political vagaries)

"There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. *But there are also unknown unknowns. There are things we don't know we don't know.*"


All i'm suggesting is to have a think about it.


----------



## nathanblack (13 July 2009)

random said:


> Its definitely only a short term view nathanblack.
> Just until we get a little momentum going.
> Many will want to jump on once we have some runs on the board. Until then we will just wallow.
> 
> ...




lol yup, everyone waiting on the DBCT announcement. i guess the full year report due in august could stimulate interest too. even a pd port/euroports announcement would be good, any negativity is already priced in to SP, so i think certainty good or bad will probable be a positive.

pitty no leaks to ramp up, but atleast theres no bad leak either. i just wish i knew what board was thinking regarding 49%-100% sale.


----------



## Largesse (13 July 2009)

Hi Nathan,

By nature, I am a skeptic. Some people look at that as a good characteristic, some bad.

Specifically,
I look at BBI as a lame bull. Could pack a punch, if it wasn't already mortally wounded. 
FWIW, I see absolute bollocks value in the equity as it currently stands. The risk of severe dilution is massive and undeniable. BEPPA not much better. This whole mantra of "it's a hybrid that ranks ahead of BBI etc etc" is being overstated. There is still significant risk that BEPPA will not be able to be realised for face value, or even close to it, should assets sales not surprise to the UPSIDE.

Macro,
You can't deny this market is at tipping point either. Earnings do not just bounce back like what the talking heads on TV are suggesting. Also, to repeat myself, the risk of a severe LIQUIDITY EVENT in equity markets is massive and again, undeniable. But that is my personal view, and I am staying as far away from equities as possible over the next 6months.


There are lots of other questions in there, some of the answers obvious, some less obvious. You should do some research, for your own peace of mind, about that big spike a few months back. Ask why, and how, and possibly who.


----------



## nathanblack (13 July 2009)

Largesse said:


> All I am suggesting is that all you converted out there take some time to objectively think about whether BBI or BEPPA are a good investments, or just mug punts praying that DBCT offsets the losses BBI is going to take on some of their other assets.





so you disagree with some of the valuations bandied around here. thats understandable and i respect your opinion and alternate view. do you think 6c is over priced still or correct price.

and in you mind what are the ramifications of DBCT not offsetting euroports/pd ports etc? i totally agree we will take a hit with pd ports and possible euroports, and you may be right that dbct wont cover that especially if oly a 49% sale.

but what will happen? equity raising? spin off of asset into seperate fund? renegotiation of debt? take over? bankrupt? 

what your view on that? or as a non holder you havent looked that far in advance?


----------



## Largesse (13 July 2009)

I think it's near impossible to put a hard value on the equity in BBI at the moment. 
Far too many unknowns, known or unknown. 
Macro factors, asset prices, debt roll over, percentage of DBCT for sale etc.

With regard to the asset prices being bandied around, yes I definitely disagree with some of them (those ones should be easy to pick out).
I do concede that DBCT is a key strategic asset, and as such it will get some good bids.... how good i'm not as sure.
I'm more worried about Euro/PD et al. 
These do not posses the same strategic significance, nor earning power, and are far more at the whim of the market. All have the potential to negatively impact on the free cash that the POTENTIAL DBCT sale produces, resulting in the offloading of a key asset, for no or a low net benefit.


To be honest, I haven't looked that far beyond the DBCT sale because, as you have shown, there are a myriad of options, all with different probabilities dependent on the terms of the sale.
If I was to proffer a guess, i'd say that BBI will continue to exist as a going concern into the future.... but whether the current equity holders will see any of the future value of the future entity is another questions.


----------



## nathanblack (13 July 2009)

Largesse said:


> I think it's near impossible to put a hard value on the equity in BBI at the moment.
> Far too many unknowns, known or unknown.
> Macro factors, asset prices, debt roll over, percentage of DBCT for sale etc.
> 
> ...




thanks for your time. its certainly food for thought. 

Purely looking at announcements of substancial holdings, i put the spike down to a pump and dump by deutch bank. why the did it or more pricesly why they chose BBI/BEPPA im not sure. i could understand if it was pushed up before an equity raising, but this appears a simple pump and dump. may be wrong though.

my logic, again could be wrong, would be that NTA are about 90cent/share.but we are trading at 6c odd, meaning if dbct/euro/pd ports all sold for no or a low *net* benefit this would help lock in some of the 90c NTA. ie if after those sale NTA is still 90cent then surely the SP will rise somewhat. if they are sold for a net loss then this will be reflected in a lowering of NTA and possibly SP.

i guess your right there are still alot of unkowns, particularly around dbct. no professional would commit until thats all settled good or bad. they could save a fortune by sitting on sidelines or miss some gains.

thanks again.


----------



## mikes (13 July 2009)

if pd ports is a price regulated monopoly infrastructure asset, if volume of business halves, surely the price regulator will double the prices permitted to be charged for usage volume at the earliest opportunity, -- am i missing something


----------



## Viva_Las_Vegas (13 July 2009)

I regularly recieve a bulletin called bell & potter research.

Now I am going off memory here as I lost many of them due to hard drive failure, but I do remember BBI coming up a number of times as a buy recommendation between AUG and NOV 2008. This is what made them come up on my radar and cause me to buy/sell a few times. The buy recommendation was 13 c at the time

I am taking this "investment" as a gamble, and have not seen anything relating to BBI in the recent bulletins, but I ask all the learned posters here

"What has changed with BBI since AUG to NOV 08?"

All i have seen is....the market bottom, BBI appoint Mac to sell DBCT, Terra Firma refusing to deny rumours of its bids for PD/Euro ports, 250MIL a year saved due to nil distributions being paid, part of SPARCS converted, some NZ BBI bonds bought back cheap AND so far nil convenants breached.

Please feel free to add opinions, but in my humble opinion I see all these a positives in a difficult situation.

I hold BEPPA/ BBI


----------



## ricee007 (14 July 2009)

Viva_Las_Vegas said:


> I regularly recieve a bulletin called bell & potter research.
> 
> Now I am going off memory here as I lost many of them due to hard drive failure, but I do remember BBI coming up a number of times as a buy recommendation between AUG and NOV 2008. This is what made them come up on my radar and cause me to buy/sell a few times. The buy recommendation was 13 c at the time
> 
> ...



Bank Cash Sweep.
Possible PD Ports impairment.
Possible problems with EuroPorts.
Possible deathspiral if the cash sweep isn't removed.

Disc. Happily holding BEPPA.


----------



## persistentone (14 July 2009)

cpsharky said:


> My understanding is that the broker has very little to do with the ownership of the stock. I can't see how a broker failure would affect you unless they were holding the stock on your behalf. But that isn't the case normally (and shouldn't be). Link Market Services on behalf of BBI will keep a record of your holding along with your identity details and your HIN. The ASX will have a record of your transactions, but I am unsure if they keep a record of your holdings (although they could work it out from your transactions).
> 
> It is easy in Australia to swap your holder sponsor (ie broker) around. I don't think the original broker can even have any say in it. If your broker goes belly up then you simply change broker. If Link Market Services went belly up then BBI changes share registry companies. If BBI goes belly up then the administrator will no doubt retain Link Market Services to keep a track of holders.
> 
> ...




Regarding ABN AMRO, can someone help me out here?    I found two different ABN AMROs.    One of these is here:

https://www.abnamromorgans.com.au

The other one is here:

http://www.group.abnamro.com/transition/transition.cfm

This latter group is now owned by Royal Bank of Scotland, which as most of you probably know is a complete basket case right now, just completely buried by all of its bad loans.   It may be too big to fail, but I would not be comfortable with them.

Can someone reflect for me on:

1) Why are there two different ABN AMROs?

2) Which of the two is the one known for its research on Australian companies?

3) How stable is the first one, the ABN AMRO Morgans?


----------



## Tysonboss1 (14 July 2009)

ricee007 said:


> Possible deathspiral if the cash sweep isn't removed.
> 
> Disc. Happily holding BEPPA.




Why do you think the cash sweep will cause a deathspiral. 

100 characters.........................................


----------



## persistentone (14 July 2009)

Tysonboss1 said:


> Why do you think the cash sweep will cause a deathspiral.




Because they lack the financial flexibility to deal with emergencies, like losing 25% of the cash flow at PD Ports which might put them in violation of a financial covenant on their corporate debt.

A lot depends on how mean spirited the bankers want to be in all of this.


----------



## fuzzie (14 July 2009)

persistentone said:


> A lot depends on how mean spirited the bankers want to be in all of this.




I doubt there is a bank conspiracy to kill off the B&B satellites, they really don't want to kill any golden geese. BBP has been given breathing space on its bank commitments.



> 13 July 2009
> 
> BBP ANNOUNCES CHANGE TO ICR TEST
> As advised in May1
> ...


----------



## hardyakka (14 July 2009)

persistentone said:


> Because they lack the financial flexibility to deal with emergencies, like losing 25% of the cash flow at PD Ports which might put them in violation of a financial covenant on their corporate debt.
> 
> A lot depends on how mean spirited the bankers want to be in all of this.




Lets just ignore the few pennies that tesco might contribute and comments from Helen regarding the PD Ports valuation.

I am not going to mention the dreaded death spiral...I have nightmares thinking about it...all those mean and nasty BEPPA holders ending up owning 100% of BBI....all because of the ..dare I say it..death spiral. 

I love fancy words like that...how about BBI going into a "drut pord"..sorta has that fancy foreign sound...complicated cos no one knows what it means so it must be technical...and maybe that even implies I have a clue what I am going on about.

Try reversing the letters..isnt that the same as the DEATH SPIRAL.

Cheers


----------



## persistentone (14 July 2009)

hardyakka said:


> Lets just ignore the few pennies that tesco might contribute and comments from Helen regarding the PD Ports valuation.
> 
> I am not going to mention the dreaded death spiral...I have nightmares thinking about it...all those mean and nasty BEPPA holders ending up owning 100% of BBI....all because of the ..dare I say it..death spiral.
> 
> ...




That does raise an interesting question.   In Australian law under Administration, would the Administrator sell assets until all creditors are satisfied, or would the Administrator be able to take all unsecured creditors and just convert them to common shares, and wipe out all BBI holders in the process?

Assuming secured asset lenders want to just keep their loans in place, would the Administrator have any ability to convert unsecured creditors to equity?


----------



## hardyakka (14 July 2009)

persistentone said:


> That does raise an interesting question.   In Australian law under Administration, would the Administrator sell assets until all creditors are satisfied, or would the Administrator be able to take all unsecured creditors and just convert them to common shares, and wipe out all BBI holders in the process?
> 
> Assuming secured asset lenders want to just keep their loans in place, would the Administrator have any ability to convert unsecured creditors to equity?




There is a heck of a lot of focus on administration...I put the chances of it at less than 20%.

The ASX listing Rules do not provide specific guidance on what is "significant", however the rule of thumb is anything that has a 5% impact on revenue or capital. PD Ports drop in value has not been disclosed under Rule 3.1, so from this I assume any impact is less than the benchmark mentioned. This was reaffirmed by the chat I had with Helen a few weeks back.

If any person is really worried about administration as a major risk they should get out of the kitchen

Cheers


----------



## random (14 July 2009)

Amen.................. I'm with you hardyakka.

Enough about administration.
We know there is a risk of it but have chosen this path.
So be it.


----------



## banska bystrica (14 July 2009)

Administration is worst case scenario but in all honesty, it is not probable. In fact, why would they be put into administration? Look at BBP. A basket case really when compared to BBI and still the banks have elected to not go down the formal administration path.

BBI has never breached a debt covenant.
BBI has never missed an interest payment to a bank.
BBI's assets are generating sufficient surplus cash to cover interest easily.
PD Ports may lose 25% of revenue if the Corus situation remains unresolved. Tesco's new facility will add about 25% to revenue.

BBI's NAV is approx 80c per security. The market discounts that by 90%.

BBI equity holders do run the risk of further dilution if no cash is available in November to deal with SPARCS.

BEPPA holders need to see 4 billion dollars wiped from the NAV before BEPPA is worthless. I look at all the assets and I ask the question. Where do we get a loss of $4B in equity?
I can find possibly $1B in total, maybe $1.5Bn if I am tough on them but $4Bn? Give me a break.


----------



## investorpaul (14 July 2009)

banska bystrica said:


> Administration is worst case scenario but in all honesty, it is not probable. In fact, why would they be put into administration? Look at BBP. A basket case really when compared to BBI and still the banks have elected to not go down the formal administration path.
> 
> BBI has never breached a debt covenant.
> BBI has never missed an interest payment to a bank.
> ...




Great summary - basically outlines the entire BBI/BEPPA situation in one paragraph. 

As you mentioned it is positive that the banks are working with BBP, as you would expect if BBI got into a similar situation that they would do the same.

Besides asset sales there are only two concerns the dilution due to SPACS and the Corus issue. 

Both issues are easily solves with the sale of DBCT as the SP would rise leading to less dilution and the Corus issue would still be a concern but not critical.

Unfortunately it is still a waiting game with prob no more answers for between 1 and 3 months. During which time the SP movements are largely irrelevant (unless you want to trade continuously).


----------



## persistentone (14 July 2009)

hardyakka said:


> There is a heck of a lot of focus on administration...I put the chances of it at less than 20%.
> 
> The ASX listing Rules do not provide specific guidance on what is "significant", however the rule of thumb is anything that has a 5% impact on revenue or capital. PD Ports drop in value has not been disclosed under Rule 3.1, so from this I assume any impact is less than the benchmark mentioned. This was reaffirmed by the chat I had with Helen a few weeks back.
> 
> ...




I disagree.   The investment is interesting even if they undergo administration or liquidation.   And if they actually did announce a possibility of voluntary administration and everyone started running for the doors, it would get even more interesting as an investment.


----------



## investorpaul (14 July 2009)

persistentone said:


> I disagree.   The investment is interesting even if they undergo administration or liquidation.   And if they actually did announce a possibility of voluntary administration and everyone started running for the doors, it would get even more interesting as an investment.




??? Are you referring to the fact that in the event of administration that there is the strong possibility that there would be something (substantial) left over for BEPPA holders?

And if you believe this does it really matter what happens?


----------



## persistentone (14 July 2009)

investorpaul said:


> ??? Are you referring to the fact that in the event of administration that there is the strong possibility that there would be something (substantial) left over for BEPPA holders?
> 
> And if you believe this does it really matter what happens?




Yes, I'm referring to the fact that even in liquidation BEPPA should see enough recovery to generate a profit.

It matters what happens because a liquidation probably produces a significantly worse result than an administration that sees them come out as a going concern, with BEPPA intact.   I would rather see BEPPA made whole and get the compounding interest payments on top of that.

Since no seems to believe that administration is a likely outcome, I guess that's a conversation I'm probably not going to have much luck having here.


----------



## drsmith (14 July 2009)

I'm of the belief that this will end with administration and have stated so in the past. This is high risk stuff.

Debt covenants, interest payments and cash flow are not what is of maximum concern to BBI's lenders in this tighter credit environment. It's the overall gearing.


----------



## investorpaul (14 July 2009)

persistentone said:


> Yes, I'm referring to the fact that even in liquidation BEPPA should see enough recovery to generate a profit.
> 
> It matters what happens because a liquidation probably produces a significantly worse result than an administration that sees them come out as a going concern, with BEPPA intact.   I would rather see BEPPA made whole and get the compounding interest payments on top of that.
> 
> Since no seems to believe that administration is a likely outcome, I guess that's a conversation I'm probably not going to have much luck having here.




I think most people on this thread see receivership/administration as a last/distant resort. A very small possibility.

I also think most people would write off their investment as a loss straight away (in their mind, not for tax reasons) if that were to happen. Simply because it takes so long for the process to conclude. 

If at the end of it all they got back x number of cents on BEPPA face value they would of course be happy and be thankful for it (but at the same time they would not be banking on it happening). Ie you cant be buying BBI/BEPPA hoping for a 500 to 1000% return and expect little risk.

The discussion on whether or not this all occurs is probably a little hard to have (in terms of informed debate). It will really come down to what happens behind the corporate doors of BBI, the banks and the interested parties looking to buy assets.

If assets fail to sell, BBI then needs to plead with the banks to roll over funding, continue loans, etc, if the banks dont play ball then its game over. Sitting on the sidelines here we can only gather the information after it is reported (ie after it has happened), after that occurs assuming a good announcement BEPPA will not be 10-11cents. 

In the mean time we can only make projections based on our research to conclude the likely sale price, the impact that will have on debt levels and the willingness of banks to extend other lines of credit etc. If at the end of all this (which the 85 odd pages of this thread have discussed) people believe that assets will be sold, the company will survive, etc than investment at 10cents looks good. On the same hand their are others (who are entitled to their view based on their research) who may come to the conclusion that at 10cents the company is doomed and it is all over.

What happens next??? we just have to wait.


----------



## nathanblack (14 July 2009)

i wonder if BBI are considering JV instead of straight asset sale. it would dilute the crap out of BBI ord shares but could offer an alternative to selling DBCT outright.

love to know the directors thinking at the moment and what offers are on the table. i wonder if we will ever know what choices they had regarding DBCT or if we will only be told about the final "we sold X% for $Ybil"


----------



## investorpaul (14 July 2009)

nathanblack said:


> i wonder if BBI are considering JV instead of straight asset sale. it would dilute the crap out of BBI ord shares but could offer an alternative to selling DBCT outright.
> 
> love to know the directors thinking at the moment and what offers are on the table. i wonder if we will ever know what choices they had regarding DBCT or if we will only be told about the final "we sold X% for $Ybil"




Search Valad property trust announcements on the ASX, they did a JV a week or two ago. 

Basically it involved their Euro properties and a bank (I think RBS) forming a JV with Valad contributing the property part and the Bank contributing equity/debt. I didnt read into it to much myself, but I believe that was the jist of it.

Not sure if something similar could happen with BBI seeing as they need cash to reduce corporate debt, not so much the debt of the individual assets/holding vechiles and any JV partner would want their equity kept with the asset as the deal would obviously be done to reduce that assets overall gearing level.


----------



## banska bystrica (15 July 2009)

drsmith said:


> I'm of the belief that this will end with administration and have stated so in the past. This is high risk stuff.
> 
> Debt covenants, interest payments and cash flow are not what is of maximum concern to BBI's lenders in this tighter credit environment. It's the overall gearing.




Overall gearing is less than 70%. I would be interested in some real figures from you to justify your comment that _"I'm of the belief that this will end with administration and have stated so in the past."_

Always happy to hear the contra view to mine but it has to be backed up by credible figures. Anyone can say I believe this or I believe that. Later I will give you guys some stress test figures that clearly show there is still net equity in BBI even in a worst case scenario and that includes the repayment of all debt and all hybrids (SPARCS and BEPPA).

I await your figures drsmith that justify administration and if you haven't got solid evidence then what is the point in even commenting on the stock.


----------



## drsmith (15 July 2009)

banska bystrica said:


> Overall gearing is less than 70%. I would be interested in some real figures from you to justify your comment that _"I'm of the belief that this will end with administration and have stated so in the past."_
> 
> Always happy to hear the contra view to mine but it has to be backed up by credible figures. Anyone can say I believe this or I believe that. Later I will give you guys some stress test figures that clearly show there is still net equity in BBI even in a worst case scenario and that includes the repayment of all debt and all hybrids (SPARCS and BEPPA).
> 
> I await your figures drsmith that justify administration and if you haven't got solid evidence then what is the point in even commenting on the stock.



Gearing at (or near) 70% in the present econimic environment speaks for itself. 

You have yourself described BBI as being in quasi administration. What do you mean by that comment? Are you suggesting it's lenders are allready calling the shots?

I also wonder why you care so passionately about what I think. It is after all only a company and not a faith.


----------



## banska bystrica (15 July 2009)

drsmith said:


> Gearing at (or near) 70% in the present econimic environment speaks for itself.
> 
> You have yourself described BBI as being in quasi administration. What do you mean by that comment? Are you suggesting it's lenders are allready calling the shots?
> 
> I also wonder why you care so passionately about what I think. It is after all only a company and not a faith.




Who said I cared "passionately" about what you think?

Gearing of circa 70% on infrastructure assets with a good portion regulated does not imply administration.

Quasi administration means they are doing themselves what an administrator would be doing anyway. Selling assets to pay down debt.

Please provide financial figures that back up your view that BBI will end up in administration. I will make further comment after I see your figures.


----------



## banska bystrica (15 July 2009)

BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?

Convert every BEPPA held into 35c cash and 2 BBI securities.

Hypothetical of course but would be interested in the thoughts of BEPPA holders. Remember of course that if that proposal was passed, it would indeed help the price of BBI as well as any threat of massive dilution in 2012 disappears. This hypothetical proposal dilutes BBI by another 1.6Bn shares but also eliminates $800M worth of debt.

Personally I would vote YES.


----------



## drsmith (15 July 2009)

banska bystrica said:


> Gearing of circa 70% on infrastructure assets with a good portion regulated does not imply administration.



If that's the case then why have BBI's directors become quasi administrators (as you describe it) in trying to sell essets to pay down debt and why have they ceased disrtribution of income/interest to security holders ?

Perhaps they see the risk of administration as being greater than 5%.


----------



## Largesse (15 July 2009)

banska bystrica said:


> BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?
> 
> Convert every BEPPA held into 35c cash and 2 BBI securities.
> 
> ...





You really need to stop with these types of fantasy posts Banksa, they destroy your credibility as a poster.


Blue sky hypotheticals are the domain of the ramper.


----------



## investorpaul (15 July 2009)

banska bystrica said:


> BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?
> 
> Convert every BEPPA held into 35c cash and 2 BBI securities.
> 
> ...




BBI share price would need to be approx 20cents.

I would then expect the following:

35 cents for my BEPPA
2 BBI shares (issued at 20c) but expecting price to drop to 15 cents, therefore in reality 30cents worth of BBI.
Giving a total value of approx 65c per BEPPA. 

I would be very happy with that.

Also BB are you able to attach that spreadsheet with stress test figures, im really interested to see it, thanks


----------



## bellenuit (15 July 2009)

banska bystrica said:


> BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?.........




If they had got a good price for those 2 assets and recourse debt had been paid out, I would NOT accept the offer.

To make NOT accepting more attractive is the fact that every BEPPA holder that accepts the offer is allowing BBI to reduce $1.10 (assuming $0.10 unpaid dividends) of debt for just $0.35. The increased BBI dilution would not effect me as a BEPPA holder.

So assuming they can make an offer that doesn't require 100% acceptance, I would decline the offer, but hope that as many others as possible accept it.


----------



## nathanblack (15 July 2009)

drsmith said:


> If that's the case then why have BBI's directors become quasi administrators (as you describe it) in trying to sell essets to pay down debt and why have they ceased disrtribution of income/interest to security holders ?
> 
> Perhaps they see the risk of administration as being greater than 5%.




perhaps the 70% gearing uses historical figures and projections? maybe BBI know there are write downs and earnings will be lower. perhaps the true gearing is higher than 70% ?


----------



## Mitsimonsta (15 July 2009)

bellenuit said:


> So assuming they can make an offer that doesn't require 100% acceptance, I would decline the offer, but hope that as many others as possible accept it.




I would turn it down also. Absolute rubbish deal to offer. I would get more out of a liquidation (on my own research).

As far as I am concerned, I am looking for BEPPA to mature and then accept reset terms. The cashflow that would result would be nearly be 100% p.a. return on capital invested once BBSW gets closer to 5% and the bonus component of interest up to around 2.5% as that is what is going to be required to get reset terms passed.

This of course would need to have the EPS terms changed so that distributions could not be deferred or suspended, and failure to pay a distribution would be enough to trigger a conversion event - either to the equivalent of BBI securities plus distributions owing in cash, or wholly in cash.

Obviously, as long as it was a non-binding election per BEPPA holder to accept 35c + 2x BBI, if you wanted to do that, it is your business. I doubt that there would be a simple majority accepting those terms to dissolve BEPPA.

----

I have 30,911 BEPPA @ 8.4c average, for a total investment of $2596.

If BEPPA matures and reset terms are offered of 250bps above BBSW (I am going to guess at about 5% in 2012), then the annual return for 30,911 @ 7.5% = ~$2320 / 89.4% p.a. return.

Only 15 months of those terms I have my money back. Then I would be happy to look at Shares & Scrip settlement.


----------



## mark_au (15 July 2009)

banska bystrica said:


> BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?
> 
> Convert every BEPPA held into 35c cash and 2 BBI securities.
> 
> ...




Id certainly consider that deal, though it would depend upon the BBI sp at that time and the general recovery of the company


----------



## banska bystrica (15 July 2009)

drsmith said:


> If that's the case then why have BBI's directors become quasi administrators (as you describe it) in trying to sell essets to pay down debt and why have they ceased disrtribution of income/interest to security holders ?
> 
> Perhaps they see the risk of administration as being greater than 5%.




drsmith,
You refuse to back up your assertions with facts. Until you do that, I will not reply to any post you write from this point on.


----------



## banska bystrica (15 July 2009)

Mitsimonsta said:


> As far as I am concerned, I am looking for BEPPA to mature and then accept reset terms.




Unfortunately you will not get that opportunity in my opinion. A restructure is on the cards. Time will tell.


----------



## persistentone (15 July 2009)

banska bystrica said:


> BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?
> 
> Convert every BEPPA held into 35c cash and 2 BBI securities.
> 
> ...




To me this proposal is more persuasive if it come six months before BEPPA matures together with a warning that they don't have the money to pay it out.  

I'm doubtful that it plays out this way, at least not if they are really good at the game.   What they should do is pay out the interest on BEPPA and then start to make market purchases on small amounts of BEPPA each quarter.   They should buy just enough (maybe $25M to $50M/quarter) to get a great price, and not so much as to significantly move BEPPA up.   At $25M to $50M/quarter, they can buy over half the amounts due at maturity probably at very distressed prices.     Buying a dollar of debt for 20-to-50 cents should be an important part of their strategy for getting out from the weight of it.   If they buy too much too soon then they won't be maximizing peoples' fear of being paid back, which would work against them here.


----------



## banska bystrica (15 July 2009)

investorpaul said:


> Also BB are you able to attach that spreadsheet with stress test figures, im really interested to see it, thanks




Paul,
Very happy to send it to you. Give me your email address via PM. I don't feel inclined posting my extensive research on here when people like Largesse and select would probably use it to their advantage whilst stabbing me in the back at the same time.


----------



## awg (15 July 2009)

someone likes them today

bbi up over 6.35%, on decent volume

beppa up 9.2%

i hold beppa

hope BB keeps posting


----------



## nathanblack (15 July 2009)

persistentone said:


> To me this proposal is more persuasive if it come six months before BEPPA matures together with a warning that they don't have the money to pay it out.
> 
> I'm doubtful that it plays out this way, at least not if they are really good at the game.   What they should do is pay out the interest on BEPPA and then start to make market purchases on small amounts of BEPPA each quarter.   They should buy just enough (maybe $25M to $50M/quarter) to get a great price, and not so much as to significantly move BEPPA up.   At $25M to $50M/quarter, they can buy over half the amounts due at maturity probably at very distressed prices.     Buying a dollar of debt for 20-to-50 cents should be an important part of their strategy for getting out from the weight of it.   If they buy too much too soon then they won't be maximizing peoples' fear of being paid back, which would work against them here.





i guess thats the whole point in BB's hypothetical. we would need to know what BEPPA were trading at and BBI for that matter. obviously if BEPPA was trading at 35cent and BBI had the cash to pay that as a cash component, them logic says they should buy the BEPPA on market rather than throw in 2 BBI shares premium.

if at the time of offer, BBI arent offering a premium to convert, then nobody will convert. if they are offering a premium then its bad business if they can buyback on market for less. heck they could issue 2 BBI shares to existing holders or new investors to fund the buyback instead of gifting it to BEPPA.


----------



## Mitsimonsta (15 July 2009)

banska bystrica said:


> Unfortunately you will not get that opportunity in my opinion. A restructure is on the cards. Time will tell.




I just cannot see that being passed by a simple majority of BEPPA holders. If they are talking about 35c cash plus 2x BBI (approx 12c) does not even make 50% of face value. I think I would get approx 80c per BEPPA in the result of a liquidation.

There are deferred distributions outstanding that would need to be paid in full before I would even consider something like this. If they are serious about this, then they MUST put their money where their mouth is.

Truthfully, if this was proposed and looked like having a chance of getting up, BEPPA would be trading at 35c + whatever 2xBBI is worth at the time + unpaid distributions. I'd more than likely SELL all my BEPPA at that point and take the cash.

Even better, I would prefer an all-cash offer on the table. Tell your contacts that. All cash means even less dilution for BBI. I doubt that there would be any good result for me to be issued BBI and then selling them. Whatever price they issue BBI at as a result of conversion, it will not stay that price for long due to the dilution.


----------



## Largesse (15 July 2009)

why don't you all stop living in fantasy land and start living in the present.

this thread is a seriously weird read.


----------



## Mitsimonsta (15 July 2009)

Largesse said:


> why don't you all stop living in fantasy land and start living in the present.




I am living in the present. We are all shooting in the dark as we await BBI Full Year Results announcement in the last week of August.

I do not want my BEPPA to convert to BBI at all with the current SP. It is not in my best interests. The issue of more BBI will hugely dilute current BBI holders and will also lower the share price. Do you think it strange that I am looking after my best interests as an investor? 

Of course, if DBCT sells in the next ~3 months and the cash sweep is consigned to history (we hope), then BBI can buy BEPPA on market at a massive discount.

Until SPARCS is settled/paid out/converted, I doubt that anything can be done with BEPPA anyway.


----------



## Largesse (15 July 2009)

There is absolutely nothing to suggest your BEPPA are going to be converted into anything, at any price, ever.

This is an idea pulled out of thin air by Banksa. FANTASY.

Read back, one suggestion of this 'conversion', and you get a dozen follow up posts with in a couple of hours. 

The only thing this stock moved on two months ago was a positive feedback cycle. No substantial changes. No ground breaking news. 

Just people buying because other people were buying because prices were moving up because other people were buying.


----------



## fuzzie (15 July 2009)

Largesse said:


> this thread is a seriously weird read.




Agreed it has definitely gone off on an obscure tangent. If I'm going to fantasize that much, it more likely involves a 5'6" blonde and I don't mean beer. Perhaps BB had too much of one or the other in Prague?


----------



## Largesse (15 July 2009)

Mitsimonsta said:


> I am living in the present. We are all shooting in the dark as we await BBI Full Year Results announcement in the last week of August.
> 
> I do not want my BEPPA to convert to BBI at all with the current SP. It is not in my best interests. The issue of more BBI will hugely dilute current BBI holders and will also lower the share price. Do you think it strange that I am looking after my best interests as an investor?
> 
> ...




And mate, you aren't an investor. With BBI, you are a merely punter hoping for a positive asset sale. 

Don't kid yourself.


----------



## investorpaul (15 July 2009)

Largesse said:


> And mate, you aren't an investor. With BBI, you are a merely punter hoping for a positive asset sale.
> 
> Don't kid yourself.




Sorry Largesse but there are different kinds of investors.

Some buy and hold long term blue chip shares (some of those people have been smashed in this market both in Aust and O/S)

Other Investors buy on fundamentals and hold the company until they see a change in those circumstances (eg a drop in profits or divs and they sell out).

Other investors look for undervalued companies and invest, the expectation being that eventually the rest of the market will catch up. In this instance there is obviously risks that the potential is very realised or that the company deteriorates instead of improving.

In each instance above investors can and do lose money. Nothing is a sure thing no matter what your strategy.

Each individual classes themselves differently and has different objectives, evaluation techniques and projected price targets (each person is entitled to their position). 

Just because you dont see potential in BBI/BEPPA and others do doesnt mean that they are not "investors". I consider myself an investor in BBI/BEPPA as I am holding in the expectation that the potential will be realised by the rest of the market, fundamentals will involve and so will the share price.

P.S. I also know there are people who hold BBI/BEPPA who would consider themselves traders (and as above each person, based on their own circumstances can class themselves as they wish). But to generalise and say we are "punters" is wrong and an uninformed comment.


----------



## Largesse (15 July 2009)

investorpaul said:


> Sorry Largesse but there are different kinds of investors.
> 
> Some buy and hold long term blue chip shares (some of those people have been smashed in this market both in Aust and O/S)
> 
> ...




Thanks for the lesson, but I was already aware that there are a range of 'investor' classes.

However, PUNTING ON A HIGHLY UNCERTAIN OUTCOME, does not, and will not ever, fall into a class of investor. 

That, is just called gambling. 

And all this ridiculous talk of "oh when this asset sells for that much above book value and management decide to convert my BEPPA into $0.xx dollars and XX BBI shares I will do this/that" is no better than a bloke at the TAB hypothesizing which flavour of beer he's going to buy after dog 4 in race 8 comes good at Cranbourne. Actually it's probably worse, because at least the punter is certain what his odds were when he took his bet.

And just because you move in and out of a stock more than once, doesn't make you a trader either.

Delusional.


----------



## investorpaul (15 July 2009)

Largesse said:


> Thanks for the lesson, but I was already aware that there are a range of 'investor' classes.
> 
> However, PUNTING ON A HIGHLY UNCERTAIN OUTCOME, does not, and will not ever, fall into a class of investor.
> 
> ...




What is wrong with discussing potential asset sale prices and the likely outcome?

This is similar to discussing the potential impact of a rise in revenue/net profit for a retailer or the impact of a potential merge between RIO and BHP operations


----------



## Largesse (15 July 2009)

investorpaul said:


> What is wrong with discussing potential asset sale prices and the likely outcome?
> 
> This is similar to discussing the potential impact of a rise in revenue/net profit for a retailer or the impact of a potential merge between RIO and BHP operations




Because those discussions are very rarely kept realistic, often contain large amounts of baseless 'non-facts' and nearly always produce unlikely/unrealistic (upside biased) outcomes that all the punters salivate over.

Pretty much exactly what happened when it was suggested that BEPPA could get converted to cash + BBI scrip.

Further, the vast majority of punters offering 'potential sale prices' are either guessing or using a very basic form of a multiples (P/E) approach, with inaccurate inputs, which *can* produce a reasonably accurate range of values if correct inputs used, but more often then not when used by amateurs, produces inaccurate valuations.


----------



## Viva_Las_Vegas (15 July 2009)

Largese,

What exactly is your position with BBI or BEPPA? DO you hold either?

If not then why do you even both posting on the BBI thread?

Labelling posters as non traders, non investors and fantasy merchant up rampers isn't very productive.

I see this thread as an exchange medium for ideas and putting thought to LCD screen. What else do you expect this thread to look like?

Let me give you an example

POST: Hey guys BBI went up 9% today
REPLY: OH COOL 
POST: I sold today
REPLY: Me too.

Without members posting their views and thinking outside the square this thread would be pointless. As far as fantasies I have plenty, some involve BBI, others BEPPA and a whole lot more involving a 15 hooker g@ngb@ng on a luxury yacht in the riviera.

As abstract as members posts and ideas may be, I think I can safely speak for 99% of BBI posters that we are aware of the risks. And most of us don't see this as a gamble. As I had posted before I remember recieving buy recommendations for BBI between AUG and NOV 2008, not too much has changed yet.

I say let the free flow of ideas be forthcoming, it sure beats the lack of info in form of announcements coming from BBI management at present.


----------



## drsmith (15 July 2009)

banska bystrica said:


> drsmith,
> You refuse to back up your assertions with facts. Until you do that, I will not reply to any post you write from this point on.



Whether or not you reply to my posts is up to you. It's no skin off my nose one way or the other.

What I have offered is an opinion on BBI's survival prospects based on the balance sheet debt and the current credit environment. If you are not emotionally attached to your investment then perhaps you could explain why you take such exception to this opinion. You have yourself aknowledged there is a risk it could fall into the hands of the administrators.


----------



## ricee007 (15 July 2009)

Would I accept 2 shares and 35c in 6 months time if BEPPA is at 30c...?

If BEPPA hit 30c, I would imagine DBCT and the GPFRs went well, and the company is "guaranteed" to survive... and that the world economy would improve enough for BBI to get a $300M loan for June 2012.... 

Which means, given that hypothetical situation... I would expect $1.20 in June 2012...

If I was offered 60c in 6 months time...
Or VERY LIKELY of getting $1.20 in 2.5 years time..... surely I would pick wait 2.5 years ->since I would finish Uni and need money in 2.6 years......

In other words... if someone offered you a (IMHO) low-risk opportunity to double your money in 2.5 years... would you take it? I think I would.... For me its the difference between $25,800 and $12,900. Surely I would pick $25,800... and let my profits run... right? (Am I convincing me or you, hmmm)


----------



## Largesse (15 July 2009)

ricee007 said:


> Would I accept 2 shares and 35c in 6 months time if BEPPA is at 30c...?
> 
> If BEPPA hit 30c, I would imagine DBCT and the GPFRs went well, and the company is "guaranteed" to survive... and that the world economy would improve enough for BBI to get a $300M loan for June 2012....
> 
> ...




In reference to what I said earlier:

Exhibit A

...............................................................................


----------



## banska bystrica (15 July 2009)

BBI/BEPPA is a risk/reward INVESTMENT. I suggest largesse go and buy CBA or better still put his funds into a CBA term deposit earning 2.5%. That would suit his risk profile. Nothing wrong with that but don't come on here and start accusing BBI holders of being no more astute than the guy down the pubtab with a beer in one hand and a smoke in the other.

Bottom line: BBI net equity is in excess of 70c per security. Stock trades at 90% discount. Market is fearful of BBI therefore has overreacted on the downside. Thankyou Deutsche Bank at 2.5c..lol 
BEPPA dragged down with it even though it is a debt instrument. Madness but we'll take it thankyou.
Bit like the stock that gave me my big kick financially. SCS (later to become VeCommerce). AMP Funds management sold their large parcel to me (and a few other private investors) at 7c after they bought at much higher prices. We sat on those shares and I sold out my shares at $1+ years later. 
Sometimes the "so-called" professional investors actually have no idea and because they are large players in smaller stocks, they influence market direction and create enormous opportunities. BBI/BEPPA is one of those rare opportunities but only for those investors brave enough to go against the market opinion.


----------



## Largesse (15 July 2009)

banska bystrica said:


> BBI/BEPPA is a risk/reward INVESTMENT. I suggest largesse go and buy CBA or better still put his funds into a CBA term deposit earning 2.5%. That would suit his risk profile. Nothing wrong with that but don't come on here and start accusing BBI holders of being no more astute than the guy down the pubtab with a beer in one hand and a smoke in the other.
> 
> Bottom line: BBI net equity is in excess of 70c per security. *Stock trades at 90% discount.* Market is fearful of BBI therefore has overreacted on the downside. Thankyou Deutsche Bank at 2.5c..lol
> BEPPA dragged down with it even though it is a debt instrument. Madness but we'll take it thankyou.
> ...




Thanks for the investment advice BB, but i'm actually quite risk tolerant, but only when the risk/reward equation lines up. 

FWIW, 







Anyone who purchased BBI above that Red line is now underwater, or anyone who purchased BBI in the last 3 months is now underwater.

On the contrary, vast majority of CBA purchasers in the last 3 months would be sitting even, or maybe slightly up.

Risk/Reward plays are great, so long as you pick the right ones.

Absolute returns are what *build *a portfolio.


A couple of other points
a) 90% Discount is for a a reason. Stop implying that it's just a free swing.
b) What type of market were you buying in when you purchased SCS?


Based on that graph, maybe you should advise everyone to go buy CBA shares?

What would most prefer? 20% down but happy that they are 'making a good risk/reward play' ? or with their money still in their account?


----------



## investorpaul (15 July 2009)

Largesse said:


> Thanks for the investment advice BB, but i'm actually quite risk tolerant, but only when the risk/reward equation lines up.
> 
> FWIW,
> 
> ...




Mate you have no idea what you are talking about.

You cannot compare BBI/BEPPA and CBA they are two totally different stocks with two totally different set of fundamentals.

Everyone who has done research on BBI/BEPPA acknowledges the risk (yes we have also discussed the potential for upside). Furthermore you cannot take a short term view on BBI/BEPPA, it will go up and down, but the real potential is in the longer term.

Most posters (based on what I have read through this forum) who see long term potential got into BEPPA at or below 10cents and would be sitting on a small profit at the moment.

One would expect the CBA and other blue chip stocks to perform solidly over the long term, you would usually expect to buy now and sell in 10 yrs and see a great profit. (but it is still not guaranteed). BBI/BEPPA is completely different it is purely an investment based on the value we see, that is not reflected in the market. Again we have all acknowledged the increase risk with this stock, but there is also increased potential (in myview and others). Whether you agree or not is irrelevant.

Furthermore I could pick a number of companies within the ASX 100 and 200 that have lost money over the last couple of months as well (have a look at ORG). You cant just pick one stock (CBA) and say because its share holders have made money in the last 3 months, that everyone who holds BBI/BEPPA is wrong.


----------



## banska bystrica (15 July 2009)

Risk /reward was the the outstanding play of the last decade when BBi were 3c and lower. Thanks Deutsche Bank. Sold at circa 16c. Game set match largesse.

By the way, I have said many times BBI was too risky at higher prices especially after Corus news hit. That's when I sold all my BBI. It is now getting to buy territory again....BUT,

*BEPPA is the play largesse. The play of 2009/10*. A time horizon of 3 months largesse? That's a bit rich to judge a stock's performance good buddy. I bought SCS from AMP at 7c in the late 80's. About the same time you were in nappies I'd reckon. Your lack of street smarts makes me think you are still fairly young with a lot to learn. Remember, the BEST house in the street is not necessarily the best investment. Sometimes the perceived dogs are the cream. You'll learn that one day.

By the way, I hold  BEPPA only.


----------



## banska bystrica (15 July 2009)

largesse wrote: "Absolute returns are what build a portfolio."

Yep and plenty who "built" a portfolio over the last ten years playing conservative "best" stocks are now under water. Ten years of building all down the drain so don't pretend the ASX Top 20 type stocks are necessarily the best investment. You normally pay a big premium when you buy the ASX Top 20. That is a poor investment. The real money is made in small/mid caps. Even you should know that.


----------



## banska bystrica (15 July 2009)

Tell you what largesse. I'll bet you a neat $20K that BEPPA outperforms CBA over the next 12 months starting now and we will both lodge our $20K with the Moderator here who can place the funds in a CBA term deposit..lol maturing in 12 months.
Are you up for the challenge? 
CBA $38.82
BEPPA 11.9c

PS. CBA better get to $100+ to even be in the running on my figures.


----------



## Largesse (15 July 2009)

investorpaul said:


> Mate you have no idea what you are talking about.
> 
> You cannot compare BBI/BEPPA and CBA they are two totally different stocks with two totally different set of fundamentals.
> 
> ...





Ok mate, as you are telling me that I have no idea what i'm talking about, maybe you should prove that you know what you are talking about.

You could do this by showing me your risk weighted valuation of BBI or BEPPA. Either will do.

No need to rush, you can get back to me in a week if you need the time to put it together. 

And no, just quoting the advertised NTA doesn't count as a valuation.

Also, as you 'have done the research', maybe you could give us all a quick run down, 200 words max, of the risks inherent in purchasing BBI or BEPPA.
Shouldn't take you long. Maybe quantify those risks as well. 

I look forward to you proving me wrong, because I am assuming that you in fact have no idea what you are talking about and are just punting based on what other people have said is a 'good investment'.

FWIW, i didn't pick CBA, merely using Banksa's investment suggestion to compare.


----------



## awg (15 July 2009)

I was a bit surprised to be called "not an investor" just because I hold Beppa in my portfolio.

I have a different range of risk profiles in my portfolio.

I bought BBI, Beppa AND CBA (and others) at about the same time.

I sold BBI at a profit, when it hit my trailing stop.

I still hold beppa, as i am still well in profit and see more upside than down.

If it falls, I may sell, its not as though it will go into receivership overnight

so really my major risk is gap risk, if bad announcements happen.

I acknowledge that is substantial risk, but beppa is a small part of my portfolio, I am not as forthright as BB.

Largesse, you mentioned you have bought and sold this stock

Why did you do that if you thought it was so risky, and what has changed your mind now?


----------



## banska bystrica (15 July 2009)

Largesse said:


> i didn't pick CBA, merely using Banksa's investment suggestion to compare.




Why do people continually get my username wrong? It is not Banksa Bystrica. It is Banska Bystrica.

Largesse, I will actually let you nominate any Top 20 stock you like for our little side wager if you don't think CBA will cut the mustard against BEPPA.


----------



## Largesse (15 July 2009)

banska bystrica said:


> largesse wrote: "Absolute returns are what build a portfolio."
> 
> Yep and plenty who "built" a portfolio over the last ten years playing conservative "best" stocks are now under water. Ten years of building all down the drain so don't pretend the ASX Top 20 type stocks are necessarily the best investment. You normally pay a big premium when you buy the ASX Top 20. That is a poor investment. The real money is made in small/mid caps. Even you should know that.




Banksa, 

I'm not here to duel it out with you. I have clearly acknowledged you made a great play on BBI/BEPPA in previous posts. What is getting my snot up is that I feel that some are understating the risk and over stating the potential reward on this stock. 

I'm not here to mollycoddle people or try to protect them from themselves, but I have the right to come in here and voice my opinion when I think they are wrong.

BBI is a rampers dream, so easy to pump up the blue sky potential while quitely overlooking the serious risk built into it's purchase.

To clear up what you keep trying to muck up, i'm not saying that BBI/BEPPA will 100% fail, or not give holders some return, i'm saying that people are misunderstanding the risks, and that the risk/reward is some what misaligned.

And no, i'm not going to bet you 20k that CBA out performs BBI, because I wouldn't invest in CBA myself. I only used it as an example because you brought it up.


----------



## banska bystrica (15 July 2009)

I said you could have your pick of any stock in the Top 20.

BTW, I acknowledge there is some chance BEPPA will be worth 0 in 12 months whilst there is no chance CBA will be worth 0. Therefore, I agree the downside potential is greater with BEPPA but it is my belief that the upside is far greater with BEPPA.

If you like, I will send you a spreadsheet with some really tough stressed numbers in it on BBI and you are free to comment via email on where you believe I am still being overly optimistic.


----------



## mikes (15 July 2009)

if chinese or friends bought ( or provided finance to a buyer) of the dalrymple bay coal loader , the price regulator would not be an issue, as from then on coal suppliers could be invited to price coal on a delivered to  dalrymple bay basis and not on fis or fob basis.

the same would apply to the japanese but dont expect that they have surplus funds which they dont want to hold in the form of us dollars.

would also obviate pressure on china to sign up for costly restrictive greenhouse restrictions.

and this is without considering bhp or rio issues.

i would have thought that prospective buyers of this coal loader would have already started loading up big time on beppa (or even bbi) so as to partly offset the cost, but this is not happening  -  i smell a big rat  -possibly want to wait for other qld coal loaders to come on the market and do not want to bid up those prices by bidding up the dalrymple bay coal loader price.

hold beppa (lots of), nil bbi, nil sparcs.


----------



## banska bystrica (15 July 2009)

Banska Bystrica is a very pretty town in Central Slovakia that should have been made the capital when Slovakia became independant. Bratislava was given the nod because of its size and geographic location (being very close to Vienna).


----------



## banska bystrica (15 July 2009)

mikes said:


> i would have thought that prospective buyers of this coal loader would have already started loading up big time on beppa (or even bbi) so as to partly offset the cost, but this is not happening  -  i smell a big rat




mikes,
DBCT is worth circa $2.7Bn.
BBI's entire market cap is worth $170M.

The big potential buyers of DBCT would not be interested in buying BBI or BEPPA.


----------



## Largesse (15 July 2009)

banska bystrica said:


> I said you could have your pick of any stock in the Top 20.
> 
> BTW, I acknowledge there is some chance BEPPA will be worth 0 in 12 months whilst there is no chance CBA will be worth 0. Therefore, I agree the downside potential is greater with BEPPA but it is my belief that the upside is far greater with BEPPA.
> 
> If you like, I will send you a spreadsheet with some really tough stressed numbers in it on BBI and you are free to comment via email on where you believe I am still being overly optimistic.





My market view is such that I wouldn't place any of the top 200 let alone top 20 against BBI or BEPPA. Penny-dreadful volatility alone would probably see me lose that bet.

I feel like you are trying to pigeon hole me as a blue chip only investor, which I am far from. But it's ok, I have presented like one.


I'll take you up on that spreadsheet and valuation.

I'll pm you my email address


----------



## Largesse (15 July 2009)

mikes said:


> if chinese or friends bought ( or provided finance to a buyer) of the dalrymple bay coal loader , the price regulator would not be an issue, as from then on coal suppliers could be invited to price coal on a delivered to  dalrymple bay basis and not on fis or fob basis.
> 
> the same would apply to the japanese but dont expect that they have surplus funds which they dont want to hold in the form of us dollars.
> 
> ...





Given our recent dealings with the Chinese and strategic assets (Rio Tinto debacle /OZL Prominent Hill), do you really think that Chinese purchase of DBCT is a realistic possibility?

My best bet would be a syndicate of local producers.


----------



## banska bystrica (15 July 2009)

Largesse,
Have I honestly ever said there were no risks or little risks with BBI/BEPPA?
Have I never mentioned that one could in fact lose the lot if buying BBI/BEPPA?


----------



## banska bystrica (15 July 2009)

Largesse said:


> Given our recent dealings with the Chinese and strategic assets (Rio Tinto debacle /OZL Prominent Hill), do you really think that Chinese purchase of DBCT is a realistic possibility?
> 
> My best bet would be a syndicate of local producers.




I agree with you on that. A syndicate of local producers would be the red hot favourite. I think the bidding will be fierce and the first official offer may not be the last one received.


----------



## mikes (15 July 2009)

no doubt the celestials could co-opt friendly parties to front for them ( in purchasing or providing finance with interesting clauses or covenants not disclosed , and commercial in confidence arrangements.


----------



## hardyakka (15 July 2009)

I have just caught up on the recent exchanges, seems as though some persons prefer sniping rather than discussing the fundamentals of the stock. 

Offer of 35cents +2 BB.
As the holder of couple of million BEPPA I would review this on my analysis of the market. It basically depends upon what the future holds. If DBCT realises a good price, PD Ports and Euroports gone then obviously no. 

Fundamentals
As a qualified accountant with a decade of experience in infrastructure some of the viewpoints regarding BBI as a dog etc etc make me smile. For example I am expecting a small impairment charge for PD Ports, this being based on what has been announced versus what must be announced under LR 3.1 , what helen has said and income streams coming on line ie Tesco. Any positive resolution to Corus is a bonus. Now the snipers can slam this, but get it from the horses mouth and ring BBI IR.

I am not going to bother repeating my analysis of other BBI issues, except to say that, considering the types of asset, I am quite happy with the fundamentals versus risk and concur with BB that it will be the play of 2009/10. I am an investor not a trader and also hold CBA.

What do I expect
I agree some form of restructure is necessary, however what I expect is to share in the inherent value of the assets not yet recognised in the balance sheet. This means that there will be some trade off by BBI security holders.

I am not a charity, yet will be flexible and quite likely accept what I consider to be an equitable restructure, with the pain and benefits shared. Yes I am still increasing my holding very simply because I reasonably understand the beast, its weaknesses and strengths. 

BB has consistently shared his research and I think it fair to say he is a fairly astute investor. An added bonus for me is that BB has drawn many conclusions which are generally consistent with my own view. I have yet to see Largesse, Dr Smith et al put up a logical or reasoned argument backed by facts supporting their views. Guys, give me facts that support your views so I can analyse these and reconsider my position.

When the financials come out next month I am going to set aside a few days to analyse them with a fine tooth comb and will post my analysis. Why doesn't someone with an opposite viewpoint to mine do likewise and that analysis can be referenced to the audited financials, regulatory price resets etc.

Enough said

Cheers


----------



## banska bystrica (15 July 2009)

Great post hardyakka. 
I fully expect some sort of offer /restructure of BEPPA and I too am willing to give a little if it benefits BBI as a company.
I used the cash + 2 BBI shares as an example. I too would contemplate any offer in conjunction with the general market and BBI's overall health at the time of any such offer.
BOTH Beppa and BBI holders will have to give a little short term for both to benefit long term.


----------



## random (15 July 2009)

I have just had a wonderfull extended lunch/ dinner and come home to read that the do gooders are still trying to save the souls of the bbi, beppa heathens.

God bless your misguided hearts but i am happy with my current beliefs.
Still going on and on but saying nothing to back up their scepticism. 

It so easy to be negative on these stocks - gee the price is so low you guys must be right, the charts say so.....loook.
The same old rhetoric but no facts that influence my thoughts.

Yes i know credit is tight, sp is low, the professionals have abondoned us.
Ah, I'm in my element.

Go beppa and bbi!
Cheers


----------



## hardyakka (15 July 2009)

banska bystrica said:


> Great post hardyakka.
> I fully expect some sort of offer /restructure of BEPPA and I too am willing to give a little if it benefits BBI as a company.
> I used the cash + 2 BBI shares as an example. I too would contemplate any offer in conjunction with the general market and BBI's overall health at the time of any such offer.
> BOTH Beppa and BBI holders will have to give a little short term for both to benefit long term.




I think the fact that BEPPA holders may be prepared to give up some value to restore the health of BBI is the key to the issue and it of course is governed by voting power. Without checking I would guess it would require a 75% of eligible voters.

On a separate issue I have been getting a bit jelous reading of your European trip. My only consolation is that I will be going for a long trip over there soon as well, Prague is on the agenda.

Cheers


----------



## hardyakka (16 July 2009)

random said:


> I have just had a wonderfull extended lunch/ dinner and come home to read that the do gooders are still trying to save the souls of the bbi, beppa heathens.
> 
> God bless your misguided hearts but i am happy with my current beliefs.
> Still going on and on but saying nothing to back up their scepticism.
> ...




Random,

I am still laughing as I try and write this. I love the approach, despite all the warnings from the pros, is it No4 in the 3.30 at Rosehill or BEPPA. Now you have me worried about what is the best choice!!

Ande here I was complaining about a lack of analysis etc etc...btw what was the horses name?

Cheers


----------



## hardyakka (16 July 2009)

mikes said:


> no doubt the celestials could co-opt friendly parties to front for them ( in purchasing or providing finance with interesting clauses or covenants not disclosed , and commercial in confidence arrangements.




Cant happen or it would constitute a breach of the Corporations Act -substantial shareholding notification requirements. basically if you hold a "relevant interest" this must be disclosed. A relevant interest can arise due to beneficial ownership, voting power, majority on a management board. The whole idea of the provisions is to ensure the ultimate owner is disclosed irrespective of any holding structure.

ASIC is actually tightening up on disclosre requirements and there is a Consultation Paper No 107 (CP 107) on scrip lending and substantial notifications open for public discussion on the ASIC website discussing proposed changes.

Cheers


----------



## random (16 July 2009)

Hardyakka,

Beppa mate for a win.

Thats my only tip for tonight but in saying that I'm still hoping to score myself.

I have to go get horizontal now.
Night


----------



## banska bystrica (16 July 2009)

hardyakka said:


> On a separate issue I have been getting a bit jelous reading of your European trip. My only consolation is that I will be going for a long trip over there soon as well, Prague is on the agenda.
> 
> Cheers




I flew into Brisbane early Tuesday morning at around 12.30am. I was intending to stay a few more weeks but a family issue arose and I thought it best to get back. I had a great time although it was cut a bit short. My top 3 cities on this trip were:

Dubrovnik 1st (Simply stunning, could well be the nicest place I have ever visited)
Vienna 2nd (Class as usual with a capital C)
Budapest 3rd (the food puts it just in front of Prague)

Special mention to Ljubljana (very pretty and quaint).


----------



## Tysonboss1 (16 July 2009)

awg said:


> I was a bit surprised to be called "not an investor" just because I hold Beppa in my portfolio.




Don't worry mate, I was shouted down in a few threads on various forums when I was sharing the fact that I was investing in MACQ COUNTRY WIDE ( MCW)

The smarter guys were quite forward in telling me what a fool I was for investing in MCW at levels below 20c, (as low as 10c actually), yesterday mcw closed at 51c, and are still paying a healthy div.


----------



## fuzzie (16 July 2009)

banska bystrica said:


> I fully expect some sort of offer /restructure of BEPPA and I too am willing to give a little if it benefits BBI as a company.
> I used the cash + 2 BBI shares as an example. I too would contemplate any offer in conjunction with the general market and BBI's overall health at the time of any such offer.
> BOTH Beppa and BBI holders will have to give a little short term for both to benefit long term.




This would be tantamount to a restructure in receivership. Surely it would only make sense to BEPPA holders if they held as a proxy for BBI equity, not as a bond.

Are you also implying the banks would be willing to settle for less than face value repayment of their loans?

BEPPA and BBI are already giving much in the short term to benefit the long term.


----------



## Mitsimonsta (16 July 2009)

Viva_Las_Vegas said:


> Without members posting their views and thinking outside the square this thread would be pointless. As far as fantasies I have plenty, some involve BBI, others BEPPA and a whole lot more involving a 15 hooker g@ngb@ng on a luxury yacht in the riviera.



Post of the entire thread. Absolutely sig-worthy. Thanks for the laugh VLV! 



Largesse said:


> Based on that graph, maybe you should advise everyone to go buy CBA shares?



I hold an approximately equivalent market value of CBA and BEPPA.



awg said:


> I was a bit surprised to be called "not an investor" just because I hold Beppa in my portfolio.



Same. I balance out my portfolio with ASX20/50 companies, some small/mid caps, and a roughie or two. Yes, BEPPA is a roughie.

For a moment, lets consider BB's example of 35c + 2xBBI as a realistic restructure offer. The 35c alone is worth over $10k in cash to me. For someone with $14K equity in the market, that's alot of money. BEPPA was always designed to drive CG growth in my portfolio, the vast majority of my other holdings are aimed at dividend/DRP growth.

My financial goals are my own, and I take massive issue with people calling me a 'non-investor' because I did my research and found the upside in a particular stock was massive, yet the downsides that are there do not perturb me too much due to the smallish amount of money invested.

$2600 invested, if BEPPA is worth $0.00, then I have lost $2600.

If BEPPA is paid out at 35c + 2xBBI, I have made 4x my original investment on the cash component alone.

I would however, prefer to see more cash involved than 35c. 45c-50c would be a much better figure in my eyes.



banska bystrica said:


> Why do people continually get my username wrong? It is not Banksa Bystrica. It is Banska Bystrica.



That's why I call you BB. Never want to offend.



Tysonboss1 said:


> Don't worry mate, I was shouted down in a few threads on various forums when I was sharing the fact that I was investing in MACQ COUNTRY WIDE ( MCW)



I got into MDT on Monday, was up well over 10% when I last looked. Very similar profile to MCW, apart from the Local/US based assets.

I look at some of the REITS now and think that that's where my money should be going for a while.


----------



## banska bystrica (16 July 2009)

fuzzie said:


> This would be tantamount to a restructure in receivership. Surely it would only make sense to BEPPA holders if they held as a proxy for BBI equity, not as a bond.
> 
> Are you also implying the banks would be willing to settle for less than face value repayment of their loans?
> 
> BEPPA and BBI are already giving much in the short term to benefit the long term.




Not implying anything about banks.

This example is just that. An example of what could be offered after most of corporate debt is paid back.


----------



## ricee007 (16 July 2009)

Largesse said:


> Banksa,
> What is getting my snot up is that I feel that some are understating the risk and over stating the potential reward on this stock.



I am confused. Has anyone really said that this stock has better than $1.25 potential? 



> I'm not here to mollycoddle people or try to protect them from themselves, but I have the right to come in here and voice my opinion when I think they are wrong.



+1



> BBI is a rampers dream, so easy to pump up the blue sky potential while quitely overlooking the serious risk built into it's purchase.



Well, to be fair... BEPPA is a rampers dream. As above, but low liquidity... and easier to understate risk (Y)



> To clear up what you keep trying to muck up, i'm not saying that BBI/BEPPA will 100% fail, or not give holders some return, i'm saying that people are misunderstanding the risks, and that the risk/reward is some what misaligned.



Really? Like who in particular? Any particular post that points to this?

I'd ALSO invest in CBA if I had enough spare cash.

Finally... anyone know why BEPPA has jumped (and BBI hasn't really)... do you think it's just someone/ones buying BEPPA and BBI, but BEPPA has lower liquidity... so it's more affected?


----------



## investorpaul (16 July 2009)

ricee007 said:


> Finally... anyone know why BEPPA has jumped (and BBI hasn't really)... do you think it's just someone/ones buying BEPPA and BBI, but BEPPA has lower liquidity... so it's more affected?




I think BEPPA tends to jump more because there are less sellers and sometimes larger price gaps between sellers. Therefore a buyer who wishes to even accumulate a couple of K worth is forced to up their bid to have their order filled.


----------



## persistentone (16 July 2009)

ricee007 said:


> I am confused. Has anyone really said that this stock has better than $1.25 potential?
> 
> 
> +1
> ...




It's simple supply and demand.   BEPPA is the more desirable security, and apparently has few sellers at current prices.   So any demand kicks up price severely.


----------



## persistentone (16 July 2009)

I noticed the investing forum at HotCopper has lots of users that are marked as temporarily suspended.    Can someone advise me what are the magic words we are supposed to never say there to avoid this issue?   Looks like it might be over-administrated....


----------



## cpsharky (16 July 2009)

Very over moderated. The mod on HC who looks after the BBI thread seems to take great pleasure in suspending BBI advocates.
Heaps of posters got suspended early this year for trying to defend Melua's (Banska) unfair suspension. Hardyakka for example wrote "Hi" and got suspended permanently. For my money Hardyakka is one of the top three contributers to the BBI threads.

Now, if you have been suspended they are very good at detecting if you are registering again under a new name. It is possible, I am told on good authority to get around their system, but you need to know what you are doing.

Poor old NickleesonNumber2. RIP.


----------



## nathanblack (16 July 2009)

Are pump and dumps legal? provided im just an ordinary investor and there is no insider trading and provided i dont mislead anyone, i would assume its a legit way to make a crumb.

looking at the volumes, and how little action it takes to move the market, im interested to have a go. if i sold $40k worth of BEPPA i could probable push the price down a bit, then rebuy.

but probably works best when buying because i could eat up a few levels and push the price up, hopefully getting others into the market. then sell down slower at higher prices.


----------



## investorpaul (16 July 2009)

nathanblack said:


> Are pump and dumps legal? provided im just an ordinary investor and there is no insider trading and provided i dont mislead anyone, i would assume its a legit way to make a crumb.
> 
> looking at the volumes, and how little action it takes to move the market, im interested to have a go. if i sold $40k worth of BEPPA i could probable push the price down a bit, then rebuy.
> 
> but probably works best when buying because i could eat up a few levels and push the price up, hopefully getting others into the market. then sell down slower at higher prices.





I would assume its illegal (but not sure, so i wont comment on that aspect)

I can however see what you mean. For example say the current price is 10.5c and their are sellers at 11c, 11.3c, 11.5c, 12c.

If you had the money you could theoretically buy up all the sellers at each of those levls pushing the price higher. You would then need to hope that others join the buy que and also wish to buy at 12c or higher so you can offload everything you bought for a profit.

As I type it does sound a bit suss, but I can see how with smaller/illiquid stocks this could happen.

just my 

P.S I dont agree with/recomment this practice


----------



## Viva_Las_Vegas (16 July 2009)

Mitsimonsta


Quote:
Originally Posted by Viva_Las_Vegas View Post
Without members posting their views and thinking outside the square this thread would be pointless. As far as fantasies I have plenty, some involve BBI, others BEPPA and a whole lot more involving a 15 hooker g@ngb@ng on a luxury yacht in the riviera.



Post of the entire thread. Absolutely sig-worthy. Thanks for the laugh VLV! 

You are welcome for the laugh!!! Thing is I am actually serious. You see when I do get my $1.20 per BEPPA share I will put the 15 h00ker g@ngB@ng fantasy into play and guess what? With the 15 hookers I can do all sorts of RESTRUCTURING! LOL

I'm sure my wife will have something to say about it though ROFL!!!

Nice to see the buyers coming back to BBI.

Mitsi I must thank you once again for telling me to hang in there with my HFA!!! THANK YOU!!!!

Oh and check out this link, I put it on HC as well. A mate emailed it to me, relating to BBI

http://www.lincolnindicators.com.au/sg_current/index.html


----------



## Viva_Las_Vegas (16 July 2009)

a qoute from ninemsn finance section today

"A surprise surge in China's economic growth will boost the Australian economy as demand for local commodities rises. "
http://money.ninemsn.com.au/article.aspx?id=838219

Another positive for DBCT in my opinion.

An increase demand for out commodities will result in more shipping traffic, this traffic could head to DBCT - just in time to use the new expansion!

An astute buyer would see that buying DBCT now will more than pay for itself as a recovery grows roots and begins to gain momentum - eventually.

Anyway im off to google to search for my luxury yacht LOL


----------



## nathanblack (16 July 2009)

Viva_Las_Vegas said:


> http://www.lincolnindicators.com.au/sg_current/index.html




not a great review, but i guess its good to have opposing ideas. fails most tests and they criticize loss making and cash flows. a few ticks though.

im going to try that pump and dump in future, when some additional funds clear provided i work out the legalities first. sounds like its ripping people off but nobody is forcing them to join the quee. and there is equal risk that i will get stuck with shares i cant offload, so my gut sys that its probably legit.

anyone have a link to market manipulation and the do's/don'ts?


----------



## Viva_Las_Vegas (16 July 2009)

Well some ticks, some crosses. Just one brokers opinions and "tests" he uses to assess a stock.

I like the layout and how it sums up the issues in a table form and breaks it down, but overall...... none of what is contained in it is new to this thread. I think we have been over the negs and positives of BBI several times.

I just thought it was intersting to post out there since someone has obviously taken a look at the stock


----------



## bellenuit (16 July 2009)

investorpaul said:


> I can however see what you mean. For example say the current price is 10.5c and their are sellers at 11c, 11.3c, 11.5c, 12c.
> 
> If you had the money you could theoretically buy up all the sellers at each of those levls pushing the price higher.




They are only the visible sellers.  I assume there are many sellers and buyers who don't want to show their hands by placing orders and just letting them sit. They wait until the price is what they want and then place an order that gets executed immediately. 

You may find that after buying everything up to 12c, there are many sellers out there who are willing to sell at price points under 12c and you are now competing with them as they place their sell orders and bring the price down.


----------



## banska bystrica (16 July 2009)

There are always sell orders lurking off screen. If I wanted to dump my BEPPA do you think I would show them in the sell line? No way. I would wait until the volume buying was there at my price and then sell.
I would suggest people take a reality check and have a good hard think about what they are trying to do. Swim with sharks and you will be eaten very quickly.
The market is no different.


----------



## nathanblack (16 July 2009)

Price manipulation
Placing buy or sell orders (or both) into the market in order to change or maintain the price of a stock. The motives for attempting to do this vary: 

To increase the value of a position in the stock for accounting or portfolio valuation purposes; 
To be able to issue new shares at a higher price; or 

To cause such a price rise that other investors are attracted to the stock, creating additional demand and higher prices that the manipulator can sell into

i guess im trying to do the last option, so technically its a no-no. but good luck proving that was my intention. how can they prove that i didnt buy $40k and decide to sell a day later for $50-60k. its my right to buy $40k-$100k of beppa and in doing so push the price up.

i think clearly the one regulators would stamp out is putting misleading info out there to increase price or if im connected to company.


----------



## nathanblack (16 July 2009)

banska bystrica said:


> There are always sell orders lurking off screen. If I wanted to dump my BEPPA do you think I would show them in the sell line? No way. I would wait until the volume buying was there at my price and then sell.
> I would suggest people take a reality check and have a good hard think about what they are trying to do. Swim with sharks and you will be eaten very quickly.
> The market is no different.




totally understnd what your saying. i made most my gains during BEPPA run up a couple months back. i delibrately limited orders to 100k and 150k to disguise buying /selling. but volumes were higher then. more recently i stick to 100k parcels and they take time to be filled.

i was more thinking out loud, knowing that i have about $60k total in beppa/bbi at the moment and thinking if i didnt trickle my sell or next buy and instead placed one large order if it would have an impact and take out several lines. weather its profitable or not is another story.

and if i did it just on pre-open or another point of the day. as i said thinking aloud only. not doing it tomorow or anything. holding this lot for a little bit yet.


----------



## bandicoot76 (16 July 2009)

Oh and check out this link, I put it on HC as well. A mate emailed it to me, relating to BBI

http://www.lincolnindicators.com.au/sg_current/index.html[/QUOTE]


while reading through this posted link i came across this lil gem:

 8     News and Announcements 01/07/2009 DBCT 7X expansion completed No negative news or announcements. 
The latest price sensitive news from BBI was the announcement of the completion of the last phase of the DBCT 7X Project, expanding the capacity of the Dalrymple Bay Coal Terminal near Mackay to 85 metric tons per annum (Mtpa), an increase of around 50% from the pre-DBCT 7X capacity.

*85 metric tons per annum capacity hey! WOW what a money spinner lol.... it amazes me that these so called analists have such a p*ss poor understanding of the fundamentals of the very things they are supposed to be analizing!  for those who dont know what the helli'm talking about 85 metric tonnes is about the average capacity of ONE DUMP TRUCK.... so this so called analist obviously doesnt analise very well.... if he'd written 85 mtpa (85 MILLION tons per annum he'd be on the ball. i bought a decent parcel of BBI at an average of 7c AFTER working on the DBCTX7 expansion project myself... shock horror! a blue collar investor no less!!! lol


----------



## Iggy_Pop (16 July 2009)

I regularly fly over DBCT for work and noticed yesterday morning that there were 46 ships waiting to load coal. Last trip 2 months ago there were 12 ships. 

During the peak of the market nearly two years ago the most seen waiting were approx 70. Things looking up for the coal economy and DBCT.


----------



## hardyakka (16 July 2009)

cpsharky said:


> Now, if you have been suspended they are very good at detecting if you are registering again under a new name. It is possible, I am told on good authority to get around their system, but you need to know what you are doing.
> 
> Poor old NickleesonNumber2. RIP.




Hi,

It is easy to open a new account when somewhere has banned your ip address, all you need is a router. Have a look at this link, it tells you how for a linksys router on a step bt step basis.

http://www.youtube.com/watch?v=KJMfazJWDqQ

Just be aware that they also watch for posting styles. When you join do so from an email account that is free but not one of the usual ones.

It has worked for me for months as they monitor by ip address.


----------



## nunthewiser (16 July 2009)

hardyakka said:


> Hi,
> 
> It is easy to open a new account when somewhere has banned your ip address, all you need is a router. Have a look at this link, it tells you how for a linksys router on a step bt step basis.
> 
> ...




is HC even worth the bother ?

last time i looked it was full of overpumped lil nazi moderators followed by overpumped lil rampers 

the amount of crud one has to sift thru to get anything unbiased or to find much of value seems like a whole waste of time to me 

Hot copper jam sand in ya clackas i say!


----------



## hardyakka (16 July 2009)

A few other comments
It would be quite difficult to manupulate BEPPA because dont forget that there are conditional triggers lurking off market, as soon as the price reaches a certain amount a buy or sell may be triggered and placed. Also it would take an order of several million to even dent the price as persons may buy or sell into it. Manipulation would involve tens of millions of units.

Lincoln
I had a look at that Lincoln analysis and discounted it immediately, its just too simple. Dont forget it was back in the days prior to the release of the Dec accounts that a UBS analyst discounted BBIs assets by 30 od % on the basis that property valuations were dropping significantly in distressed property trusts. That so called analyst ignored or was not aware that the assets were not marked to market and there is a difference between property and regulated infrastructure.

When the DBCT announcement is made before the release of the financials I think we will be smiling somewhat, maybe not buying that yacht yet, but smiling all the same.

Cheers


----------



## hardyakka (16 July 2009)

nunthewiser said:


> is HC even worth the bother ?
> 
> last time i looked it was full of overpumped lil nazi moderators followed by overpumped lil rampers
> 
> ...




Lol..totally agree but I just lerve dargies reference every second post to the DEATH SPIRAL..it is coming and only the faithful will survive the DEATH SPIRAL


----------



## cbrendan (17 July 2009)

With all the doom and gloom in this thread lately, i thought it would be a good idea to get other holders thoughts on realistic BEPPA/BBI prices in 3 months time.

That would take us through to october and hopefully DBCT, Euroports and PD ports would all be sold.

I can't see BBI getting much higer than 25 cents unless the company has cash to avoid sparcs dilution (not that a 25c SP would be anything to scoff at in light of currrent circumstances)

And i would hope that in 3 months beppa is sitting between 35-40 cents?

Does anyone agree/ disagree with my predictions? Think im dreaming?

More interested in thoughts on BEPPA seeing thats all i hold, but interested in BBI thoughts as well 

Cheers


----------



## Largesse (17 July 2009)

cbrendan said:


> With all the doom and gloom in this thread lately, i thought it would be a good idea to get other holders thoughts on *realistic BEPPA/BBI prices in 3 months time.*
> 
> That would take us through to october and hopefully DBCT, Euroports and PD ports would all be sold.
> 
> ...






Hilarious post

......................................................... .............................


----------



## Mitsimonsta (17 July 2009)

Viva_Las_Vegas said:


> You are welcome for the laugh!!! Thing is I am actually serious. You see when I do get my $1.20 per BEPPA share I will put the 15 h00ker g@ngB@ng fantasy into play and guess what? With the 15 hookers I can do all sorts of RESTRUCTURING! LOL



Oh my lord you make me laugh..... But I feel that if that fantasy does come into play, you may cause yourself an injury, possibly a groin strain? 



Viva_Las_Vegas said:


> Mitsi I must thank you once again for telling me to hang in there with my HFA!!! THANK YOU!!!!



It was the bottom of the market, the SP had seemed to have settled out although market volatility was at it's highest. You were running around like a headless chook on a caffine drip. You just needed to settle down, take a breath, and look at what the market was doing. It was starting to flatten out, some stocks were even going up.

Okay, we all have made at least one 'questionable' trade. In most cases, we just sit on it for a bit longer and see what happens. Fairly soon after that post of mine, things picked up overall and today HFA last traded at 22c.

The chart is channelling upwards, so if you haven't sold them yet, then I would maybe 'wait and see' for a bit longer. I forsee a bit of resistance at 23-23.5c, after that I would wait for it to jump and then sell about 25c.


----------



## cbrendan (17 July 2009)

Largesse said:


> Hilarious post
> 
> ......................................................... .............................




If dbct sells for ~2.7 bil, we get screwed by a few % on europerts but still make a sale, and if pd ports sells at even a slight loss, why would the beppa price not be 35 cents?

Without corporate debt the risk of admin is removed, and BEPPa holders will be getting $1 worth of something in 2012. Be it cash or BBI stock, so diluted that beppa holders become majority holders?

Why am i being hilarious?


----------



## nathanblack (17 July 2009)

cbrendan said:


> If dbct sells for ~2.7 bil, we get screwed by a few % on europerts but still make a sale, and if pd ports sells at even a slight loss, why would the beppa price not be 35 cents?
> 
> Without corporate debt the risk of admin is removed, and BEPPa holders will be getting $1 worth of something in 2012. Be it cash or BBI stock, so diluted that beppa holders become majority holders?
> 
> Why am i being hilarious?




i guess largesse is just saying theres alot of IFs there.
1. IF DBCT sells for ~$2.7bil ...may sell for less or only a 49% stake.
2. IF we get screwed by few % euroports...may be more or get called off(requiring return of deposit)
3.IF pd ports sells at slight loss...again could be more than slight loss or no sale.

Really it is impossible to predict/even guess a 3month price target given the uncertainty around DBCT. the exact timing of sale will effect cash on hand and refinancing options in november for sparcs conversion.

the exact percentage of sale affects the amount of debt that can be paid down, as does the final sale price.

overall though i agree that most of your IFs are the probable outcomes IMHO only, others may disagree. i think pd ports will sell if BBI need it too and we will take a loss(insignificant compared to DBCT price). i also agree euroports will sell and probably only slightly discounted like QIC did to powerco.

the biggest and by far most significant and uncertain aspect is DBCT. until we know 49%-100% sale and ~$2.5b-3bil range we cannot predict the handling of sparcs(particularly important for BBI price not so much for BEPPA), we will not know how much corporate debt can be repaid, and we will not know if a capital raising/restructure will be required.

however assuming 100% sale, i think your figures seem about right. ive been saying all along about a 3x or 4x growth in SP for both BBI and BEPPA under those circumstances. your numbers fall inline with that. i think BBI might slightly outperform BEPPA in that time frame, but after that its hard to see much organic growth in BBI over medium-long term, whereas BEPPA will continue to grow linearly until 2012 $1 odd.


----------



## Viva_Las_Vegas (17 July 2009)

The following is a joke, but to me it's an analogy for BEPPA in a way

A Ukrainian walked into a bank in Toronto and asked for the loan officer.


He told the loan officer that he was going to Kiev on business for two weeks and needed to borrow $5,000 and that he was not a depositor of the bank. The bank officer told him that the bank would need some form of security for the loan, so the Ukrainian handed over the keys to a new Ferrari. The car was parked on the street in front of the bank.
The Ukrainian produced the title and everything checked out. The loan officer agreed to hold the car as collateral for the loan and apologized for having to charge 12% interest.
Later, the bank's president and its officers all enjoyed a good laugh at the Ukrainian for using a $250,000 Ferrari as collateral for a $5,000 loan. An employee of the bank then drove the Ferrari into the bank's underground garage and parked it.

Two weeks later, the Ukrainian returned, repaid the $5,000 and the interest of $23.07. The loan officer said, "Sir, we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked you out and found that you are a multimillionaire. What
puzzles us is; why would you bother to borrow $5,000?"

The Ukrainian replied: "Where else in Toronto can I park my car for two weeks for only $23.07 and expect it to be there when I return?"


----------



## hardyakka (17 July 2009)

Good news for PD Ports business

"Jul 16, 2009 PD Ports welcomes decision approving MGT power station to be built at Teesport  PD Ports, the owner of Teesport, welcomes the Government’s decision to approve MGT Power’s 295 megawatt (MW) wood fuelled power station which is to be built on the South Dock area of the port.  One of the largest biomass plants set to be built in the UK, the Tees Renewable Energy Plant will produce enough carbon neutral, sustainable electricity to power 600,000 homes across the North East.

The announcement is very good news for the area. MGT Power’s £500m investment is bringing a new impetus to the area in terms of the size of its renewable energy power station. MGT Power has a grid connection agreement; it has secured long term supply contracts for biomass feedstock from managed sustainable forests and plantations, and suppliers ready to take on plant construction. The port has the plans ready for a new quay wall and crane capacity at Teesdock. The plant will require 2 -3 years for construction and will be operational by autumn 2012.

“With MGT Power’s plan becoming a reality, we will see a new traffic flow of o*ver 2m tonnes per annum through the port.* This is great news,” stated PD Ports’ Group Chief Executive David Robinson.

MGT Power had received planning approval from Redcar & Cleveland Borough Council in November 2008 and has now received the final approval from the Department of Energy & Climate Change (DECC) to proceed (known as the Section 36 approval).

“We have moved a long way forward over the past year and are grateful for the help of all our local partners to realise our plans. The local MPs Vera Baird and Ashok Kumar, PD Ports and Redcar & Cleveland Council have all been enormously helpful to us,” commented Chris Moore, Director at MGT Power. “We can now secure all the detailed financing plans, let the construction contracts, and start building. We remain very optimistic that we can be ready in three years time.”

Key Facts: Background

The project is a 295MW (megawatt) base load renewable electricity generator, and one of the world’s largest renewable energy projects of any type.  The project will bring over £500m of investment into the local area during its 3 year construction period, meaning 600 construction jobs followed by 150 onsite jobs for up to 40 years.  Once operational, the renewable plant will spend over £30m per year on maintenance and support services.  With the Tees Valley’s core industrial expertise and experience most of this spending is set to be absorbed by local labour and firms sustaining 300-400 indirect jobs each year for the local economy.

The 295MW plant will be constructed on land adjacent to the main southern dock at Teesport, on the south bank of the River Tees.  In addition to its deep-water facilities, the plant is well served by arterial transport routes such as the A66, A19, A1 and the main East coast rail network.

It is also close to the National Grid electricity transmission system and MGT Teesside – the developer for the project and wholly-owned subsidiary of MGT Power Ltd – has a transmission contract with the National Grid Company to export power from the site from 2012.

The project will comprise a single, circulating fluidised bed boiler that will burn wood chip to produce steam.  The steam will be used to turn a steam turbine, which will in turn power a generator to produce electricity.

Once operational in late 2012, the plant will save 1.2m tonnes of CO2 per year and will account for 5.5% of the UK’s renewable electricity target."


----------



## hardyakka (17 July 2009)

Largesse said:


> Hilarious post
> 
> ......................................................... .............................




Is that the best analytical evidence you can provide of why BBI assets, including PD Ports, DBCT and Euroports are dogs?

Give me facts and figures, data sources, anything verifiable so that I can understand your reasoned conclusions.

largesse-Does the gain of the Tesco business and power station through put offset the loss of Corus? If not why not?

Cheers


----------



## nathanblack (17 July 2009)

hardyakka said:


> The plant will require 2 -3 years for construction and will be operational by autumn 2012.
> 
> “We can now secure all the detailed financing plans, let the construction contracts, and start building. We remain very optimistic that we can be ready in three years time.”




This is great news for the new owner, and will hopefully push the sale price up. 3 years is still a long time for the new owner to wait for increase in revenues but should be factored in to sale price, if not then i suggest BBI walk away and wait 2 or 3years before putting this asset on the market. proviso that DBCT is sold in entirety.


----------



## hardyakka (17 July 2009)

nathanblack said:


> This is great news for the new owner, and will hopefully push the sale price up. 3 years is still a long time for the new owner to wait for increase in revenues but should be factored in to sale price, if not then i suggest BBI walk away and wait 2 or 3years before putting this asset on the market. proviso that DBCT is sold in entirety.




Agreed Nathan, but dont forget the revenue stream will be taken account of in the EBITDA number and hence EV, which are big pluses for PD Ports.

What this transaction also demonstrates is that there is only upside for PD Ports, we are assuming nil contribution from Corus. The EV will include a contribution from this that should eventuate once economies recover from the GFC.

Cheers


----------



## Mitsimonsta (17 July 2009)

I notice that Bluescope is going to fire up the No.6 Furnace at Kembla as global demand for steel is going up in a big way. They postponed the restart just 6 weeks ago.

I am not so sure that Corus is down and out just yet. Demand is growing for Steel - even more so that China has played silly buggers and now are basically paying spot price for Iron Ore, so the price is going up.

I feel that the market over-reacted in a number of ways. I think it is merely re-adjusting as production dropped more than demand did - now they are just catching up.

If Corus has negotiated a good long term contract (probably with Vale) then it could well produce a very competitively priced product.


----------



## Viva_Las_Vegas (17 July 2009)

Hey Guys

I've been doing some research on the "pump & dump"

I think this you tube sums it up pretty well.

Please watch it to the END! in order to make full sense of it.

Having watched it, I am convinced it's legal to PUMP & DUMP.

You're all welcome in advance!!

http://www.youtube.com/watch?v=5zIDgPVg9HM&feature=related

VLV!!!


----------



## persistentone (17 July 2009)

Viva_Las_Vegas said:


> Hey Guys
> 
> I've been doing some research on the "pump & dump"
> 
> ...




Legality aside, you can only significantly affect the stock price if you have overwhelming firepower and a lot of patience and wear out early sellers.  Even then you would also need a lot of luck, because the key element here is that you must create the illusion of a powerful rally that draws in *new buyers*.   It's not at all obvious that someone who could bring BEPPA to 25 cents could sustain that price or start any kind of rally based on new buyers around it.

If you have $100M and feel like losing $1M to get some experience in pricing dynamics be my guess.   If you don't have $100M and don't feel like losing $1M, you probably don't have enough firepower to be playing that game.


----------



## Tysonboss1 (17 July 2009)

Viva_Las_Vegas said:


> Hey Guys
> 
> I've been doing some research on the "pump & dump"
> 
> ...




HAHAHAH HAHAHA, 

every thing that happened in the second half of that video should be illeagal.

I never want to hear the words pump and dump again. c:


----------



## banska bystrica (17 July 2009)

This thread has really deteriorated. If anyone wants to discuss fundamentals about BBI/BEPPA, feel free to send me a PM.


----------



## Viva_Las_Vegas (17 July 2009)

Apologies for deteriorating the thread BB. Twas not my intention.

This thread seemed to be going round in circles with DBCT, PD etc covering old ground over and over again.

Talk of pump and dumping seemed to be the new flavour, I just wanted to contribute.

The way I see it is...... the guy (woody harolson) is BBI and the old lady land lord is BNB in the video clip. Woody is doing what he can to pay his rent and the land lady is his nemesis, not unlike the banks or the BNB namesake.

Anyway as a result I'm banning myself  and my twisted view of the world from the thread for 24 hrs.

Self imposed ban... starting..... .NOW.


----------



## hardyakka (17 July 2009)

Now this is a really great summary of the prospects for PD Ports, what do you think will be the affect on the price of the asset!

http://www.nebusiness.co.uk/top-bus.../not-just-any-port-in-a-storm-51140-24142322/

Cheers


----------



## nathanblack (17 July 2009)

Viva_Las_Vegas said:


> This thread seemed to be going round in circles with DBCT, PD etc covering old ground over and over again.
> 
> Talk of pump and dumping seemed to be the new flavour, I just wanted to contribute.




thats the thing about fundamentals Viva, they don't change that much. Rather than rehash fundamentals that have already been discussed, the discussion diverged onto talk of pump and dump. it was in the context of volumes and volatility and added a different scenario to discuss.

the fundamentals will only change when a big announcement happens regardibg dbct or such, then everything changes. we can recalulate NTA, debt, interest, interest cover, revenues , etc.

until then feel free to contribute any views you like, or your particular strategy with this stock and your expectations.

i begin my 1minute self imposed ban now.


----------



## nathanblack (17 July 2009)

hardyakka said:


> Now this is a really great summary of the prospects for PD Ports, what do you think will be the affect on the price of the asset!
> 
> http://www.nebusiness.co.uk/top-bus.../not-just-any-port-in-a-storm-51140-24142322/
> 
> Cheers




great link. it really is a great asset with growth potential. with that set to be online and the power station both in a couple years, it doesnt help todays earnings but will be reflected in any sale price.

the price quoted of 450mil pound is acceptable, but as we paid more(600mil), i reaaly would be reluctant to accept any less. if corus went our way plus the power plant and tesco all added to revenue in 2012, im sure the port is worth the 600mil then and it would easily cover interest.

i re-iterate my earlier opinion that IF we sell 100% DBCT, then BBI need to seriously look at keeping this one.


----------



## cpsharky (17 July 2009)

PD ports is an interesting one. To me it looks like PD ports has had real value added to it by BBI. They saw the strategic potential when they purchased it and have made real advances with the Tesco and MGT deals. Buyers will be factoring in all of this potential IMHO. Corus was a hit, and the buyers will be expecting a good price in this climate, but I'll be shocked if PD sells for as little as 450m pounds. I'm predicting 550-600m.


----------



## nathanblack (17 July 2009)

cpsharky said:


> I'm predicting 550-600m.




i agree, it does seem like vlue has been added, mainly die to its strategic location and available surrounding land.

assuming the offer was lower than your range, what would be the least you'd accept before walking away?

we need to keep some assets to remain an ongoing entity and make earnings and distributions. if DBCT must go, i would keep NGPL and PD. we might as well continue to sell down europrts now, and im not a huge fan of westnet rail.


----------



## cpsharky (17 July 2009)

nathanblack said:


> assuming the offer was lower than your range, what would be the least you'd accept before walking away?




The following are my calculations based on the investor pack.

Asset level debt is 315m pounds, allocated corporate debt is 85m. Even 400m sale price would take out AUD of about 170m corporate debt. 450m would take out AUD 270m. 600m would take out AUD 570m. I would need to check how much the corporate ICR is affected by losing PD corporate cash flow - I wouldn't want the ICR to fall as a result of the sale. 

Full year 2008 EBITDA was 59.5m pounds. FY 2009 EBITDA won't be pretty, but buyers will be taking a long term view. Also, long term, extra revenue coming on line from Tesco etc should make up for any (possible) Corus hit. 60m pound EBITDA x 9 = 540m pounds. Multiple of 9 and I think buyers should be falling over each other.

Can't wait for the PDP sale. I think it will be announced before DBCT. If my guess is correct, it will turn much better than the media would have us believe.


----------



## cbrendan (17 July 2009)

With ebitda hypothetically reduced to 50 mil x 8 = 400 mil, the chance IMO of a 300 mil sale seems very low.

Perhaps in a dream world there is a missunderstanding, eg. 300mil aud after debt sale etc.

Find out soon I guess.



cpsharky said:


> The following are my calculations based on the investor pack.
> 
> Asset level debt is 315m pounds, allocated corporate debt is 85m. Even 400m sale price would take out AUD of about 170m corporate debt. 450m would take out AUD 270m. 600m would take out AUD 570m. I would need to check how much the corporate ICR is affected by losing PD corporate cash flow - I wouldn't want the ICR to fall as a result of the sale.
> 
> ...


----------



## hardyakka (17 July 2009)

*Re: PD Ports*



hardyakka said:


> I had a chat with Helen at Investor Relations today regarding the numbers quoted in the press of BBI reducing the asking price for PD Ports from GBP 450M to GBP300M.
> In summary Helen said that no financial data had been provided by BBI. This data had been originated and perpetuated by the UK press, despite BBI pointing out that they had not provided that information. (They cannot affirm or deny).Helen also noted that the supposed  reduction in price of GPB150M, were it true, would be a material amount and require  disclosure under the ASX Listing Rules. Helen also said that, as notified in April, negotiations with interested parties are continuing.
> My view is that a price reduction of that amount would have been disclosed immediately by BBI under the listing rules so IMO someone in the UK press is telling porkies. Since when did the truth ever sell papers. Its the screaming headline, especially if the Aussies are getting hammered, and girl on page 3.
> Cheers




I want to remind people of what BBI IR said.

There is a lot of focus on the numbers in the press for PD Ports. I think that the above comments by Helen of BBI IR are very important. I expect the price for PD Ports to be significantly higher than that in the press, simply because of what BBI IR said as per above.

Cheers


----------



## banska bystrica (18 July 2009)

I would be surprised and disappointed if they sold PD Ports for 300M GBP. That is not in keeping with their stated objective of selling assets at book value or above.


----------



## nathanblack (18 July 2009)

banska bystrica said:


> I would be surprised and disappointed if they sold PD Ports for 300M GBP. That is not in keeping with their stated objective of selling assets at book value or above.




but at what point do you see the potentential debt reduction of a PD Port sale being outweighed by the benefit of capital growth and earnings growth potential?

personally a quick, clean , 100% sale for 500mil pound would be the lowest i'd accept. any lower and the asset is too cheap and better value to BBI longterm to build a business around.

anymore(which i expect) and i guess we need to reluctantly let it go.

but with euroports almost definately going, and DBCT possible 100%, i'd prefer tokeep this one.

i dont want the company to place all assets on the market and effectively wind up the company, even if it meant full repayment of BEPPA and a handsome special dividend for BBI.

i want BBI to keep enough quality assets to build and grow around in the future. i guess they could limit themselves to one asset class, either ports or energy. if DBCT goes then obviously we keep NGPL but i think theres room for PD Ports too. i cant see much growth potential in westnet rail.


----------



## hardyakka (18 July 2009)

nathanblack said:


> but with euroports almost definately going, and DBCT possible 100%, i'd prefer tokeep this one.
> 
> i dont want the company to place all assets on the market and effectively wind up the company, even if it meant full repayment of BEPPA and a handsome special dividend for BBI.
> 
> i want BBI to keep enough quality assets to build and grow around in the future. i guess they could limit themselves to one asset class, either ports or energy. if DBCT goes then obviously we keep NGPL but i think theres room for PD Ports too. i cant see much growth potential in westnet rail.




Nathan,

My sentiments entirely. With Tesco coming online, the wood fired station 3 years off, recovery of Corus once markets pick up I see PD Ports adding significant value. When you consider EV is based upon future EBITDA then these must be factored in to produce a minimum acceptable price.

Personally I would like to see BBI retain PD Ports rather than sell it at firesale prices reflective of a distressed seller.

Cheers


----------



## nathanblack (18 July 2009)

Exactly. And they could always keep it until 2012 and sell it to cover BEPPA. Imagine the sale price then.


----------



## drsmith (18 July 2009)

banska bystrica said:


> I would be surprised and disappointed if they sold PD Ports for 300M GBP. That is not in keeping with their stated objective of selling assets at book value or above.



When selling assets every director's objective is to sell at or above book value. That does not mean they always can, particularly if they are acting as quasi administrators.


----------



## nathanblack (18 July 2009)

how do you think the DBCT announcement will go down? will it occur after hours with little or no trading halt required? or will they need a few days trading halt prior to announcement to prevent leaks? or a few days after announcement to allow digestion of news?


----------



## hardyakka (18 July 2009)

drsmith said:


> When selling assets every director's objective is to sell at or above book value. That does not mean they always can, particularly if they are acting as quasi administrators.




It also does not mean that they cannot sell at or above book, especially considering the additional revenue streams coming online for PD Ports.

Quasi-administrators, that I will put in the same category as the beloved death spiral. An entity either* is or is not* in administration. To my limited knowledge BBI is not, so any talk about quasi, pseudo, partial, thingymajig administration is simply a pile of horse manure.

Cheers


----------



## random (18 July 2009)

Whilst i like the fact that we have each and every one of our assets i think that we all agree that dbct is the crown jewel.
PD Ports is for sale as well as any entity of the portfolio is (for the right price) sure.

If we sell dbct as a whole for a figure in the 2.8b range i personally can't see why we would need to sell any other asset.

As time goes on i believe that our situation will get stronger due to increased cash flow in each and every business (including PD Ports now with the latest news posted) and reduction in debt will continue to be a priority of the board irrespective of any bank direction or desire but that is by and by.
Sure dividends could be delayed still but the increase in sp would be reward enough in my opinion.

So my question to the far more expert bean counters than myself is.....is this a realistic scenario.ie is the sale of dbct for a figure of 2.8b or more enough given our total current cash flow remains the same in other businesses (and for arguements sake that interest rates remain the same) for bbi to keep rolling. 

If you think it is - as i do, why do we keep talking about additional sales at book prices or possibly below when it is simply not necessary? I don't get it.
Cheers


----------



## hardyakka (18 July 2009)

random said:


> ..is this a realistic scenario.ie is the sale of dbct for a figure of 2.8b or more enough given our total current cash flow remains the same in other businesses (and for arguements sake that interest rates remain the same) for bbi to keep rolling.
> 
> If you think it is - as i do, why do we keep talking about additional sales at book prices or possibly below when it is simply not necessary? I don't get it.
> Cheers




Consider the following for DBCT:
a) It is loading at maximum capacity.
b) The queue of ships to be loaded = coal demand = pick up in markets.
c) It is a 5o year lease with 50 year option and regulated income stream  = ideal income stream for life companies etc (matching income streams with policy liabilities).
d) BBI is viewed as in trouble and the market is viewed as down = buyers consider they will get the best price compared to that in a normal market.

$2.8B is the midpoint of the number I expect DBCT to realise. Higher than most expect, but realistic IMO. In % terms the difference between $2.6 and 2.8B is about 8%.
The wild card is will the purchaser negotiate a deferred settlement arrangement, say over 3 instalments. I would not be surprised if they did so.

BBI's business model required too much debt, and the days of cheap easy credit are long gone. Realising assets above book enables the removal of debt and the surplus above book can be used to pay down other debt. The de-leveraging of the balance sheet will strengthen the company resulting in an improvement in sp.

Cheers


----------



## banska bystrica (18 July 2009)

random said:


> Whilst i like the fact that we have each and every one of our assets i think that we all agree that dbct is the crown jewel.




Well I for one do not agree that DBCT is the crown jewel. NGPL wins hands down. There is much more growth in NGPL with gas storage in the USA going through the roof. DBCT is the "sentimental" crown jewel because it was the first asset owned and it is in Australia. NGPL is financially the crown jewel by a long way.


----------



## banska bystrica (19 July 2009)

hardyakka said:


> $2.8B is the midpoint of the number I expect DBCT to realise. Higher than most expect, but realistic IMO. In % terms the difference between $2.6 and 2.8B is about 8%.




I would consider $2.7Bn rock bottom and closer to $3Bn as a reasonable price.
If $1Bn of corporate debt is extinguished, PD Ports sells for 450GBP and the Euroports conditions precedent are met, then that should be all that is required regarding asset sales.
Then we should see an improving BBI price to around 25c which then opens up the door to restructure BEPPA.


----------



## mikes (19 July 2009)

foreget about any bbi scrip issue before sparcs conversion

foreget about any beppa restructure  as

1. very cheap interest rate, which payment can be deferred on  without any penalty to management or bbi.

2. beppa holders are eunochs, they do not have a vote and cant pass judgement on or remove the bbi directors.

3. i, am in no mood for giving up anything on my beppa , after copping losses on other stocks, and do not have unconditional confidence in babcock and brown's appointed management and directors ethics or credibility, and expect i am not alone. 

The management, directors  and their associates have previously overpaid for investments and taken out outrageous fees and charges amounting to my estimate a total of in excess of $2bn australian.

3. expect any restructure will require 75% vote of beppa holders to amend constitution, and do not see any vote getting up. ( precedent the directors previously tried out the sparcs holders in a vote and could not get it passed). dont see what they could offer of value for beppa holders to give anything up.  

4. when beppa near maturity (2012) directors can offer a rollover like have offerered to sparcs, but if the rollover gives the directors the right to defer or suspend future coupons, or coupons are not guaranteed by an AAA business, the directors would be the biggest laughing stock on the asx.


----------



## banska bystrica (19 July 2009)

mikes said:


> expect any restructure will require 75% vote of beppa holders to amend constitution, and do not see any vote getting up.




Difficult to say the vote would not get up until you see what the new offer/terms are.
Some sort of restructure proposal is a near certainty in my opinion.

BBI cannot afford to take the huge risk that BEPPA holders could in fact control the company in 2012 if they all convert.


----------



## nathanblack (19 July 2009)

hardyakka said:


> The wild card is will the purchaser negotiate a deferred settlement arrangement, say over 3 instalments. I would not be surprised if they did so.




i agree this is on the cards. at the very least i would expect the sale price of DBCT to be at the lower end of expectations, then linked with performance payment for the next 3 years. eg $2.4bil cash now and a bonus of $200mil in 12months if a certain capacity is achieved, possibly followed up with another performance based payment in 24months time.

with the uncertainty of corus, and tesco not online yet, and the power station approved, i would expect similar sale structure for PD Ports. say $400mil upfront, if tesco impoves earnings like we expect a further bonus payment will be made. the final price will be fair withe the bonus payments made.

With DBCT a discount may occur if a quick settlement can be reached, or atleast condition precedence, followed by large $500mil downpayment to help takecare of sparcs. the other assets like europort which should settle before sparcs due is simply too small to make a difference.

my guess is dbct wont get us the cash in time, but if the deal is rock solid, with a deposit, and the numbers stack up, im sure the banks will give us a bridging facility to temporarily deal with sparcs. OZL got several extensions and bridging finance when it was obvious that minmetals would buy there assets.

if money was tight, i would consider offering sparcs holders the opportunity to convert up to a maximum of 50% of there holdings to cash, while the other 50% would convert to script. you would assume everyone would take the maximum cash on offer. this would eliminate 50% dilution and mean BBI need 50% less cash.

i think it would be acceptable to banks, sparcs, and bbi holders.


----------



## nathanblack (19 July 2009)

banska bystrica said:


> Difficult to say the vote would not get up until you see what the new offer/terms are.
> Some sort of restructure proposal is a near certainty in my opinion.
> 
> BBI cannot afford to take the huge risk that BEPPA holders could in fact control the company in 2012 if they all convert.




the terms would need to be hugely stacked in BEPPA holders side. with interest payments on hold, i doubt i will care much if they offered a 2year extention til 2014 at an increased interest rate of 2%.

most people bought the stock as a speculative punt, knew divs were on hold, but expecting medium term oportunity to sell out with capital gain (say circa 30c) on market or keep til maturity and get $1odd(3years).

any offer/terms would need to increase the BEPPA price and provide on market sell oportunity, because few of us entered into this one long term. increasing the dividend rate on a deffered basis and extending maturity is unlikely to do so, infact i think price would suffer.

for me personally, the offer would at minimum need to return my initial outlay. so if the offer involved a cash payment the covered my entry cost + holding/opportunity cost then i would consider. perhaps some cash + BBI share i could sell. ofcourse if dividends get re-instated before any rollover attempt, everything changes.


----------



## banska bystrica (19 July 2009)

nathanblack said:


> i agree this is on the cards. at the very least i would expect the sale price of DBCT to be at the lower end of expectations, then linked with performance payment for the next 3 years. eg $2.4bil cash now and a bonus of $200mil in 12months if a certain capacity is achieved, possibly followed up with another performance based payment in 24months time.




The income is regulated. It matters nought whether one ship turns up. 
You might also be disappointed on the BEPPA arrangements too if your realistic hopes are what you posted. If you are in for a quick buck on BEPPA, you're in the wrong investment. The Directors will not be concerned with those who have entered BEPPA at current prices. An individual's entry price is irrelevant to the company.


----------



## banska bystrica (19 July 2009)

nathanblack said:


> With DBCT a discount may occur if a quick settlement can be reached, or at least condition precedence, followed by large $500mil downpayment to help take care of sparcs.




Again, you are forgetting the bank sweep. Any proceeds from DBCT will be going to corporate debt and NZ Network Bonds. SPARCS don't rate equally. C'Mon guys, it's not rocket science.


----------



## nathanblack (19 July 2009)

banska bystrica said:


> The income is regulated. It matters nought whether one ship turns up.
> You might also be disappointed on the BEPPA arrangements too if your realistic hopes are what you posted. If you are in for a quick buck on BEPPA, you're in the wrong investment. The Directors will not be concerned with those who have entered BEPPA at current prices. An individual's entry price is irrelevant to the company.




it may be regulated, but building/expanding a port and stating it can handle X throughput doesnt make it so. i would factor that in to any purchase agreement. if 85 capacity cant be delivered then no bonus payment. if it is shown that it can operate at 85 or even more then a final payment will be made.

i know the directors arent concerned with my entry price, but im pretty sure few people will accept a deal that sees NO return past 2012. NO dividend and flat growth. People bought this share expecting a return in 2012, if earlier great, but at worst in 2012.

unless they can get me some of my money back by 2012, then i will not be accepting any rollover. like i said a rollover by 12-24months to 2013/14 would be hugely detrimental to BEPPA trading price. and instead of concern over survival to 2012 we suddenly need BBI to survive longer.

May be good for BBI but not BEPPA.


----------



## nathanblack (19 July 2009)

banska bystrica said:


> Again, you are forgetting the bank sweep. Any proceeds from DBCT will be going to corporate debt and NZ Network Bonds. SPARCS don't rate equally. C'Mon guys, it's not rocket science.




not forgetting the sweep. i think a bank will lend BBI the required funds(for sparc), but the deal (dbct sale)would want to be rock solid, ie a huge deposit of say $500mil.

then when proceeds of euroports and dbct are settled, all asset level debt will be repaid and AS MUCH corporate debt as possible. this includes the bonds. we may be left with some corporate debt as a result of borrowing for sparcs, but sparcs will be eliminated.

thats why i propose only borrowing for a cash redemption of 50% sparcs, the rest in BBI script.  share buybacks ans SPP work that way, ie the company elect how many shares or value they want to buy back. just send a letter to all sparcs holders offering conversion in november at $1. a maximum of 50% per holding can be taken as cash, the remainder must be taken as BBI script.

that offers the best of both worlds. 
we get rid of sparcs...good
dilution of BBI...yes but not maximum amount
debt to repay sparcs...yes but only 50% not 100%, good outcome for sparcs holders to recieve some cash, requires banks to lend for sparcs but also improves balance sheet as 50% is converted in BBI(banks should be ok) and good for BBI to eliminate sparcs and not suffer total dilution and EPS.


----------



## nathanblack (19 July 2009)

banska bystrica said:


> You might also be disappointed on the BEPPA arrangements too if your realistic hopes are what you posted.




you think circa 30c for beppa is unrealistic short term? i would hope that post dbct sale and post sparcs(november) 30c is very realistic. after all it almost irrelevant how sparcs is dealt with to beppa. if BBI is diluted by 100% sparcs thats even better for beppa.

can i ask why you are in BEPPA if you think 30c is unrealistic in a 5-6month timeframe? and what do you consider realistic? surely your in it to make profit.

or is it the rollover/conversion terms you find unrealistic? i think if dividends aren't re-instated(which isnt going to happen near term), then any EARLY conversion will require a cash component. i would like atleast 10c cash before i accept any offer(this will return my initial outlay), especially if BEPPA are trading circa 30c at that time.

as far as rollover, i dont see much point(for BBI) in rolling over for only 12months, so im GUESSING it would be 24 months(til 2014). if that were the case then an increased dividend(which we arent even recieving) wont be enough. the Beppa price will go south(if it was at 30c at time of offer) if the mature date suddenly went from 2012 to 2014.

same applies if Beppa were circa 20c.


----------



## nathanblack (19 July 2009)

also most my thoughts are based on a restructure, meaning the elimination of BEPPA as aposed to a rollover of terms. any capital raising via a BEPPA style listed debt or BBI securities would requie beppa out the way.

BBI cant issue a higher ranking debt than Beppa. would you buy a new debt issue for $1/share that ranks equally or lower than beppa? NO

and no insto would buy a large placement of BBI at current prices or at 20c post rebound, knowing that Beppa ranks above them and that beppa could dilute there holdings.

so capital raising = beppa must go. not be postponed by 1 or 2 years.

the closer we get to 2012, the closer to $1 i expect.


----------



## random (19 July 2009)

Yes, the closer to 2012 beppa will surely be hitting the $1 mark - how can it not. Although i am not eliminating a proposal from management before that which could be accepted. I'm with nathanblack with a 30c price on beppa's after a dbct sale too - surely.


I would also be very surprised if beepa holders delayed redemption any longer than 2012 - just can't see it regardless of interest rate offered.

A point of clarification. I still think that dbct is the jewel at this time but certainly agree that NGPL is the potential jewel.


----------



## nathanblack (19 July 2009)

random said:


> A point of clarification. I still think that dbct is the jewel at this time but certainly agree that NGPL is the potential jewel.




i guess it comes down to growth potential. DBCT has further expansion available, but its limited. so its basically capped.

NGPL has more growth potential. if they were both sold today, DBCT would probably just have an edge in price. But in a few years time perhaps NGPL will be worth more.

both great assets, and we needed to keep one to remain an ongoing business with potential to build around.


----------



## random (19 July 2009)

banska bystrica said:


> I would consider $2.7Bn rock bottom and closer to $3Bn as a reasonable price.
> If $1Bn of corporate debt is extinguished, PD Ports sells for 450GBP and the Euroports conditions precedent are met, then that should be all that is required regarding asset sales.
> Then we should see an improving BBI price to around 25c which then opens up the door to restructure BEPPA.




In your head banska bystrica what time frame is this to be fulfilled?
Does it have anything to do with your scenario of 35c and a 2:1 by any chance (being made in 2009/ 10) or is it a insiders insight or just a excursion into ........? - regarding the restructure that is.


----------



## banska bystrica (19 July 2009)

random,
I'm thinking sometime this financial year. The 35c + 2 BBI was just an example of what could be possible once corporate debt is all but gone. It could be 20c + 2.5 BBI. Something that eliminates the chance of massive dilution in 2012 and also saves them paying out $800M in cash (which they are unlikely to have in 2012).
Management have to tread a fine line between paying down debt and also keeping enough assets and free cashflow to grow the company beyond 2012.

nathan,
I think an extension of BEPPA maturity past 2012 has got two chances of happening. Buckley's and none.
When I am talking restructure, I am talking in terms of a partial cash offer and some conversion of debt to equity. It is a winner for both BBI holders and BEPPA holders.


----------



## nathanblack (19 July 2009)

banska bystrica said:


> random,
> I'm thinking sometime this financial year. The 35c + 2 BBI was just an example of what could be possible once corporate debt is all but gone. It could be 20c + 2.5 BBI. Something that eliminates the chance of massive dilution in 2012 and also saves them paying out $800M in cash (which they are unlikely to have in 2012).
> Management have to tread a fine line between paying down debt and also keeping enough assets and free cashflow to grow the company beyond 2012.
> 
> ...




agree. i cant see a rollover of terms either. but a buyback is on the cards. my thinking of a restructure is the same as yours, it will happen sooner or later to allow for a capital raising.

but i still think 30c is REALISTIC post dbct sale. and i still think most people would want a cash component. my logic says cash component should be equal to atleast 10c. this would most likely cover the entry price of most current holder. original holders might not be impressed but how many still exist.

but the longer they wait, the nearer to 2012 and $1 we get. the offer will need to increase linearly the nearer we get.


----------



## banska bystrica (19 July 2009)

One last chance to buy BEPPA and BBI so cheap. That is, if Euroports fails to settle. In my opinion, you will then see a basket case of a BBI price (2-3c) and BEPPA down around 6c. A big IF, but if it happens I will be buying BBI at 3c or less with plenty of ammunition.


----------



## nathanblack (19 July 2009)

banska bystrica said:


> One last chance to buy BEPPA and BBI so cheap. That is, if Euroports fails to settle. In my opinion, you will then see a basket case of a BBI price (2-3c) and BEPPA down around 6c. *A big IF*, but if it happens I will be buying BBI at 3c or less with plenty of ammunition.




Agreed. Big IF. Wont happen.

Don't agree with the consequences IF it did happen though. Sure it wont look good for management being able to broker deals and deliver on promises, which is a huge negative. The loss of faith in management might result in a loss of say 30% SP (bbi/beppa).

But its a small sale in the scheme of things, the proceeds once asset level debt is repaid are insignificant to corporate debt. So not selling it wont have a material impact, we can keep it on market and sell when a new offer is recieved or concentrate on moving a different asset like westnet rail.

Even that will be somewhat determined by timing. Afterall the dbct announcement is due around same time. If BBI came out and said we just sold 100% DBCT for $2.8bil, and oh yeah btw the euroports sale is off now. The net result would still be positive.

Clearly the only way this SP is going down that hard is if DBCT doesnt sell or sells for peanuts. I just dont see it happening.


----------



## banska bystrica (19 July 2009)

What about the financial consequences if Euroports doesn't settle? Put options obligation circa $100M? Plus refund of $75M deposit monies? That would crush sentiment in the short term. 3c would be a formality for the head stock in my opinion.


----------



## nathanblack (19 July 2009)

banska bystrica said:


> What about the financial consequences if Euroports doesn't settle? Put options obligation circa $100M? Plus refund of $75M deposit monies? That would crush sentiment in the short term. 3c would be a formality for the head stock in my opinion.




Ageed. Not great. But BBI has $50mil after sweep, so im sure the $75mil wouldnt be an issue and the put option hasn't been exercised and can always be renegotiated.

IMHO euroports can only have been extended for 1 of 2 reasons:
1. the sale will go ahead possibly with a tweak to price or % OR;
2. it wont go ahead(unlikely), but BBI know that the month extension is enough for DBCT sale to be finalised/announced.

If DBCT goes, then do you still consider the Euroports deposit and put option as significant to SP? Surely they will have access to the required funds, and surely the positive would far outweigh the negative.


----------



## banska bystrica (19 July 2009)

_"On 12 July 2007, Euroports Holdings S.a.r.l entered into a shareholders agreement with the minority
investors who were the previous owners of the Manuport Group. Euroports Holdings S.a.r.l owns 75% of
Benelux Port Holdings S.A, whilst the minority investors own the remaining 25%. Benelux Port Holdings
S.A was then used as the entity to purchase Manuport Group NV, Westerlund Group NV and CTB
Magemon. As part of the shareholders agreement, a put option arrangement was entered into.
The put option gave each of the minority investors the right, but not the obligation, to sell all or part of
their shares in Benelux Port Holdings S.A to Euroports Holdings S.a.r.l. The put option could be
exercised between 18 months and 10 years after the date of signing the shareholders agreement. The
put option exercise price is calculated at the time the put option is exercised, based on a formula
contained in the shareholders agreement.
In February 2009, the minority investors purported to exercise the put option and Euroports Holdings
S.a.r.l and the minority investors are currently implementing the expert determination process set out in
the shareholders agreement to determine the exercise price applicable to the put option. Once the
exercise price is determined and accepted, Euroports Holdings S.a.r.l has ten business days to make
the appropriate payment. As at the date of this Notice of Meeting and Explanatory Memorandum, the
exercise price has yet to be determined.
Whilst it is expected that this commitment will be funded from the proceeds of the Euroports share
subscription agreement when that transaction closes, there is a risk that the amount determined as
payable under the expert determination process is such that the proceeds from the Euroports share
subscription agreement is insufficient to meet the amount payable. If this proves to be the case, then
BBIL will be liable under the share subscription agreement to indemnify the two incoming investors in
respect of any amount payable under the put option in excess of the proceeds provided under the share
subscription agreement.
If the transaction under the share subscription agreement does not complete, Euroports will not have
sufficient cash to meet the obligation under the put option and this could lead to a winding up of the
Euroports business if other arrangements cannot be agreed with the holders of the put option."_

_"Exclusivity deposit
Euroports Holdings S.a.r.l. also entered into an exclusivity agreement with one of the investors under the
share subscription agreement, Babcock & Brown European Infrastructure Fund. Under the terms of the
exclusivity agreement, a refundable deposit of â‚¬35.0 million ($71.2 million) was paid to Euroports
Holdings S.a.r.l.
The obligations of Euroports Holdings S.a.r.l., including the obligation to repay the deposit in the event a
sale of Euroports does not proceed, were guaranteed by BBIL. Babcock & Brown European
Infrastructure Fund was also subsequently granted a fixed and floating charge over the assets of
another BBI Group company, BBI Europe Holdings Pty Ltd, which indirectly owns all of BBI’s interests
in Euroports.
The amount of the deposit is expected to be repaid upon completion of the transaction under the share
subscription agreement.
If the transaction under the share subscription agreement does not complete, Euroports will not have
sufficient cash to repay the deposit and Babcock & Brown European Infrastructure Fund may have
recourse to either or both of the fixed and floating charge and the BBIL guarantee."_


----------



## banska bystrica (19 July 2009)

What did Euroports do with the deposit monies seeing they do not have it if the deal does not settle? I would have thought a refundable deposit would be put in trust until settlement.


----------



## nathanblack (19 July 2009)

banska bystrica said:


> _
> The put option could be exercised between 18 months and 10 years after the date of signing the shareholders agreement. The put option exercise price is calculated at the time the put option is exercised, based on a formula
> contained in the shareholders agreement.
> 
> ...




I would say there is little gain for the put holder to force payment in the event the sale falls through. Its sure to be re-negotiated. Besides, it will sell.

EDIT: the deposit was swept, but BBI have access to $50mil anytime. im sure they can redraw the rest.


----------



## banska bystrica (19 July 2009)

Are you saying the deposit was swept by the banks? That is incredible. They would sweep a deposit that is subject to a sale that hasn't settled yet.


----------



## hardyakka (19 July 2009)

Before we can talk of a restructure we need be aware that the vast majority of BEPPA holders ie instos etc bought in at face value, so would do the utmost to avoid any capital loss. 

Secondly any restructure deal has to be offered to all holders and all would have the right to vote, the fact that some bought in at a few cents and others at face value of $1 is irrelevant. But then subject to ASX LR requirements there is nothing to stop BBI buying a percentage of BEPPA back on-market.

IMO I see a restructure as involving equity, cash and debt. For example say 30 cents cash, 2 or 3 BBI and 25% of BEPPA being refinanced at market rates with a 5 year extended deadline. Such a proposal would be interesting because it provides immediate liquidity to BEPPA holders (and a profit), gives them exposure to the riskier equity upside and hedges this with a % of BEPPA as long term debt with its current priority. For BBi it removes debt at a discount,the threat of massive dilution and holds a much smaller component of debt at corporate level.

If a DBCT sale is transacted at circa $2.8B then that resolves the SPARCS issue, bank debt and removes the pressure to fire sale Euroports and PD Ports. The latter especially I would like to see BBI retain. A failed Euroports along with a successful DBCT sale is four paces forward, one step back. Not desirable but not the end of the world. Like most I am simply waiting for the announcement and watching trading patterns.

There is a totally different way BEPPA can be dealt with. Rather than have BEPPA sitting as debt at the corporate level. It could be associate with a single asset, namely NGPL. Now this does give up some security, but what if the return on BEPPA was amended so that it included an equity component (both income and capital) arising from the performance of NGPL AND an undertaking from BBI that a certain percentage of income would be applied in reducing the first ranking bank debt over NGPL. 

Then you would have BEPPA moved to the asset level with exposure to the performance of that asset (which we agree is exceptional) whilst at the same time the bank debt on that asset is being reduced thus increasing the security of the BEPPA charge over the asset. Any such arrangement may include an option for BBI to buy out BEPPA holders upon payment of its full redemption value, in the mean time BEPPAs returns are enhanced.

Food for thought.

Cheers


----------



## banska bystrica (19 July 2009)

Agree with those thoughts re: DBCT sale at circa $2.8Bn and the effects thereafter.
Also agree we will most likely see a BEPPA restructure sooner rather than later and the options you presented are all possibilities.
BTW, you have a PM.


----------



## hardyakka (19 July 2009)

Regarding the Euroports deposit the transaction was incomplete and BBI had no right to the funds. So if the banks have swept that deposit as part of the sweep I am pretty certain that a smart lawyer would be able to establish a case that BBI may have had possession of the deposit, however it did not have ownership because a binding contractual commitment had not been entered into. As such BBi did not have beneficial ownership and title to the funds and the banks had no right sweeping monies that did not belong to BBI. 

Cheers


----------



## random (19 July 2009)

I like the proposal hardyakka.

The most subtle way of management dealing with beppa though is clawing back drip by drip beppa on the market though. Sure that is slow, as not many are being offered, but what a saving for them in the long run at these prices. Yeh, i know there are more pressing immediate priorities but what great value for each $ spent.

I know this idea has been mentioned previously and apologies for not giving credit to who raised it initially.


----------



## banska bystrica (19 July 2009)

I find it incredible that the Directors would have allowed the banks to sweep that money that did not legally belong to BBI. I have never received a satisfactory answer to that whole Euroports deposit question when I have spoken to BBI IR dept. I have emailed the CFO as well and it is the only time I have never received a response. The way IR talk, you would think BBI were trading at $1.50 and the financial world has not changed. Overall, I find the CFO much more realistic.


----------



## hardyakka (19 July 2009)

banska bystrica said:


> I find it incredible that the Directors would have allowed the banks to sweep that money that did not legally belong to BBI. I have never received a satisfactory answer to that whole Euroports deposit question when I have spoken to BBI IR dept. I have emailed the CFO as well and it is the only time I have never received a response. The way IR talk, you would think BBI were trading at $1.50 and the financial world has not changed. Overall, I find the CFO much more realistic.




I agree, I will ring her tomorrow and ask:

a) is the deposit held separately in a trust account or does it form part of the monies swept by the banks.
b) if no binding contractual arrangement exists and BBI does not have beneficial ownership of those funds do BBI intend upon recovering it from the banks should it need be refunded.
Will post when I can.

Cheers


----------



## nathanblack (19 July 2009)

banska bystrica said:


> I find it incredible that the Directors would have allowed the banks to sweep that money that did not legally belong to BBI. I have never received a satisfactory answer to that whole Euroports deposit question when I have spoken to BBI IR dept. I have emailed the CFO as well and it is the only time I have never received a response. The way IR talk, you would think BBI were trading at $1.50 and the financial world has not changed. Overall, I find the CFO much more realistic.




its largely irelevant if it was swept or not. the bank sweep doesnt take all BBI cashflow. it leaves enough for operating expenses. so if BBI need the money for euroports deposit refund, next sweep the amount will be left.

in the mean time we saved interest charges.


----------



## hardyakka (19 July 2009)

nathanblack said:


> its largely irelevant if it was swept or not. the bank sweep doesnt take all BBI cashflow. it leaves enough for operating expenses. so if BBI need the money for euroports deposit refund, next sweep the amount will be left.
> 
> in the mean time we saved interest charges.




I do not agree Nathan.

If the deal falls through due to the banks sweeping monies that they should not have, then that creates a short term liquidity problem. Ignoring the effect on sp due to a crisis of confidence, it would mean BBI needs borrow funds at penalty rates or firesale an asset to raise funds.

If that occurred then I would seriously start to question the RE board. Also if they allowed the fund to incur a loss through an error, ie by allowing funds BBI did not own to be swept, and incurring a loss by fire saling an asset then they are at risk as they must make good that loss. They would have breached their fiduciary duty and RE directors are jointly and personally liable for compliance with the financial services laws, which includes the Corps Act.

I doubt the RE would permit such an issue to arise.


----------



## mikes (19 July 2009)

who are /were the owners and directors & managers of B&B Europe Holdings Pty Ltd and B&B Europoean Infrastructure Fund and surely there would not have been any properly undisclosed association with B&B and associates or related party transactions which have not been approved by bbi holders.


----------



## drsmith (19 July 2009)

hardyakka said:


> It also does not mean that they cannot sell at or above book, especially considering the additional revenue streams coming online for PD Ports.
> 
> Quasi-administrators, that I will put in the same category as the beloved death spiral. An entity either* is or is not* in administration. To my limited knowledge BBI is not, so any talk about quasi, pseudo, partial, thingymajig administration is simply a pile of horse manure.
> 
> Cheers



With regard to the origin of the term Quasi-administraton, go back to the first post on page 80. 

With regard to the directors objectives let's not forget that this was born in the Babcock and Brown stable of irrational exuberance. The directors will first of all look after their own pay packets and will hop into bed with the lenders at unitholder expense if necessary to keep their jobs.

One need look no further than Centro as an example of this. It's still alive but the banks are hoovering up all the cash flow and shareholders have been very heavily diluted. Babcock and Brown's directors also managed to keep their jobs as part of their formal administration IIRC.


----------



## nathanblack (19 July 2009)

mikes said:


> who are /were the owners and directors & managers of B&B Europe Holdings Pty Ltd and B&B Europoean Infrastructure Fund and surely there would not have been any properly undisclosed association with B&B and associates or related party transactions which have not been approved by bbi holders.




BBI have sold assets or parts of assets previously in the same fashion. Some USA assets were offloaded to a private non-listed BBI Fund. Its all legit and above board. Its how BNB and many satelites have made money in the past. Buy assets, break them up, sell individual assets or stakes to an unlisted subsiduary and float the subsiduary or seek private equity.

All the while adding a premium to the price and collecting management fees.

But what would i know? I consider myself in quasi administration at the moment


----------



## banska bystrica (19 July 2009)

drsmith said:


> With regard to the origin of the term Quasi-administraton, go back to the first post on page 80.




I stand by that 100%. When a forced bank sweep is in place, you are in quasi administration. It doesn't mean you are history. It doesn't mean investors cannot make a fortune out of it. 

Now drsmith, myself and others are still waiting with baited breath for some concrete figures that back up your opinion. If you cannot provide figures, your opinion is not worth very much even though you are entitled to have one.
I suspect your knowledge of the BBI fundamentals are so lacking that you don't have figures to back your opinion up. Prove me wrong.


----------



## Viva_Las_Vegas (19 July 2009)

BB,

In your post you mentioned the following:

"I think an extension of BEPPA maturity past 2012 has got two chances of happening. Buckley's and none.
When I am talking restructure, I am talking in terms of a partial cash offer and some conversion of debt to equity. It is a winner for both BBI holders and BEPPA holders."

I appreciate what you are saying in terms of BBI holders winning by dilution being minimised, and BEPPA winning (well patrly) if there was a partial cash payout, subsidised with BBI shares.

My question is once PD ports is sold, then DBCT.... what does BBI have left? Westnet rail (which needs work), a % of ownership in NGPL..... essentially it is a company with little or no debt but missing many of the great assets that it once had as a result of the GFC.

So this is why I am wondering why I would want to accept part cash/part stock conversion for my BEPPA units in a restructure of BEPPA. If this ever happens.

In your opinion, and based on your research would you want to be the owner of shares in BBI post asset sales?

I understand that if I am wrong, and that if BBI can still perform then technically the BBI SP will have an infinite upside in price, as opposed to the finite upside of BEPPA at $1.20

Ofcourse all such proposals would have to pass in a vote. I personally would be happy to wait till 2012 for $1.20 or even roll over till 2015 with appropriate interest added on top.


----------



## nathanblack (19 July 2009)

Viva_Las_Vegas said:


> Ofcourse all such proposals would have to pass in a vote. I personally would be happy to wait till 2012 for $1.20 or even roll over till 2015 with appropriate interest added on top.




You can always sell your BBI shares immediately or shortly there after to realise cash for them.

rolling over to say 2015 seems stupid to me. like you said not too many assets left after sales. will BBI still be around and healthy in 2015? whats the point of an increase dividend for beppa if its deffered?

its a safer bet to say BBI will survive til 2012 than 2015. i suspect it will be around for both, but obviously 2012 is more likely(less risk).

EDIT: Welcome back from your self imposed ban


----------



## banska bystrica (20 July 2009)

Viva_Las_Vegas said:


> My question is once PD ports is sold, then DBCT.... what does BBI have left? Westnet rail (which needs work), a % of ownership in NGPL..... essentially it is a company with little or no debt but missing many of the great assets that it once had as a result of the GFC.




VLV,
The remaining assets (if DBCT and PD Ports are 100% sold) would be generating approximately $800M in EBITDA.
Now, tell me if you have a company that is debt free at the corporate level generating EBITDA of >$800M, don't you think that is a very good position to be in considering the mess we have witnessed over the last 12 months?



Powerco	81
IEG		96
CSC	        22
Westnet Rail	 75
Alinta			187
NGPL			240
Euro Ports		116

If that eventuates and they restructure BEPPA to avoid massive dilution in 2012, you will see BEPPA at a huge premium to the current price and BBI a decent multiple of the current 7c.


----------



## Viva_Las_Vegas (20 July 2009)

BB,

Thank you. I agree with you.

NATHANBLACK:
Nice to be back from the self-imposed ban!! The judge went easy on me this time!


----------



## Mitsimonsta (20 July 2009)

With talk of the restructuring of BEPPA...... would the currently outstanding distribution payments (somewhere around 5c now) be paid out prior to any restructure, or would they be a part of any restructure?

It is my position that any deferred distribution plus accumulated interest be paid to BEPPA holders prior to any restructuring proposal being made to BEPPA holders.


----------



## banska bystrica (20 July 2009)

What's the difference?

1. We'll pay the 5c owing and offer you 30c + 2 BBI securities or

2. We will not pay accumulated interest but offer BEPPA holders 35c + 2 BBI securities.

Does it really matter?


----------



## Mitsimonsta (20 July 2009)

Well, the only thing I am suggesting is that BEPPA holders might be more amenable to a restructuring if they are paid the deferred distribution before the terms are offered.


----------



## banska bystrica (20 July 2009)

Mitsimonsta said:


> Well, the only thing I am suggesting is that BEPPA holders might be more amenable to a restructuring if they are paid the deferred distribution before the terms are offered.




Perhaps, but any deal will come down to what the Top 20 BEPPA holders agree to as they own 80% of the BEPPAs. I have three separate holdings but combined I think I am in the Top 20. I am sure BBI will canvass the Top 20 prior to making a final decision on what the new terms will be. This assumes they are indeed seriously thinking about a restructure. According to the Fin Review they are, so where there's smoke there's fire.


----------



## banska bystrica (20 July 2009)

Mitsimonsta said:


> Personally, I would prefer not to hold any BBI post-BEPPA as I believe the value will be very, very low.




You may be correct but I beg to differ. I think a corporate debt free BBI with BEPPA restructured (and therefore huge dilution potential gone) will make an enormous difference to the BBI security price.
Say the restructure does involve issuing 2 BBI for every BEPPA plus some cash.
The BBI on issue after this would be approximately 4.2Bn securities.
Corporate debt nil, no further dilution and EBITDA of approximately $800M per annum. Interest expense on Corporate debt gone (saving approx $100M per annum in interest alone). Therefore, you then have the very realistic prospect of BBI distributions being reinstated. EBITDA of $800M and EPS of even 4c per share would put BBI at 32c (assuming a P/E of 8). Doesn't sound too shabby at all to me.
BEPPA a huge winner and BBI a huge winner for those who bought the stock over the past six months.


----------



## Mitsimonsta (20 July 2009)

banska bystrica said:


> Perhaps, but any deal will come down to what the Top 20 BEPPA holders agree to as they own 80% of the BEPPAs.




Well, they need to be sure that whatever is proposed will pass. they do not want another SPARCS.



banska bystrica said:


> I have three separate holdings but combined I think I am in the Top 20. I am sure BBI will canvass the Top 20 prior to making a final decision on what the new terms will be.



Undoubtedly. I think you would be the largest holder here by quite a margin now. There are a few decent holders of BEPPA around here.

Even at 30c per unit, I would have to think that your cash component of any restructuring would have to be well over 7 figures. I assume that the CG considerations would have to make an impact on your decision of wether to accept or reject any proposed restructure. 



banska bystrica said:


> This assumes they are indeed seriously thinking about a restructure. According to the Fin Review they are, so where there's smoke there's fire.



I have not seen anything about that but then again I do not read AFR every day. If you could nudge me towards that info then I would appreciate it.

--

I know you hold exponentially more Units than I do BB, but I am holding $31K worth of debt which I was able to purchase at over 90% discount.

Now 5c over 31K units is a reasonable amount of money to me - it could be much better in my pocket and invested somewhere else. I want to be buying into other stocks NOW while there is excellent value out there.

Consider: if the average entry price of most smaller BEPPA holders is 10c, and the 5c distribution is paid.
(We will forget the Top 20's for now)

1) half that initial average investment has come back. You could say that then BEPPA owes you 5c.

2) 30c is then offered as a restructure of BEPPA. This makes a 6x bagger on the average entry.

3) Any extra BBI is pure bonus - you would treat it like a stock that you have doubled up on and sold half. Just let it run as profit and owing you nothing.

Personally, I would prefer not to hold any BBI post-BEPPA as I believe the value and returns will be very, very low.

Please take into account that I purchased BEPPA as a Capital Gains vehicle to expand my portfolio. The profits were always going to be reinvested elsewhere. I am pretty sure that I have mentioned this before, both publicly and privately.

--

Sorry, moved the crux of my argument, however:



banska bystrica said:


> BEPPA a huge winner and BBI a huge winner for those who bought the stock over the past six months.




BEPPA - I totally agree or I would never have bought it. BBI - Unsure of this just yet. If it does do what you mention (SP of ~32c) then I would more than likely sell at least half of them to fund other investments.


----------



## banska bystrica (20 July 2009)

Mitsimonsta said:


> BEPPA - I totally agree or I would never have bought it. BBI - Unsure of this just yet. If it does do what you mention (SP of ~32c) then I would more than likely sell at least half of them to fund other investments.




I'm with you although I would probably exit the entire BEPPA/BBI portfolio if "best case" scenario eventuated. It is a long way from that right now. I entered this play as a massive risk/reward potential I had not seen for decades..... not because I am in love with BBI. The calculated risk has been taken and therefore, if the reward is realised, the mission is complete once the chips are cashed in. Lots of IF's still there. The play is a long way from coming off.


----------



## banska bystrica (20 July 2009)

Mitsimonsta said:


> Undoubtedly. I think you would be the largest holder here by quite a margin now. There are a few decent holders of BEPPA around here.




What anyone holds is irrelevant. It's all relative. For all I know, your smaller holding might be a larger percentage of your entire net worth than mine is. I only commented about my holding in the context of possibly being canvassed prior to any restructure being decided.


----------



## banska bystrica (20 July 2009)

Let's all just see what happens with Euroports in two weeks. That has the potential to completely decimate the sentiment and in my opinion we would see the BBI and BEPPA prices smashed on any news that the Euroports deal is off.


----------



## Mitsimonsta (20 July 2009)

banska bystrica said:


> I'm with you although I would probably exit the entire BEPPA/BBI portfolio if "best case" scenario eventuated. It is a long way from that right now. I entered this play as a massive risk/reward potential I had not seen for decades..... not because I am in love with BBI. The calculated risk has been taken and therefore, if the reward is realised, the mission is complete once the chips are cashed in. Lots of IF's still there. The play is a long way from coming off.



Exactly. 

In my '10c average entry' example, it's worth getting out completely. There is no guarantee of a SP of 32c for BBI, and even IF it does get to that, it could be 2 years or more for it to happen.

I do note however, 30c cash + 2x BBI (at 32c) = $1.01 and much closer to the ballpark.

Trust me, if they pay out the distributions owed, and then throw up 35c + 2.5x BBI per BEPPA, then they *MIGHT* be onto a winner.



banska bystrica said:


> What anyone holds is irrelevant. It's all relative. For all I know, your smaller holding might be a larger percentage of your entire net worth than mine is. I only commented about my holding in the context of possibly being canvassed prior to any restructure being decided.




No, it's nowhere near a greater percentage of my net worth than yours. BEPPA is ~27% of my portfolio value now. I doubt I will add to it now, I have other targets in mind.

I only mentioned it as you have basically put your money where your mouth is and put quite an amazing amount of money into BEPPA (and made all the right trades I hasten to add).



banska bystrica said:


> Let's all just see what happens with Euroports in two weeks. That has the potential to completely decimate the sentiment and in my opinion we would see the BBI and BEPPA prices smashed on any news that the Euroports deal is off.



Agreed. If the two SP's do get smashed (and well below my Av. Buy of 8.4c) then I would consider topping up with some more. I'd like to have 50K units of BEPPA.


----------



## hardyakka (20 July 2009)

Mitsimonsta said:


> Agreed. If the two SP's do get smashed (and well below my Av. Buy of 8.4c) then I would consider topping up with some more. I'd like to have 50K units of BEPPA.




If the BEPPA price gets savaged due to Euroports before the DBCT announcement then that will open a very brief buying opportunity.


----------



## nathanblack (20 July 2009)

hardyakka said:


> If the BEPPA price gets savaged due to Euroports before the DBCT announcement then that will open a very brief buying opportunity.




I suspect if Euroports IS bad news, then BBI will time the DBCT announcement to be prior or at same time as Euroports to avoid that scenario.

I've got funds put aside just incase.


----------



## banska bystrica (20 July 2009)

nathanblack said:


> I suspect if Euroports IS bad news, then BBI will time the DBCT announcement to be prior or at same time as Euroports to avoid that scenario.




Cannot happen as DBCT are not even at the second round of bids yet. Any offer for DBCT is probably at least 4-6 weeks away.

I suspect Euroports will not settle by July 31, there will be a bloodbath and we will have a window of opportunity to load up for more at very cheap prices. That's my opinion anyway. Looking for BBI around 2.5c/3c and BEPPA around 6/7c.


----------



## nathanblack (20 July 2009)

banska bystrica said:


> Cannot happen as DBCT are not even at the second round of bids yet. Any offer for DBCT is probably at least 4-6 weeks away.
> 
> I suspect Euroports will not settle by July 31, there will be a bloodbath and we will have a window of opportunity to load up for more at very cheap prices. That's my opinion anyway. Looking for BBI around 2.5c/3c and BEPPA around 6/7c.




i hope your right, but im not confident enough to sell my holding now and re-enter IF it falls to those levels. With about $60k worth, the risk of miss timing the situation and selling now and then not getting a rebuy oportunity far outways my rewards for just holding.


----------



## banska bystrica (20 July 2009)

nathanblack said:


> i hope your right, but im not confident enough to sell my holding now and re-enter IF it falls to those levels. With about $60k worth, the risk of miss timing the situation and selling now and then not getting a rebuy oportunity far outways my rewards for just holding.




For sure. I agree it is very risky to be selling now and hoping to buy back cheaper. I am not selling any BEPPA. Whilst my gut feeling is that Euroports will not settle, I could very well be wrong therefore I am sitting tight.


----------



## banska bystrica (21 July 2009)

People need to be aware of the short term downside here. Do not under-estimate the potential downside if Euroports does not settle. I'm not being alarmist. I just don't want to see people whinging and carrying on if we see BBI and BEPPA down near the November lows. If it doesn't happen, well and good. We then move on and await DBCT news.


----------



## nathanblack (21 July 2009)

banska bystrica said:


> People need to be aware of the short term downside here. Do not under-estimate the potential downside if Euroports does not settle. I'm not being alarmist. I just don't want to see people whinging and carrying on if we see BBI and BEPPA down near the November lows. If it doesn't happen, well and good. We then move on and await DBCT news.




great post. i agree. be alert not alarmed. expect the worst but hope for the best.

my gut still says an announcement(not settlement) RE: DBCT will happen about the same time, hopefully just before, and the good news will offset the bad. could be wrong though.

and certainly no news from DBCT and bad news from euroports will be a huge blow, and if its followed up by disappointing news from dbct we will be in for a rough ride. then followed up again by sparcs conversion.

if anything atleast we will see some volatile times, and people need to be aware they could make or LOSE 50% in a week. so better prepare yourselves now and decide an exit strategy. ie understand the risks and decide to ride out the negatives or get out while you can or atleast have a stop loss in place.

cheers


----------



## drsmith (21 July 2009)

banska bystrica said:


> I stand by that 100%. When a forced bank sweep is in place, you are in quasi administration. It doesn't mean you are history. It doesn't mean investors cannot make a fortune out of it.



It must concern you though that around the positive speculation in this thread, people are failing to understand the true situation.



banska bystrica said:


> Now drsmith, myself and others are still waiting with baited breath for some concrete figures that back up your opinion. If you cannot provide figures, your opinion is not worth very much even though you are entitled to have one.
> I suspect your knowledge of the BBI fundamentals are so lacking that you don't have figures to back your opinion up. Prove me wrong.



I have offered rationale behind my opinion, rationale which you seem to either overlook or ignore. You are welcome to comment on specific points I have made if you wish.

As for the prospects of a restructure one possibility is that BBI's Board and lenders may reach agreement on converting some of the debt to equity with the result being that existing unitholders are severely diluted. Again I refer to Centro as an example. 

As for BEPPA holders they vote on a restructure if changes to BEPPA terms are proposed but that could well be a choice between a very small fraction of their face value or administration if such a vote fails.


----------



## banska bystrica (21 July 2009)

drsmith said:


> It must concern you though that around the positive speculation in this thread, people are failing to understand the true situation.




Why would it concern me? I'm not here to hold everybody's hand and assure them everything will work out fine. It's risk/reward. Moderate risk/massive reward when it comes to BEPPA. Note I do not own any equity (BBI). Sold out after Corus news at circa 17c.


----------



## random (21 July 2009)

Dr Smith,
What you fail to understand is that we do understand the true situation but you cant understand that we do understand, yet accept it for what it is.

Got it yet?


----------



## banska bystrica (21 July 2009)

drsmith said:


> I have offered rationale behind my opinion, rationale which you seem to either overlook or ignore. You are welcome to comment on specific points I have made if you wish.




You have offered about as much rationale as the local press covering BBI who have no idea what they are talking about when it comes to matters involving BBI. One poor journo even mention Babcock and Brown (BNB) having to sell DBCT. My goodness, how can BNB sell DBCT when they don't even own it?

Forget about your general "rationale" drsmith and give me some numbers that show BEPPA being worthless.
Rationale is another way of saying "I have no idea why I think this way but I am going to say it anyway".
Solid numbers drsmith, nothing less, or you will be ignored and your posts will not be responded to in future as far as I am concerned. Happy to hear the bearish view but give me some evidence. Where are the breach of debt covenants? Where are the asset write-offs? Show me how they lose $4Bn worth of equity to make BEPPA worthless?


----------



## drsmith (21 July 2009)

banska bystrica said:


> Show me how they lose $4Bn worth of equity to make BEPPA worthless?



1) Asset writedowns.
2) Lenders charging more for credit upon refinance thereby reducing (or eliminating) unitholder equity over time.
3) Lenders accepting equity in exchange for credit with the result being a severe dilution for existing unitholders.

With covenants, arn't they only in relation to existing debt agreements. What happens when the debt is due to be renewed ?

Also, how do you think BBI's directors will act if faced with a choice between sacrificing their own jobs and sacrificing existing unitholder equity in any restructure to satisfy lenders ?


----------



## select (21 July 2009)

banska bystrica said:


> As I said over at HC, I'm back in BBI at average 7.4c and I have no idea if that will hold but what I do know is that at least one of the big buyers is back in action chomping away. By the course of sales data, they seemed to acquire about 10M today and they took out about 3M on the close and it finished at 7.9c.




You commented that you sold out of BBI at circa 17c but you did buy back in at average 7.4c post the corus news. See the above quote.

You must have taken a stop loss opportunity or do you still hold them?


----------



## drsmith (21 July 2009)

random said:


> Dr Smith,
> What you fail to understand is that we do understand the true situation but you cant understand that we do understand, yet accept it for what it is.



For a good example to the contrary, review posts 1783, 1820 and then finally the first post on page 80.


----------



## banska bystrica (21 July 2009)

select said:


> You commented that you sold out of BBI at circa 17c but you did buy back in at average 7.4c post the corus news. See the above quote.
> 
> You must have taken a stop loss opportunity or do you still hold them?




Neither so you are wrong again Constable select. Take a look at the 2 month chart for BBI. Note my purchase of a parcel near the start of that two month chart at average 7.4c. Now note the price action after I bought in up until June 14. Remember select/macrae12, I sold all those BBI PRIOR to leaving Australia for my trip to Eastern Europe.


----------



## banska bystrica (21 July 2009)

All BBI followers, please take note I will not be responding to anymore posts by "select" or "drsmith". They are clearly only coming onto this thread to stir so if I don't take the bait anymore, please understand.


----------



## select (21 July 2009)

banska bystrica said:


> All BBI followers, please take note I will not be responding to anymore posts by "select" or "drsmith". They are clearly only coming onto this thread to stir so if I don't take the bait anymore, please understand.




BB,

I'm not trying to be difficult or stir.

I simply refreshed your memory about buying BBI post the Corus news. This fact is contrary to what you posted in the post that I responded to.

It's your business why you bought BBI after the Corus news but it does fly in the face of your selective memory and what you would have people believe.

I suppose we can all create a super human investor if we choose to and forums can facilitate the process and the creation of a myth if certain characters have a penchant for abusing the system.

Am I being a trouble maker? Maybe not. 

All the best, sincerely!


----------



## hardyakka (21 July 2009)

drsmith said:


> 1) Asset writedowns.
> 2) Lenders charging more for credit upon refinance thereby reducing (or eliminating) unitholder equity over time.
> 3) Lenders accepting equity in exchange for credit with the result being a severe dilution for existing unitholders.
> 
> ...




Apologies as I havent been able to speak with Helen yet, simply snowed under at work.

Dr Smith-Whilst you are entitled your views, I must admit that I have not seen any reasonable data supporting these. 

Regarding your points above:
Writedowns-The assets are not revalued and cannot be compared to a property trust, apples and pears. What writedown do you estimate for total BBI assets overall? I estimate a net positive of $2B on top of existing NTA ie about $4B NTA, what about you. (I have previously posted my rationale for this number). What is the NTA per your calcs after all writedowns??

Debt-Coversion of debt to equity is beneficial for BEPPA. As for increased interest charges, $4B of *net* (ie income less increased expense) additional expenses in the form of additional interest cost have to be incurred before BEPPA is affected one cent.

At a sky high rate *increase* of 400bps, that equates to $100B of debt for one year or $10B of debt for 10 years before the $4B of NTA is wiped out. After that 10 years BEPPA will be affected for the first time.

Dilution of equity holders, well I dont hold equity. But then I agree I will give up 40 cents of the $1 face value so I get paid 60 cents. Even then I am losing 40 cents in the $

As a final observation I think a previous poster summed it up nicely. I think you fail to understand that we do understand the risk profile of BEPPA and BBI and invest accordingly. In my case I have set aside funds to take advantage of short term price movements. 

Cheers


----------



## ricee007 (22 July 2009)

hardyakka said:


> Apologies as I havent been able to speak with Helen yet, simply snowed under at work.
> 
> Dr Smith-Whilst you are entitled your views, I must admit that I have not seen any reasonable data supporting these.
> 
> ...



Just a minor correction....

NTA= Net tangible assets.
DBCT lease is an intangible... yet, it would be fair to include that in any asset calculation (Y)...


----------



## prawn_86 (22 July 2009)

Just a reminder to all posters in this thread. Please keep the posts on the topic of BBI, as opposed to who has bought or sold what. Individuals holdings should have very little affect on the postings or *information about the stock*, providing the are disclosed. 

Thanks

Prawn


----------



## banska bystrica (22 July 2009)

Well said prawn_86.

I am still waiting for some solid evidence that BBI's assets have suffered impairment to the value of $4Bn which is the quantum required for BEPPA to be rendered worthless.

I ask select, drsmith and anyone else who thinks BBI is doomed to please submit which assets have suffered impairment since the Dec 31 accounts were released and please specify the quantum of impairment on each asset. That way, we can all see the alternate view and make up our own minds.


----------



## banska bystrica (23 July 2009)

Silence at this point in time from the doomsayers.

Ok, I'll give them a leg up. I'll slash $300M from PD Ports, $300M from Euroports,  $400M from Alinta and $400M from Westnet Rail.
These are all "end of the world" valuations. There's potentially $1.4Bn in write-offs.

Now, NGPL, DBCT, PowerCo are all performing at or above expectations despite the GFC. It's hard to imagine a more bearish period so I cannot see any possible impairments from those. IEG is performing so lets slash a mere $100M off it.
The rest are small fry and not material.

So, what have we got? Potentially $1.5Bn in impairments. That still leaves BEPPA worth $1. Trading at 12c? I'm comfortable and if they get cheaper due to panic if Euroports doesn't settle, I'll step up for some more.


----------



## fuzzie (23 July 2009)

Analytics has nothing to do with it. It's all in the sentiment!

I still have BBP in my watch list and I scratch my head every day! There is a share that by my back of the envelope sums has no asset value left after debt.

And they continue to trade at a premium to BBI. 

I guess at this penny dreadful end of the market sentiment rules. That's why going down a cent looks really bad and panic sets in but going up a cent doesn't have quite the same positive push.


----------



## banska bystrica (23 July 2009)

fuzzie said:


> I still have BBP in my watch list and I scratch my head every day! There is a share that by my back of the envelope sums has no asset value left after debt.
> 
> And they continue to trade at a premium to BBI.




BBP market value: $60M
BBI market value: $175M

Market rates BBI a 3 times more valuable company than BBP at current prices.


----------



## fuzzie (23 July 2009)

banska bystrica said:


> BBP market value: $60M
> BBI market value: $175M
> 
> Market rates BBI a 3 times more valuable company than BBP at current prices.




Well yes, if you look at it that way. But the NTA per share is about the same going on the published figures, however the Aegis research seems to raise questions over that NTA valuation and there is the problem that they don't seem to be covering interest with earnings.

I think the numbers for BBI look better, therefore I'd expect to see the BBI sp at least a little better than BBP. As for BEPPA........


----------



## banska bystrica (23 July 2009)

fuzzie said:


> Well yes, if you look at it that way. But the NTA per share is about the same going on the published figures, however the Aegis research seems to raise questions over that NTA valuation and there is the problem that they don't seem to be covering interest with earnings.
> 
> I think the numbers for BBI look better, therefore I'd expect to see the BBI sp at least a little better than BBP. As for BEPPA........




Yes I agree. As for BEPPA?.... Well BEPPA is a strange animal. As a debt security with face value $1, it shouldn't really have much correlation to the BBI price but if you look at the graph, it has. What has happened is the market has basically written off BBI and therefore dumped both BBI/BEPPA to distressed levels. BEPPA being illiquid has just tracked BBI on the downward path. It's a hard one to value (BEPPA) because in reality it's probably worth either ZERO or $1.04.


----------



## random (23 July 2009)

In August /Sept of 2008 Babcock and Brown Group had about 8% of the shares in BBI.
I was wondering if anyone knows if they have sold these off and if so what % they still have left?

(I know shareholdings are normally not relevent  prawn 86 but in this case i think it is relevent to know).


----------



## suhm (24 July 2009)

banska bystrica said:


> You have offered about as much rationale as the local press covering BBI who have no idea what they are talking about when it comes to matters involving BBI. One poor journo even mention Babcock and Brown (BNB) having to sell DBCT. My goodness, how can BNB sell DBCT when they don't even own it?
> 
> Forget about your general "rationale" drsmith and give me some numbers that show BEPPA being worthless.
> Rationale is another way of saying "I have no idea why I think this way but I am going to say it anyway".
> Solid numbers drsmith, nothing less, or you will be ignored and your posts will not be responded to in future as far as I am concerned. Happy to hear the bearish view but give me some evidence. Where are the breach of debt covenants? Where are the asset write-offs? Show me how they lose $4Bn worth of equity to make BEPPA worthless?




I've been doing some back of the envelope calculations and was wondering how you got the figure of $4 billion?

From their interim results, using the one from their investor pack as it doesn't have the assests up for sale listed as current.

Net assests = 2.36 bn
- 1.5bn goodwill
= 0.8bn

Not sure if BEPPA and SPARCS are listed as interest bearing liabilities on the balance sheet but if so +1bn = 1.8bn

I understand most of the debt is non-recourse to BBI, but if the assests do become insolvent then the net assets associated with them would also be lost.

Or is it from the proportionally consolidated assets? net assets 17.4bn and net debt 11.3bn (including BEPPA and SPARCS).

Why are these numbers different to consolidated balance sheet ones?

Its not the easiest annual report to read.

Edit. There's also the 4.1bn of other intangibles which if discounted would wipe out the security for BEPPA


----------



## ricee007 (24 July 2009)

I'm scared BEPPA may drop....
Why do I hold?

If BEPPA drops below 10c due to Euroports (or similar)... I STILL think it is very unlikely that there won't be a time within 3 years that BEPPA WON'T be above 10c.

As such, I think this is another reason why I consider BEPPA *fairly* long-term safe.

EVEN IF
PD Ports sold for 300MGBP.
We had bad Euroports news
DBCT sold 49% at <$1.1Bn

All happened.... I believe that BBI would still be in the position to offer some sort of BEPPA restructure within 3 years... whether that be as little as just the interest payments of about 20c in three years ($155.6M spare cash over three years isn't hard to imagine)... or just BBI hitting $0.25 and being offered 2 BBI shares (and selling for somewhere south of $0.50c... but ).

Long story short... even if BEPPA drops.. I find it hard to believe that BEPPA won't rise to be above 10c within 3 years.... As such, I see it as not PARTIUCLARLY high risk.

(I still think it's most likely that I will get at least $1 back, but.)


----------



## hardyakka (24 July 2009)

suhm said:


> I've been doing some back of the envelope calculations and was wondering how you got the figure of $4 billion?




Two points:
a) If you are interested then if you read through some previous posts of mine in the last few months you will see a detailed analysis of NTA at $3.5B after a general impairment charge (being a "just in case" provision) of $0.5B.

b) Intangibles do not mean things such as mastheads and goodwill only, it includes DBCT which is a lease.

thought for the day-"If the right *fluffy* stuff is *select*ed than the death spiral impact will be all soft and flaccid"

Think about it


----------



## banska bystrica (24 July 2009)

suh m,

The balance sheet as at Dec 31 listed Net assets at $2.364Bn.
This includes all hybrid debt (SPARCS and BEPPA).
This total seets figure includes all the BOOK values of assets. DBCT has a book value of $1.9Bn. The general consensus is that it will attract a sale price of at least $2.7BN. Even bearish analysts at Wilson HTM are assigning an EV of $2.6Bn for DBCT.
So, we can add in another $800M to the Net Assets figure which is value not reflected in the books.
That bumps the Net Assets figure to $3.164Bn. Since BEPPA is included in that figure, there needs to be total impairment in the remaining assets, excluding DBCT, of $3.964Bn ($3.164BN PLUS $800M)for BEPPA to receive nothing.

Now even if you write off all the $1.54Bn goodwill (and I do not see how one can) we still have Net Assets of $1.62Bn AFTER repayment of all bank debt and hybrids.

For a detailed understanding of Goodwill and Intangibles, please read pages 129-131 of the 2008 Annual Report.

Further, (see my previous posts) I have written off $1.5Bn in net assets in an "end of world GFC" scenario. This effectively renders BBI equity as worthless but BEPPA remains in tact at full face value of $1 per BEPPA.


----------



## ricee007 (24 July 2009)

hardyakka said:


> Two points:
> a) If you are interested then if you read through some previous posts of mine in the last few months you will see a detailed analysis of NTA at $3.5B after a general impairment charge (being a "just in case" provision) of $0.5B.
> 
> b) Intangibles do not mean things such as mastheads and goodwill only, it includes DBCT which is a lease.



Again... NTA = net tangible assets.
I don't believe NTA could be $3.5Bn.

I do believe net assets could be $3.5Bn.

Kind Regards,
Rhys


----------



## hardyakka (24 July 2009)

ricee007 said:


> Again... NTA = net tangible assets.
> I don't believe NTA could be $3.5Bn.
> 
> I do believe net assets could be $3.5Bn.
> ...




Fair cop, a slip of mine....Cheers

  .........................................................100 characters


----------



## persistentone (26 July 2009)

Does this potential Chinese investment in rail infrastructure in Australia have any potential implications for Westnet Rail?

http://www.reuters.com/article/rbssSteel/idUSSYD43758820090724


----------



## persistentone (26 July 2009)

Can someone tell me what are the EBITDA multiples now on the books for BBI for the following key assets:

DBCT
Powerco
IEG
Cross Sound Cable
PD Ports
Westnet Rail
Alinta
NGPL
Euroports

I'm expanding on a stress test done by BB and I'll share the numbers from that when I am done.    Since the bears here aren't apparently willing to do any research, I want to at least articulate clearly the EBITDA multiples at which BEPPA is likely to become worthless.


----------



## persistentone (26 July 2009)

Can someone breakdown what businesses BBI includes in its Australian ET&D numbers, and is the contribution of each of these businesses broken out separately anywhere?   

I keep seeing this "Australian ET&D" referred to as "ex-Alinta".    Alinta is an Australian natural gas retail supplier?   Did they sell Alinta, and if not why it is referred to as ex-Alinta?


----------



## persistentone (26 July 2009)

I'm trying to get my arms around the Powerco sale.    My numbers look suspect so I would appreciate some corrections.

BBI sold 58% to QIC for around $423M NZD (let's call it $350M AUD).   

Did QIC assume 58% of all debt, both non recourse and corporate debt?

Assuming prorata assumption of debt, and using book value for the asset around $1.5B, I calculate the original net equity after all debt on the asset around $328M AUD, prior to sale.   Is it right?

58% of $328M would have been $190M AUD, but we were paid $350M, which seems a considerable premium.

Which numbers above are wrong?

Note I am having to deduce most of this from tiny bits and pieces in different press releases.   I don't have a consolidated view of the sale to read.


----------



## persistentone (26 July 2009)

Who publishes some 2009 EBITDA estimates for BBI?   I'm trying to validate growth or shrinkage assumptions versus 2008 EBITDA.


----------



## persistentone (26 July 2009)

I'm trying to break out the 2008 EBITDA numbers for each key asset, and to my surprise the 2008 annual report does not have this in a tabular format.   Instead they have detailed descriptions of each asset along with its EBITDA.   The problem is that many of these contain only partial contributions.   This probably means they bought the asset in 2008.   So NGPL for example has a five month EBITDA of $72.8M AUD.   I can I just extrapolate from those number to derive the equivalent 12 month EBITDA?   For example:   12/5*$72.8M = $174.7M


----------



## banska bystrica (26 July 2009)

persistentone said:


> I'm trying to break out the 2008 EBITDA numbers for each key asset, and to my surprise the 2008 annual report does not have this in a tabular format.   Instead they have detailed descriptions of each asset along with its EBITDA.   The problem is that many of these contain only partial contributions.   This probably means they bought the asset in 2008.   So NGPL for example has a five month EBITDA of $72.8M AUD.   I can I just extrapolate from those number to derive the equivalent 12 month EBITDA?   For example:   12/5*$72.8M = $174.7M




The reported 2008 figures for NGPL included only 5 months of operations.
The Dec 31, 2008 figures represented a full 6 months operations and the EBITDA for the six months was AUD$133.6M (This was BBI's 26% share of EBITDA).
ABN Amro have a very good handle on BBI and they are forecasting EBITDA of AUD$256.4M for NGPL for the current financial year (2009/10) and $277.1M for 2010/11. This justifies an EV of $2.7Bn, possibly $3.3Bn if you use the growth figures of 2011.


----------



## persistentone (26 July 2009)

banska bystrica said:


> The reported 2008 figures for NGPL included only 5 months of operations.
> The Dec 31, 2008 figures represented a full 6 months operations and the EBITDA for the six months was AUD$133.6M (This was BBI's 26% share of EBITDA).
> ABN Amro have a very good handle on BBI and they are forecasting EBITDA of AUD$256.4M for NGPL for the current financial year (2009/10) and $277.1M for 2010/11. This justifies an EV of $2.7Bn, possibly $3.3Bn if you use the growth figures of 2011.




While I understand that EBITDA is the common valuation metric, I really wish they would break out free cash flows for each asset.   Because ultimately its the free cash flow that is the money available to pay down debt.   

I'll continue to model on EBITDA because that is what they give, and there are only so many hours in the day for me to reverse engineer the cash flows on my own using their capex numbers.


----------



## banska bystrica (26 July 2009)

NGPL: (6 months to Dec 31, 2008)

EBITDA: $133.6M
Net Financing costs - asset level ($50.4M)
Corporate debt int exp ($20.1M)
Maintenance Capex ($11.3M)
Tax Paid ($3.6M)
Other Payments $8.0M
FX gain on cash flow hedges $5.5M
***Other ($28.3M)
Operating cash flow: $33.4M

*** This represents adjustments made to reconcile the difference between BBI's proportionate share of Operating cash Flow (ie. EBITDA less financing costs, maintenance capex, tax paid etc) and the distributions received from BBI's investment in NGPL where it has a minority investment.


----------



## persistentone (26 July 2009)

After a first pass to expand on the stress test model BB worked on, I think I am prepared to try to articulate the assumptions under which BEPPA becomes worthless, and sees no recovery in administration.   I'm not prepared to say I believe this case yet, but doing this work certainly heightened my awareness about how we get the valuation we have for BEPPA today.

First, let's talk about multiples in general, in a distressed situation.   These three assets are cyclical assets, and as such their EBITDA is subject to severe diminishment in a cyclical downturn, and the EBITDA multiple used to value them is subject to contraction.   Those three (with the EBITDAs I used) are:

Westnet Rail: $95M
PD Ports: $90M
Euroports: $87M

These EBITDAs assume appropriate diminishment of revenue in a downturn.

For multiples, a railroad, for example, in healthy times gets an EBITDA multiple from 6 to 12 based on my research (there is a tremendous variation because of large differences in quality of earnings from different railroads).   In a cyclical downturn, these assets normally get multiples of 5 to 8.   I did a quick test against the current market caps of some US railroads and was coming up with EBITDA multiples of 5 to 7.

For the bear case to be made for BBI, you assume that the three assets above will in a distress sale get offers around a 6 multiple of EBITDA.   Based on debt in all of them that makes them failed assets (we have no net equity).

Next look at the natural gas plays.   These are much higher quality assets and have much less cyclicality in them.    I gave all of these an 8 multiple on EBITDA:

International Energy Group (IEG): $96M
Cross Sound Cable (CSC): $20M

Australian ET&D: $188M
(e.g., WA Gas formerly Alinta
Dampier to Bunburry (DBNGP)
Multinet
Tasmanian Gas Pipeline
Westnet Energy)

Natural Gas Pipeline Company of America NGPL: $240M

I gave Powerco a 7 multiple on $86M EBITDA, a little lower than the 2008 sale, which allows for the fact that a utility is much more subject to diminished EBITDA in a downturn.

Without doing the math here in detail, the above EBITDAs and multiples leave BBI and BEPPA in a world of hurt.   It all comes down to DBCT.   If you use a 2010 EBITDA of $224M and a multiple of 9 in a distress sale, you end up with SPARCs and BEPPA worthless.

I made the analysis more sophisticated by factoring out non recourse debt on assets that would sell below their net asset value.   Unfortunately, $174M of PD Ports is corporate debt so that doesn't help a lot.   In this scenario though, SPARCS would recover $65M AUD of value, and BEPPA is still worthless.

Now let's step up our assumptions and assume that DBCT can get a 10 multiple against the 2010 estimate.   That gives a $2.2B sale price, definitely low, but I am modeling distress, right?   Now SPARCS recovers in full and BEPPA gets a 24 cent recovery *if* we can partition assets in administration and force non recourse debt to accept losses against net equity value.  That's hardly a spectacular return against the risk of total loss, buying in at the current 13 cents value.

Step up the assumptions again and apply an 11 multiple for DBCT.  That gets us to a $2.4B sale and in the case I ignore assets with negative values that only have non recourse debt, I calculate a 51 cent recovery on BEPPA.

Step up assumptions again and apply a 12 multiple for DBCT and if the non recourse lenders can be made to eat their losses, then we get total recovery on BEPPA.   

I want to caution that my EBITDA numbers above (except for DBCT) were based on BB's 2011 "distress" multiples.   I have NOT done the work to verify these numbers.   Some of them seemed a little high to me, and others seemed a little low, and I am ignorant enough about the basis for them that my judgements are probably not trustable yet.   I wasn't willing to use BB's 2011 estimate for DBCT, just to be conservative.   2010 is so much higher than 2009 in any case that it is already aggressive (but it's appropriate given the recent completion of the expansion of DBCT).

The conclusions I get from this analysis:

1) You don't have to be insane to come up with a $0 valuation for BEPPA in a distress situation.   All it takes is a realists understanding about which of these assets are cyclical assets and likely to get low multiples in a distress sale.

2) If we can reasonably argue for a 9 multiple on the pipelines, then things look up a little and we get better recoveries.  On some of the US natural gas pipelines I was calculating 8 to 11 multiples on EBITDA, so 9 is not crazy.   But this change by itself gets us to 36 cent recovery on BEPPA (but *only* if losses on assets with non recourse debt don't spill over to other assets).

3) As if I needed to say it: it really does all come down to DBCT.   The bull case is clear:  it's a world class asset in a moment of high utilization that many coal companies would kill to own.   The bear case is also pretty clear to me:  the buyers are huge sophisticated companies that understand full well how badly BBI needs this sale.   If they stall the sale, wait for administration, and then conspire together as bidders to form some kind of "joint venture" whose purpose is to remove competition from the bidding process, and then pass on low costs to all coal companies in the "joint venture" then this asset's price could get walked way down.

I ran some hybrid case numbers that better represent my own beliefs about where the key asset values might end up in distress.  I gave DBCT a 10 multiple and NGPL a 9 multiple.   That gives partial recovery around 52 cents for BEPPA *if* the assets with only non recourse debt cannot carry their losses outside their assets.

Given the extreme speculative nature of some of this, I would be a buyer of BEPPA around six cents.   Unless we get bad news around Euroports, it doesn't look like I will get my chance.

On the other hand, if we get a DBCT announcement with a big number and the market under-appreciates the impact, maybe I'll get a chance to play again.  Not likely, but at least now I have a model for it.


----------



## nathanblack (26 July 2009)

interesting post. when you mention cyclical downturns did you consider the regulated nature of many of BBI revenue streams? were you compring BBI assets with regulated or non regulated assets? this can vary asset to asset and be country specific in nature.

als did you consider the impact of a minority DBCT sale? its a serious possibility that only 49% will be sold. what would happen then?

i agree euroports relies on a strong economy, but other assets have a regulated income stream.


----------



## banska bystrica (26 July 2009)

If one plugs in a low enough EBITDA multiple on RIO's assets, there is a case for RIO to be insolvent. Let's get real here guys. We have just been through the worst financial crisis in our lifetime. Take a look at what Powerco sold for in the midst of that. Look at the final EBITDA multiple even after the QIC haircut.
I think it's fair to say that if we have not the seen the worst of the GFC, BBI are in deep trouble. If we have seen the worst, they will survive but equity holders could be diluted to nothing. "Could" be, not a certainty at all.

BEPPA looks ok to me.


----------



## persistentone (26 July 2009)

nathanblack said:


> interesting post. when you mention cyclical downturns did you consider the regulated nature of many of BBI revenue streams? were you compring BBI assets with regulated or non regulated assets? this can vary asset to asset and be country specific in nature.
> 
> als did you consider the impact of a minority DBCT sale? its a serious possibility that only 49% will be sold. what would happen then?
> 
> i agree euroports relies on a strong economy, but other assets have a regulated income stream.




Maybe Banska and others can comment on the business model at PD Ports and Westnet Rail.   ABN Amro calls those assets cyclical.  Certainly the rails in the US had their revenues and earnings hit in a big way because they are paid by the boxcar full of materials.   I would think that PD Ports revenue has a large cyclical component because probably they get a fee for each ship that comes into port, but someone correct me on that.  You have to believe there is a strong usage-based component to their revenue model.

Natural gas pipelines are beautiful assets primarily because the revenue is based on a reservation fee and the revenue comes in whether they pipe zero gas or keep the pipeline filled.

DBCT is unfortunately cyclical too, but we are just lucky to be in a sweet spot now with China's needing coal, so I would say that one asset is acting counter cycle to the overall economic downturn.

I did not model the 49%.   But I just played with numbers and it looks to me that if BBI can get a 12 multiple on 2010 earnings for DBCT, they just might pull off the 49% sale.     If I were them, I would be doing a 49% sale with a put option for the other 51%.   That let's them play a dangerous wire act on liquidity, and it lets them cover their worst case in case they need to go back and raise more.     Anything under a 12 multiple, and I think realistically it may end up becoming a 100% sale of DBCT eventually.  They may still try the 49% / 51% trick.


----------



## banska bystrica (26 July 2009)

persistentone said:


> DBCT is unfortunately cyclical too, but we are just lucky to be in a sweet spot now with China's needing coal, so I would say that one asset is acting counter cycle to the overall economic downturn.




DBCT is regulated. Take or pay contracts with customers. Number of ships visiting is irrelevant. BBI still get paid.


----------



## persistentone (26 July 2009)

banska bystrica said:


> If one plugs in a low enough EBITDA multiple on RIO's assets, there is a case for RIO to be insolvent. Let's get real here guys. We have just been through the worst financial crisis in our lifetime. Take a look at what Powerco sold for in the midst of that. Look at the final EBITDA multiple even after the QIC haircut.
> I think it's fair to say that if we have not the seen the worst of the GFC, BBI are in deep trouble. If we have seen the worst, they will survive but equity holders could be diluted to nothing. "Could" be, not a certainty at all.
> 
> BEPPA looks ok to me.




Just to make sure my intent is understood here, I am not a BEPPA "bear".  But the conversation here was getting very old with select and the doctor simply making very general assertions without putting any data behind them.   They were clearly just posting from intuition and were not willing to do real work to make an argument.

I wanted to at least put some kind of framework in place - with real EBITDA numbers and multiples - that puts forth a coherent, factually-based scenario and assumptions that are required for BBI to fail and for BEPPA to become worthless.

I'm trying to do this in a way that is honest, and also putting forth variations in the scenarios that show how BEPPA can achieve some real recovery.

No doubt there are errors in some of my EBITDA numbers and in some of the multiples, and it's a great conversation to have now to firm up those assumptions.

And then in the end everyone has to formulate their own decisions about risk and reward.   For my sensibility, given the fragileness of my assumptions, a 10-to-1 payoff would compensate me for risks taken.   For those who have greater certainty about outcomes, probably less payoff is required.   But it's pretty clear to me that there is a real risk here of BEPPA getting back nothing, particularly if the DBCT sale is a disappointment.


----------



## persistentone (26 July 2009)

banska bystrica said:


> DBCT is regulated. Take or pay contracts with customers. Number of ships visiting is irrelevant. BBI still get paid.




I stand corrected, and I guess that is why ABN Amro doesn't think this one is cyclical.

Excellent business model!   What a shame to get rid of any part of such a good asset.

It's all hindsight now, but imagine how much stronger BBI might be now if they had avoided the three cyclical assets.


----------



## banska bystrica (26 July 2009)

persistentone said:


> I stand corrected, and I guess that is why ABN Amro doesn't think this one is cyclical.
> 
> Excellent business model!   What a shame to get rid of any part of such a good asset.
> 
> It's all hindsight now, but imagine how much stronger BBI might be now if they had avoided the three cyclical assets.




True but we would never have got the opportunity to buy them at 2.5c in November either...........................


----------



## fuzzie (27 July 2009)

persistentone said:


> I keep seeing this "Australian ET&D" referred to as "ex-Alinta".    Alinta is an Australian natural gas retail supplier?   Did they sell Alinta, and if not why it is referred to as ex-Alinta?




The history of BEPPA and Alinta assets are intimately entwined with a takeover/merger/restructure of two other companies AGL and Alinta. My understanding is:

AGL was formed in 1837 and listed when the ASX opened in 1871. In the 1990s, AGL purchased electricity networks in Victoria, pipelines in WA and utilities in New Zealand. AGL acquired customers in South Australia, Victoria and New Zealand. In 2000, the group spun-off its transmission pipelines into APA. The NZ business was sold in 2004. Alinta made a David takeover attempt of Goliath AGL and the pair wasted millions fighting each other for years. B&B got involved and eventually AGL and Alinta turned around and merged their respective infrastructure businesses in October 2006, with AGK (new AGL) emerging as a new separately listed entity. Alinta owned old AGL assets and APA picked up some more. At this point the B&B crowd engineered a restructure and old AGL and Alinta shareholders ended up holding shares in AGK, AAN, APA, BBI, BBP and BEPPA. I think this is where BEPPA originated and was issued as part payment to cover purchase costs of Alinta assets.


----------



## persistentone (27 July 2009)

fuzzie said:


> The history of BEPPA and Alinta assets are intimately entwined with a takeover/merger/restructure of two other companies AGL and Alinta. My understanding is:
> 
> AGL was formed in 1837 and listed when the ASX opened in 1871. In the 1990s, AGL purchased electricity networks in Victoria, pipelines in WA and utilities in New Zealand. AGL acquired customers in South Australia, Victoria and New Zealand. In 2000, the group spun-off its transmission pipelines into APA. The NZ business was sold in 2004. Alinta made a David takeover attempt of Goliath AGL and the pair wasted millions fighting each other for years. B&B got involved and eventually AGL and Alinta turned around and merged their respective infrastructure businesses in October 2006, with AGK (new AGL) emerging as a new separately listed entity. Alinta owned old AGL assets and APA picked up some more. At this point the B&B crowd engineered a restructure and old AGL and Alinta shareholders ended up holding shares in AGK, AAN, APA, BBI, BBP and BEPPA. I think this is where BEPPA originated and was issued as part payment to cover purchase costs of Alinta assets.




Wow, that's a complex history.   It looks like BBI is now calling what used to be Alinta by the name WA Gas.   Based your description, it may be the case that some of the other gas assets they are holding are broken out from the old Atlinta.

Looking at all of the Australian gas assets that BBI now holds, which of these are *not* pure pipeline plays?


----------



## Tysonboss1 (27 July 2009)

fuzzie said:


> old AGL and Alinta shareholders ended up holding shares in AGK, AAN, APA, BBI, BBP and BEPPA. I think this is where BEPPA originated and was issued as part payment to cover purchase costs of Alinta assets.




they also got shares in BBW which has since been renamed infergen energy.

Beppa is an IOU ( I owe you ) that was paid to shareholders rather than cash.


----------



## random (27 July 2009)

Can i ask "the panels" view what impact a rising $AUD will have on the viability of BBI in the short to medium term (if any).

Personally i believe that the $AUD will rise over the next 6 months so ride with me on this even if you believe that it won't. Assume that it will rise against the $US predominantly but to a less extent UK pound and euro.

A US90c is not out of the question IMHO for the $AUD.

Your thoughts would be appreciated.


----------



## banska bystrica (28 July 2009)

random,
NGPL is a US based asset with US dollar cash flows and US dollar debt. Ditto for Euroports and PD Ports.
BBI do also undertake some FX hedging.


----------



## investorpaul (28 July 2009)

New BBI announcement RE: Euroports 

BBI Announcement

Just reading it know, what are the implications of this?


----------



## shiftyphil (28 July 2009)

Announcement just out about Euroports. Only skimmed it so far, but this looks to be positive. But I need to type more to get it to post.



> All conditions precedent associated with the transaction have been satisfied and as such completion of the Amended SSA is targeted to occur in late July or early August and a further announcement will be made in due course.


----------



## investorpaul (28 July 2009)

My understanding is that we basically:

1. Sold part of our stake in Euroports - We still retain a percentage
2. A capital reserve has been created at the Euroports level to cover medium to short term liabilities
3. A share equalisation process in the future (not sure on the impact of this???)
4. Movement of 100% ownership Benelux port and BBI port acquistions luxembourg. (not sure on the impact of this either???)
5. BBI recognises a pre tax impairment/loss of 120 million euros.

Any way, Im still reading/digesting it all.


----------



## fureien (28 July 2009)

whats share equilisation mean? although it wont impact till 2012-13 is it a good or bad thing :S

it also says capitalisation by all shareholders....more cap raising??

my sell order got processed this morning near day high at 8 cents so im not complaining but the fact that this news hasnt made the sp go nuts with the momentum from yesterday can only mean its not that great news right?

reason i ask is i was intending to buy back in


----------



## drsmith (28 July 2009)

banska bystrica said:


> Silence at this point in time from the doomsayers.
> 
> Ok, I'll give them a leg up. I'll slash $300M from PD Ports, $300M from Euroports,  $400M from Alinta and $400M from Westnet Rail.
> These are all "end of the world" valuations. There's potentially $1.4Bn in write-offs.
> ...



According to today's announcement on the part sale of Europort's, BBI will recognise a pre-tax impairment/loss on disposal of 120m Euros. Given that this is for a 40% interest the total combined loss/writedown is likely to be 300m Euros or approximately AU$520m at todays exchange rate.

The ultimate outcome however has the potential to be much worse as, according to the announcement, BBI may lose as much as 65% of Euroports under the sale depending on performance.


----------



## investorpaul (28 July 2009)

Does this announcement leave any room for reducing the debt at the asset level? Or are all the funds put towards the recapitalisation process?

A previous distressed net equity value discussed for Euroports was -113 m AUD.Does the 120 Euros ($207 AUD) pre tax impairment/loss mean that the actual net equity value achieved is -$207 AUD?

Sorry for the above questions, I am just trying to get my head around the announcement and plug the new figures into a spreadsheet.


----------



## persistentone (28 July 2009)

Since this was an equity investment, one hopes that some of that money reduces debt at the asset level, but honestly this agreement looks like bad news top to bottom for me, and to me it creates more doubt than it removes.   I am very surprised to see the stock rally on this at all.

First, they have $809MM AUD net debt in Euroports.    $140MM Euros is about $242MM AUD, so even if 100% paid down debt it still doesn't make a big dent in the debt level.

Second, none of the monies (apparently) are going back to BBI, so it does nothing to clear corporate debt.

Third, the agreement apparently has some kind of huge dilutionary formula (the details of which they conveniently remove from the press release) that allows the investors to grab 65% of the asset if the port doesn't perform well.    

I can't see any way to dress this event well.   I guess the only bright news is that this financing might prevent Euroports from declaring its own administration, and I assume the operating cash flows keep coming back to BBI to pay off debt.   But we impaired the asset.

It's not a big surprise to me, since in my distress analysis I had pretty much written off Euroports and PD Ports as failed cyclical assets.    The big surprise to me is that the stock is rallying on this news.   I don't understand the market's logic.

I didn't analyze how this impacts on interest coverage.   Does BBI get 100% of the EBITDA of Euroports going forward?   If we lost 40% of the operating cash flows, then it's a catastrophe since we would be making interest coverage worse not better (we would at best pay down 29% of debt but lose 40% of the operating cash flow).


----------



## drsmith (28 July 2009)

persistentone said:


> I didn't analyze how this impacts on interest coverage.   Does BBI get 100% of the EBITDA of Euroports going forward?   If we lost 40% of the operating cash flows, then it's a catastrophe since we would be making interest coverage worse not better (we would at best pay down 29% of debt but lose 40% of the operating cash flow).



I would estimate that BBI will lose 34% of EBITDA plus the coupon rate on the convertible bond which accounts for the other 6%. 

Whether or not that equates to 40% of EBITDA will therefore depend on the bond coupon rate. It would be very interesting to know what the bond coupon rate is. The terms of the convertible bond are also not detailed in the media release.


----------



## random (28 July 2009)

I don't think that the news here is all that bad, in fact i think it is probably modestly good at best, however i also reckon that the wording of the announcement is very calculated.
The spin here is obviously meant to give a positive impression but a lot of time has been spent on the choice of phrasing.
What is required by the market place is clarity. 
This report is not giving us the clarity required by shareholders.
This is not to say that the information isn't accurate.
It may make the ownership of the assets simpler but it is not clearer because we have been given some of the information but not all relevent info in my opinion.

Full transparency is the go here, no jibber jabber please.


----------



## banska bystrica (28 July 2009)

BBI were caught between a rock and a hard place. They dodged a killer bullet but at a big price. The terms as released to the ASX are wishy-washy but appear to be very much in favour of the buyers. BBI got stitched up. The buyers have all the upside and are hedged on the downside. No free cash appears to be available for reduction of corporate debt. All the cash will go into the Euroports business. How they still settle the put option is unanswered.
The deal saves BBI's bacon as far as Euroports administration goes but it does nothing to solve the corporate debt problem or the dilution potential from SPARCS in November.

The stock is rallying but my guess is it will be short lived. Short term target prices: BBI 7c and BEPPA 11c. I may be wrong of course.


----------



## random (28 July 2009)

On the positive side

Ownership of:

Manuport (Belgium and Bulgaria) 100%.......previously 75%.
Westerlund (Belgium and France) 100%.......previously 75%.
TPS (Spain)100%......previously 51%.
WCT(Belgium)100%......previously 51%.

Whilst ownership of Finnish Ports (Finland), TRI (Italy) and SHRU (Rostock Germany) remain unchanged at 100%, 80% and 50% respectively.


----------



## persistentone (28 July 2009)

random said:


> On the positive side
> 
> Ownership of:
> 
> ...




Good catch.   Does Euroports break out a separate earnings statement that gives EBITDA numbers for each of these?    If yes, did someone recalculate the new projected EBITDA for Euroports going forward?


----------



## banska bystrica (28 July 2009)

persistentone said:


> Good catch.   Does Euroports break out a separate earnings statement that gives EBITDA numbers for each of these?




No they do not. It appears as though the put option commitment has been negotiated.

Positives: No cash needed to refund deposit monies.
Euroports survives.

Negatives: BBI suffer impairment in line with my distressed worst case scenario.
Buyers hedged on any future downside at the expense of BBI.
Sale implies an EV of AUD$620M. My distressed value was AUD$609M.
No free cash for payment of corporate debt.


----------



## persistentone (28 July 2009)

banska bystrica said:


> No they do not. It appears as though the put option commitment has been negotiated.
> 
> Positives: No cash needed to refund deposit monies.
> Euroports survives.
> ...




What would you guess would be the impact on overall EBITDA for Euroports given the new ownership percentages for the sub-assets within Euroports?

Owning 100% of subassets might increase overall EBITDA for Euroports, and losing 40% of the equity then cuts into that higher overall number?

I don't suppose you have access to the ABN Amro analyst?


----------



## persistentone (28 July 2009)

Does anyone know if an Australian pipeline company named APT Pipelines trades on ASX?

In general, are there any natural gas pipeline plays in Australia other than those BBI owns that trade on ASX?


----------



## awg (28 July 2009)

persistentone said:


> Does anyone know if an Australian pipeline company named APT Pipelines trades on ASX?
> 
> In general, are there any natural gas pipeline plays in Australia other than those BBI owns that trade on ASX?




I think you may be refering to APA

Business Description
APA Group (APA) owns and operates over 12,000kms of natural gas pipeline infrastructure throughout Australia with a significant presence in all mainland states and territories. Over 90% of revenue is contracted or regulated. APA transports over 50% of Australias natural gas through a network of pipelines comprising a mixture of mature, established pipelines - Moomba-Sydney - and more recently constructed pipelines. APA has made significant acquisitions with GasNet - the dominant gas transmission pipeline operator in Victoria, Allgas Energy a South-East Queensland gas distributor and Origin Energy Networks a provider of management and operations services to Victorian gas distribution and transmission company Envestra as well as a 30.6% stake in Envestra and a 33% interest in the SEA Gas pipeline.

Company Strategy
APAs strategy revolves around the development of Australias leading energy transmission and distribution business. There is a commitment to grow the business and to maximise the value for the securityholders. Growth is achieved via a three pronged management philosophy - organic growth within the business; the development of brownfields and greenfields projects; and by outright acquisition. The APA business model is a low cost, transparent and competitive with no fee leakage. Financial strategy aims at increasing annual distributions by at least the CPI. Of high priority is the development of a gas transmission grid linking the populous eastern states of Australia. The grid would enable a seamless tariff to be charged for gas supplied throughout the eastern seaboard which would drive the expansion of a competitive gas market in Australia. It would foster an increase in competition between gas producers regardless of the location of their reserves. APA Group reported NPAT up 18.4% to $67.19m for the year ended 30 June 2008. Revenue from ordinary activities were $897.73m, up 65.5% from last year. Basic EPS was 14.9 cents compared to 15 cents last year. Net operating cash flow was $186.42m compared to $136.71m last year. The final dividend declared was 9 cents, taking the full year dividend to 29.5 cents compared with 28 cents last year. APAs operations and financial performance in the financial year reflect full and part year contributions of acquired businesses, growth in existing businesses, and benefits achieved through the continued integration of recently acquired businesses into its internal management model.


----------



## persistentone (28 July 2009)

awg said:


> I think you may be refering to APA
> 
> Business Description
> APA Group (APA) owns and operates over 12,000kms of natural gas pipeline infrastructure throughout Australia with a significant presence in all mainland states and territories. Over 90% of revenue is contracted or regulated. APA transports over 50% of Australias natural gas through a network of pipelines comprising a mixture of mature, established pipelines - Moomba-Sydney - and more recently constructed pipelines. APA has made significant acquisitions with GasNet - the dominant gas transmission pipeline operator in Victoria, Allgas Energy a South-East Queensland gas distributor and Origin Energy Networks a provider of management and operations services to Victorian gas distribution and transmission company Envestra as well as a 30.6% stake in Envestra and a 33% interest in the SEA Gas pipeline.
> ...




Yes that is it.   Supposedly they have an income security as well APTIT but initial investigation suggests it is a stapled security, so when you buy APA you are getting some units in the partnership and some separate units in this income trust.   So I'm sure the taxation issues alone will make for interesting reading. :/   It's probably a very tax advantageous investment for an Australian resident.   For a U.S. resident it is probably a headache, but I'm a masochist so I'll probably have a close look at it.

My first glance convinces me they own outstanding assets.  I guess they have a gearing problem, but given the solid revenues pipelines bring in they can afford to push on gearing.

I would appreciate feedback on APA from any of you who have studied it.


----------



## Paragon1 (28 July 2009)

persistentone said:


> Does anyone know if an Australian pipeline company named APT Pipelines trades on ASX?
> 
> In general, are there any natural gas pipeline plays in Australia other than those BBI owns that trade on ASX?




Hastings Diversified Utility Fund (HDF) own Epic Energy which owns natural gas pipelines throughout Australia. A recent takeover proposal by Trust Company of the West valued it at 10.1x EBITDA (which was 68m in 2008)


----------



## persistentone (28 July 2009)

Paragon1 said:


> Hastings Diversified Utility Fund (HDF) own Epic Energy which owns natural gas pipelines throughout Australia. A recent takeover proposal by Trust Company of the West valued it at 10.1x EBITDA (which was 68m in 2008)




Sure, but Hastings is a bit of a mess, or was until it did its recent capital raising.   The TAPS Trust income security associated with HDF was a real home run, though, and has been made money good for all effective purposes.

APA actually looks like a well-oiled and well managed machine.    I think I might actually trust a company like APA with some debt.


----------



## nathanblack (28 July 2009)

interesting that the original announcement was to sell 29.7% and stated wanting to sell down further to 49% minority stake. now they've done this deal suddenly there is no desire to sell down anymore, yet not cash from the sale has been diverted to corporate debt. obviously part of the deal is that they dont further sell down, and even if they wanted to i guess they now need to retain atleast enough to give the consortium 65% in a few years time.

overall im happy with the deal. europrts is healthier, own 100% of most ports(simpler), has someone to share capital expenses with going forward, put option out the way.

not impressed with the change of direction, ie not dealing to pay down corporate debt. hate to see them do a similar deal on DBCT. but i'd say this deal makes 49% sale more likely??? also shows that a "friend" could get involved in DBCT. They probably need 100% sale more than ever now.


----------



## persistentone (28 July 2009)

nathanblack said:


> interesting that the original announcement was to sell 29.7% and stated wanting to sell down further to 49% minority stake. now they've done this deal suddenly there is no desire to sell down anymore, yet not cash from the sale has been diverted to corporate debt. obviously part of the deal is that they dont further sell down, and even if they wanted to i guess they now need to retain atleast enough to give the consortium 65% in a few years time.
> 
> overall im happy with the deal. europrts is healthier, own 100% of most ports(simpler), has someone to share capital expenses with going forward, put option out the way.
> 
> not impressed with the change of direction, ie not dealing to pay down corporate debt. hate to see them do a similar deal on DBCT. but i'd say this deal makes 49% sale more likely??? also shows that a "friend" could get involved in DBCT. They probably need 100% sale more than ever now.




I'm sure they wanted to sell down to 49%, but they couldn't.   And it looks like they had to agree to horrible terms just to get any equity sold at all.

From the standpoint of corporate debt repayment, this deal leaves them worse off not better.    They lose 40% of the EBITDA but only lose about 30% of the asset related debt.   That makes their debt coverage overall worse not better.

Let's be honest here:  they did this deal to avoid the embarrassment of having Euroports do an Administration.    As far as helping BBI with its debt problems, it doesn't look like this deal does that, and in fact sets us backward.


----------



## nathanblack (28 July 2009)

persistentone said:


> From the standpoint of corporate debt repayment, this deal leaves them worse off not better.    They lose 40% of the EBITDA but only lose about 30% of the asset related debt.   That makes their debt coverage overall worse not better.



i dont entirely agree with that. the proceeds of the sale went towards buying out minority holders in indidual assets and paid out the put option. the remainder pays off some asset level debt.

so 100% euroports(presale)<100% euroports(post debt reduction/port acquisitions)

earnings from 100% stake in smaller ports will be greater than before and less interest will be payable. the downside if it doesnt perform, ie giving up 65% of euroports is a bad situation, but if things rebound globally then some of the increased port holding will increase in value(i assume we paid fair market value). 
also future costs are now split 40-60.

so i think euroports will be able to contribute to corporate debt reduction within a short period of time.

i agree its not great news, but its not terrible either. i just question the direction of the company, they announce a strategy then change plans with this particular sale. this makes you wonder how hell bent they are on selling DBCT in a straight forward cash for asset sale.

will they try orchestrate a similar sale for DBCT. are they still devoted to asset sales and debt reduction? 

personally, the recent rally from 6.3c to 8c at one point today, compared with a flatter beppa over the same period has convinced me to swap out of BBI and back to BEPPA. for my sitution the changeover cost will work and i see more upside in beppa and possibly when the gap opens again a switch back to bbi. 

if i can do that a few times before sparcs dilution, then one final time after the dilution i will have a larger holding than just holding throughout


----------



## persistentone (28 July 2009)

nathanblack said:


> i dont entirely agree with that. the proceeds of the sale went towards buying out minority holders in indidual assets and paid out the put option. the remainder pays off some asset level debt.
> 
> so 100% euroports(presale)<100% euroports(post debt reduction/port acquisitions)
> 
> ...




Really good point regarding the possibility that Euroports post-sale may have much better EBITDA.   But can you quantify the claim?

Euroports and PD Ports are cyclical assets with revenue models that are usage based.   Those kinds of assets get lousy prices when you sell them in a distress situation.   And who can blame the buyers for not wanting to pay up for declining revenues?

DBCT is a different animal entirely.   As BB points out, the revenue is guaranteed whether the ships use the facility or not.   They are using more of a pipeline reservation model where they get paid even during low utilization.  DBCT should be able to fetch a much better multiple.

The risk with DBCT as I see it is more around conspiracy by the bidders for the asset.    Given the need for a quick sale, couldn't the coal companies conspire to put BBI into Administration, then when dealing with an asset sale through an Administrator, they could conspire to form a "joint venture" that avoids all competition on the asset purchase.    The purpose of the joint venture would be to buy the asset for low dollar and then to pass on that low cost to all coal companies who own stakes in the venture.  If BBI had no liquidity issues, they could wait a long time for the bidders to compete.   BBI would see through any "joint venture" in a second and reject their bid.   An Administrator won't be that savvy.


----------



## random (28 July 2009)

I realize that 2012/13 is a long way off and i am happy to take flack on this but my taking on this deal is that *if *trade in euroports ports returns to 2008 volumes or better we will actually be in a favourable position.

By that i mean that our "take home pay" will be as good as it was, or better than before this deal was done with the additional % of ownership of ports we now have.

If trade does not return......well i'd rather not go there for now.

Its a bitter sweet pill we just took.
We just don't know quite how bitter yet - time will tell.

Just my take at this time!


----------



## nathanblack (28 July 2009)

persistentone said:


> Really good point regarding the possibility that Euroports post-sale may have much better EBITDA.   But can you quantify the claim?
> 
> *unfortunately BBI dont breakdown the results for individual ports, but obviously 100% belgium port > 50% belgium port.*
> 
> ...




*BBI directors will look after themselves, not me or any other BBI holder. Selling DBCT will result in job losses for mates, but selling to mates and restructuring could allow them to keep there jobs and any mates to make a fortune.

someone mentioned yesterdays heavy volume and price rise as clearly an indication of inside trading regarding euroports. let all the connected people buy in before announcing to general public.

if you buy into that theory, then there must be some concern that there isnt huge volume and price rises based on the current bidding process at DBCT. there must be several people at BBI and MAQ in a position to know the likelyhood of no/bad/good/great sale yet no leak?*


----------



## nathanblack (28 July 2009)

random said:


> I realize that 2012/13 is a long way off and i am happy to take flack on this but my taking on this deal is that *if *trade in euroports ports returns to 2008 volumes or better we will actually be in a favourable position.
> 
> By that i mean that our "take home pay" will be as good as it was, or better than before this deal was done with the additional % of ownership of ports we now have.
> 
> ...



yes i'd assume the same. if things are rosey in 2012, then the earning will rebound and the asset value will increase. and this will be amplified by the increased holdings in some smaller ports that were acquired today. you would ASSUME that under those trading condition BBI retain 60% odd of euroports.

IF euroports isnt performing, the new buyers will get an increased stake(up to 65%), so effectively they cant lose.   it would be a bit like your house dropping in value by 50%, but then your neighbour gives your there house for free. you now have 2 houses 50% + 50% = 100%.

they cant lose. BBI can.

Hopefully BBI will reveal under what performance target each trigger event occurs, hopefully they are realist and not stacked against BBI too much. Np insto will commit until those details are transparent. especially when sparc is dilutionary, we dont want euroports diluted to 35% too


----------



## cpsharky (29 July 2009)

persistentone said:


> The risk with DBCT as I see it is more around conspiracy by the bidders for the asset.    Given the need for a quick sale, couldn't the coal companies conspire to put BBI into Administration, then when dealing with an asset sale through an Administrator, they could conspire to form a "joint venture" that avoids all competition on the asset purchase.




I agree peristentone. DBCT is a very large asset; and divided up could keep many buyers content so buyers conspiring is my greatest worry. Given the time this has taken and the apparent lack of insider buying, I am concerned about not achieving the price multiple we are after. 

If we can't find a real buyer then I would be hoping to unlock the equity in DBCT some other way. In my mind, it would make for a great float. It is a very straight forward investment to rate and understand and Asciano has shown there is still plenty of capital out there able to be raised for infrastructure investments. Beppa holders would quite likely agree to being "transferred" over to the new float also if they were given appropriate ranking in the new structure. I hope Maquarie/BBI is at least considering it.


----------



## persistentone (29 July 2009)

cpsharky said:


> I agree peristentone. DBCT is a very large asset; and divided up could keep many buyers content so buyers conspiring is my greatest worry. Given the time this has taken and the apparent lack of insider buying, I am concerned about not achieving the price multiple we are after.
> 
> If we can't find a real buyer then I would be hoping to unlock the equity in DBCT some other way. In my mind, it would make for a great float. It is a very straight forward investment to rate and understand and Asciano has shown there is still plenty of capital out there able to be raised for infrastructure investments. Beppa holders would quite likely agree to being "transferred" over to the new float also if they were given appropriate ranking in the new structure. I hope Maquarie/BBI is at least considering it.




That's a very interesting idea.   I guess Maquarie's fee would be semi-outrageous, but in absence of a real buyer I believe an asset of that quality could get a 10 multiple.   And what I particularly like about that idea is that BBI could float more than 49% of the asset without losing effective control, and that BBI could control use of the funds, specifying clearly how much of it would stay with the asset and how much would go back to pay corporate debt for BBI.   

BB: since you have an in with the CFO, is that an idea you might try to suggest to him?


----------



## nathanblack (29 July 2009)

persistentone said:


> That's a very interesting idea.   I guess Maquarie's fee would be semi-outrageous, but in absence of a real buyer I believe an asset of that quality could get a 10 multiple.   And what I particularly like about that idea is that BBI could float more than 49% of the asset without losing effective control, and that BBI could control use of the funds, specifying clearly how much of it would stay with the asset and how much would go back to pay corporate debt for BBI.
> 
> BB: since you have an in with the CFO, is that an idea you might try to suggest to him?




Persistent1, its not a new idea and has been discussed before. the biggest dilemna is what price should BBI put on DBCT for purpose of floating? Be realistic in your answer to your self. Think along the lines would YOU invest into the float at that price.

If BBI tried to float it at say $2.8bil, the first thought that jumps into my mind is that they DIDNT recieve an offer of that much or more, otherwise they would acept it. Are you willing to buy in at an inflated price? Its a good idea and could have worked IF they went down that path from the beginning.

The other aspect is, assume they did sell 50% in a float at $1.4bil. most of that money will need to go to asset level debt reduction. Think if you buy a house do you inherit the previous owners mortgage aswell? so a 50% float will not reduce the corporate debt, we need 100% really.


----------



## persistentone (29 July 2009)

nathanblack said:


> Persistent1, its not a new idea and has been discussed before. the biggest dilemna is what price should BBI put on DBCT for purpose of floating? Be realistic in your answer to your self. Think along the lines would YOU invest into the float at that price.
> 
> If BBI tried to float it at say $2.8bil, the first thought that jumps into my mind is that they DIDNT recieve an offer of that much or more, otherwise they would acept it. Are you willing to buy in at an inflated price? Its a good idea and could have worked IF they went down that path from the beginning.
> 
> The other aspect is, assume they did sell 50% in a float at $1.4bil. most of that money will need to go to asset level debt reduction. Think if you buy a house do you inherit the previous owners mortgage aswell? so a 50% float will not reduce the corporate debt, we need 100% really.




Remember the "strategic" buyers view this asset differently than a retail investor would.   The strategic buyer simply wants to control their supply chain to China, and possibly gain control of the asset in the long term in order to lower their costs of business.

A retail buyer would look at DBCT the way they look at a pipeline:  as a way to get a tax-advantaged high-dividend yield with lots of growth opportunities for the dividend.

For something like this idea of floating DBCT to make sense, I think it would need to pay out a 10% dividend to the investor.   Probably that is going to be hard selling the asset at a 12.5 enterprise value to EBITDA multiple.   

If they did do a 50% sale at $1400MM, then cleared that much of the asset level debt, then that leaves BBI in a much stronger position going forward to pay off corporate debt.   Because they clear $1400/$1806 = 77.5% of their interest expenses from DBCT, but retain 50% of the EBITDA. 

In the big picture, they may still be between a rock and a hard place.


----------



## nathanblack (29 July 2009)

persistentone said:


> Remember the "strategic" buyers view this asset differently than a retail investor would.   The strategic buyer simply wants to control their supply chain to China, and possibly gain control of the asset in the long term in order to lower their costs of business.
> 
> A retail buyer would look at DBCT the way they look at a pipeline:  as a way to get a tax-advantaged high-dividend yield with lots of growth opportunities for the dividend.




As a retail buyer would YOU buy into the float if it valued DBCT at $2.8bil even though you knew "strategic" buyers had offered only $2.4bil? 15% odd premium?

Under what conditions would you buy into DBCT float? Debt repaid at asset level? control still with BBI? would you want your "share" to be structured as equity or debt? options attached to further increase equity in DBCT or even in BBI? at what value would you buy into DBCT?


----------



## persistentone (29 July 2009)

nathanblack said:


> As a retail buyer would YOU buy into the float if it valued DBCT at $2.8bil even though you knew "strategic" buyers had offered only $2.4bil? 15% odd premium?
> 
> Under what conditions would you buy into DBCT float? Debt repaid at asset level? control still with BBI? would you want your "share" to be structured as equity or debt? options attached to further increase equity in DBCT or even in BBI? at what value would you buy into DBCT?




My point was that my valuation of DBCT would have little in common with the strategic buyers.    I want good coverage for a strong dividend and a lot of growth opportunity.   The strategic buy probably doesn't want that; they want to control costs on another business.    So it's not the case that each type of buyer evaluated the same asset with the same goals, and reached different conclusions.

The bigger problem is that to pay the price BBI needs the retail buyer to pay, probably precludes paying a good dividend (if the dividend is based on what they can really afford and isn't itself the cause of more gearing).    So it's all academic anyway.


----------



## nathanblack (29 July 2009)

persistentone said:


> The bigger problem is that to pay the price BBI needs the retail buyer to pay, probably precludes paying a good dividend (if the dividend is based on what they can really afford and isn't itself the cause of more gearing).    So it's all academic anyway.




OK. So we agree it was a good idea, but aint going to happen.

Not exaxctly a growth asset either, there are a few minor expansions possible and the regulator can increase fees to grow with inflation and such. but over all its more defensive than growth.


----------



## persistentone (29 July 2009)

nathanblack said:


> OK. So we agree it was a good idea, but aint going to happen.
> 
> Not exaxctly a growth asset either, there are a few minor expansions possible and the regulator can increase fees to grow with inflation and such. but over all its more defensive than growth.




Take a look at a satellite photo of DBCT sometime.    It's unbelievably tiny really.  Looks like plenty of expansion is possible there, and if there are really 20+ ships lined out to sea, you can easily imagine the facility handling twice or three times the traffic.

Then again, is coal export a growth business for more than 10 years?


----------



## nathanblack (29 July 2009)

persistentone said:


> Take a look at a satellite photo of DBCT sometime.    It's unbelievably tiny really.  Looks like plenty of expansion is possible there, and if there are really 20+ ships lined out to sea, you can easily imagine the facility handling twice or three times the traffic.
> 
> Then again, is coal export a growth business for more than 10 years?




Also the rail system leading to DBCT cant cope with much more, infact its not coping now. How much of the land is available and owned/leased by dbct for development and is the expense worth the return.

also how much can a lease really grow? although 99years is along way away, at some point the asset needs to depreciate to $0.


----------



## hardyakka (29 July 2009)

nathanblack said:


> As a retail buyer would YOU buy into the float if it valued DBCT at $2.8bil even though you knew "strategic" buyers had offered only $2.4bil? 15% odd premium?
> 
> Under what conditions would you buy into DBCT float? Debt repaid at asset level? control still with BBI? would you want your "share" to be structured as equity or debt? options attached to further increase equity in DBCT or even in BBI? at what value would you buy into DBCT?




If DBCT was floated into a separate vehicle I would gladly swap $1 of BEPPA for $1 of ordinary units, each unit representing $1 NTA of DBCT, the NTA overpriced by 15%. 

A very defensive income stream and I am getting a $1 of 15% over priced units backed by DBCT and its income stream and nothing else. Thats a great deal considering $1 face value of BEPPA costs about 12 cents.


----------



## nathanblack (29 July 2009)

hardyakka said:


> If DBCT was floated into a separate vehicle I would gladly swap $1 of BEPPA for $1 of ordinary units, each unit representing $1 NTA of DBCT, the NTA overpriced by 15%.
> 
> A very defensive income stream and I am getting a $1 of 15% over priced units backed by DBCT and its income stream and nothing else. Thats a great deal considering $1 face value of BEPPA costs about 12 cents.




I wish they would offer something similar, id accept even less. i reckon we could sell a share in dbct on market for about its float price or certainly alot more than beppa trading price.

wont happen though because it brings no money to BBI, yes it removes $800mil beppa but thats long term debt. they need actual cash to reduce corporate debt more.


----------



## nathanblack (29 July 2009)

IF BBI were to refinance some corporate debt into asset level debt, which assets have most room to move(from a debt/equity and interest cover angle)?

Is that a solution, that either some corporate debt or even sparcs is recapitalised into asset level debt? maybe instead of selling DBCT, we can tap into $200mil of equity and do the same with NGPL, then sell PD Ports only.

I know from a SP angle, it will help only a little, due to increased certainty, possibly getting sparcs out the way and removing the bank sweep. Im only thinking of an alternative to selling, if BBI are having difficulty. Obviously asset level banks will only allow it if EV is enough and interest cover.

But IF we could unlock say:
DBCT($300mil)
NGPL($300mil)
PD Ports(sell and paydown as much as possible)

Then use that money to repay corporate level debt plus sparcs. No dilution, assets intact, still same debt just shifted from one place to the next, same interest cover, perhaps lower interest rate because loan is now secured against an asset. 

After interest cover there should be money left over for BBI to put aside for beppa and save for a rainy day. under those conditions SP will rise, lets say to 25c. BBI then do a 1:1 right issue at discounted price of 20c. Proceeds can be used to pay outstanding dividend which is a requirement of beppa if equity is raised all outstanding divs must be paid.

remainder of funds raised used to lower debt ratio on the higher geared assets. which will further reduce interest payable, thus creating larger profit.

RESULT: SPARCS paid out in full. BBI no dilution. BEPPA worth $1 in 2012. WIN-WIN-WIN.

Obviously relies on banks being agreeable to restructuring asset level debt, and enough net equity being available. Corporate banks will definately agree(they get paid out). Asset level banks should agree if the ratio and cover is there, especially if BBI only roll the debt over into short term debt with the knowledge that after a capital raising they can payback some or all of the rolled over debt.

i know the only way to realise NAV value of 90c/share is to sell ALL assets at or above book value, and selling some assets will result in somewhere between current SP and the NAV, but surely 25c/share would still be a great result considering it deals with all issues and retains key profitable assets to improve value going forward.

Just a rant really, i know it wont happen, but it demonstrates there are options available.


----------



## persistentone (29 July 2009)

nathanblack said:


> IF BBI were to refinance some corporate debt into asset level debt, which assets have most room to move(from a debt/equity and interest cover angle)?
> 
> Is that a solution, that either some corporate debt or even sparcs is recapitalised into asset level debt? maybe instead of selling DBCT, we can tap into $200mil of equity and do the same with NGPL, then sell PD Ports only.
> 
> ...




You would never get a corporate lender to agree to take a step down to the asset level.

But maybe you could get some new lender to give asset level debt for the highest quality assets, specifically DBCT and NPGL.    The new NPGL debt would then pay off the corporate level debt for NGPL, and the DBCT asset level debt would pay off some additional corporate debt.    The DBCT asset has a strong growth path on EBITDA projected so you might pull that off.

At the end of the day, there is still $1250 of corporate debt to get rid of, and getting rid of $600M to maybe $800M of that as a debt for debt swap doesn't really get the corporate lenders off our backs.   For BBI to restore operational flexibility we need those corporate lenders to get paid off in full and just go away.   Anything less than that and we are in a slow burn.

Has anyone done an analysis to see if we turn off all growth capex and just do minimum maintenance capex (which is the mode the corporate lenders already have them in I am sure), given the EBITDA around $1100MM how long does it take us to pay off corporate debt in full?     Assume that all lenders cooperate in restructuring debt repayment dates to accomodate the cash flows.


----------



## nathanblack (29 July 2009)

persistentone said:


> You would never get a corporate lender to agree to take a step down to the asset level.
> *secured against a quality asset, i'd consider it. plus i was more thinking unlocking the equity via new loan, then using that to repay corporate debt.
> 
> *
> ...




*thats basically what im saying/wondering. if we recapitalise our corporate debt into asset level debt, we survive. if we survive and make repayments from free cash flow, how long will it take to be 100% healthy and reduce our debt ratios without selling *


----------



## banska bystrica (29 July 2009)

persistentone said:


> Has anyone done an analysis to see if we turn off all growth capex and just do minimum maintenance capex (which is the mode the corporate lenders already have them in I am sure), given the EBITDA around $1100MM how long does it take us to pay off corporate debt in full?




Approximately 5-6 years...................................................................................


----------



## persistentone (29 July 2009)

banska bystrica said:


> Approximately 5-6 years...................................................................................




I came up with three years, but I trust your numbers better than mine. 

Pretty hard situation in either case....


----------



## nathanblack (29 July 2009)

persistentone said:


> I came up with three years, but I trust your numbers better than mine.
> 
> Pretty hard situation in either case....




in a relatively short time the company could be corporate debt free, without selling assets. but banks/ shareholders will not wait that long, pitty because i think the SP would be pretty healthy then. And each year the balancesheet will improve so even shorter term like 2years would be a pretty healthy low risk profile company. at such time other opportunities will arise to counter debt.

seems like resistance at 8c now, if that breaks near term, could get a bit of a run on. at 6c i was bullish on BBI(versus BEPPA), but at current prices and with current issues/future announcements im think BEPPA has got the edge over BBI again (risk v reward)


----------



## persistentone (30 July 2009)

banska bystrica said:


> Approximately 5-6 years...................................................................................




If management doesn't like the price offered for DBCT and decides to just payoff loans the hard way, do you think lenders will accomodate that, or do you think they will push for Administration?

Administration almost certainly will increase the lenders' losses.   I'm thinking the lenders must prefer to get paid their interest and principal as long as the economy can sustain EBITDA in excess of interest?

If that scenario unfolds, then BBI and BEPPA enter a period of long long sleep.   It would be years before the turn happens.


----------



## banska bystrica (30 July 2009)

Why would the banks "push for administration" when they have the sweep in place? The sweep achieves exactly the same as administration would. Free cash to the banks to reduce debt. BBI has never missed an interest payment to a bank. The banks cannot legally put them into administration until debt covenants are breached. We have been through the worst financial crisis in living memory yet BBI have still paid their bank debts on time. What grounds have the banks to put them into administration? NONE.

DBCT will sell for a very good price. Corporate debt will be reduced to the US$250M due in 2013 and then you will see a restructure of the debt/equity (BEPPA/BBI). My opinion only.


----------



## persistentone (30 July 2009)

banska bystrica said:


> Why would the banks "push for administration" when they have the sweep in place? The sweep achieves exactly the same as administration would. Free cash to the banks to reduce debt. BBI has never missed an interest payment to a bank. The banks cannot legally put them into administration until debt covenants are breached. We have been through the worst financial crisis in living memory yet BBI have still paid their bank debts on time. What grounds have the banks to put them into administration? NONE.
> 
> DBCT will sell for a very good price. Corporate debt will be reduced to the US$250M due in 2013 and then you will see a restructure of the debt/equity (BEPPA/BBI). My opinion only.




They could be forced into a breach of covenants on PD Ports, depending on how much business they lose there (and how much is offset by the new import centre), and PD Ports does have a lot of corporate debt.   So there are scenarios where they breach covenants and the banks could push them into administration.

Having said that, I agree with you they should not want to do that.   If DBCT does not sell, probably the most likely outcome is the banks restructure debt and continue to milk them.   The only thing that changes that outcome is if economy worsens and EBITDA falls.


----------



## investorpaul (30 July 2009)

persistentone said:


> They could be forced into a breach of covenants on PD Ports, depending on how much business they lose there (and how much is offset by the new import centre), and PD Ports does have a lot of corporate debt.   So there are scenarios where they breach covenants and the banks could push them into administration.
> 
> Having said that, I agree with you they should not want to do that.   If DBCT does not sell, probably the most likely outcome is the banks restructure debt and continue to milk them.   The only thing that changes that outcome is if economy worsens and EBITDA falls.




Correct me if I am wrong but isnt the BBI model to have all assets "held at arms length" so if PD ports goes into Admin they "cut it off" and the main company BBI  survives.

EG If PD ports goes into admin, they cut it off, BBI survive but there share price would still get hammered. Obviously not ideal but better than the whole company going into admin


----------



## nathanblack (30 July 2009)

investorpaul said:


> Correct me if I am wrong but isnt the BBI model to have all assets "held at arms length" so if PD ports goes into Admin they "cut it off" and the main company BBI  survives.
> 
> EG If PD ports goes into admin, they cut it off, BBI survive but there share price would still get hammered. Obviously not ideal but better than the whole company going into admin




Yes, thats the idea of the non-recourse asset level debt. However some assets have corporate level debt associated with them too, eg PD Ports, so theoretically the corporate bankers have a claim too.


----------



## random (30 July 2009)

Is anyone else having a problem accessing the announcement by bbi this morning?

I've tried on the asx site as well as commsec to get it up on the screen.
The last announcement also took ages to access although the announcement icon was published.

Guessing its todo with the sale!


----------



## investorpaul (30 July 2009)

random said:


> Is anyone else having a problem accessing the announcement by bbi this morning?
> 
> I've tried on the asx site as well as commsec to get it up on the screen.
> The last announcement also took ages to access although the announcement icon was published.
> ...




It just confirms the sale has been complete but does not provide any new or further info. It is not listed as a price sensitive announcement


----------



## shiftyphil (30 July 2009)

Don't bother with announcements on CommSec at the moment, it's broken.

It's fine for me straight from ASX.

It's just a follow up to yesterday's notice saying the transaction is complete.


----------



## random (30 July 2009)

Thank you gentlemen.
............................................................................


----------



## nathanblack (30 July 2009)

random said:


> Is anyone else having a problem accessing the announcement by bbi this morning?
> 
> I've tried on the asx site as well as commsec to get it up on the screen.
> The last announcement also took ages to access although the announcement icon was published.
> ...




through comsec worked fine for me, but note on the "comsec news" to the left hand side of the page that some clients are experiencing difficults accessing announcements. the way around it is to not search the code: BBI and then click on the news link, INSTEAD:
goto :"news/research" at the top of page, then enter code :bbi.

but, yes your right, its just regarding the earlier euroports announcement, saying all went through and its finalised. not price sensitive because nothing new in it.

cheers


----------



## random (30 July 2009)

Thank you gentlemen.
............................................................................


----------



## persistentone (30 July 2009)

investorpaul said:


> Correct me if I am wrong but isnt the BBI model to have all assets "held at arms length" so if PD ports goes into Admin they "cut it off" and the main company BBI  survives.
> 
> EG If PD ports goes into admin, they cut it off, BBI survive but there share price would still get hammered. Obviously not ideal but better than the whole company going into admin




90% correct.   Unfortunately PD Ports has $170MM+ of corporate debt associated with it, and if we lose a lot of business there we trigger covenants on the corporate debt.    

If the corporate bankers had a reason to push BBI into Administration, that technical default on covenants for the PD Ports corporate debt might let them do it.

I don't think they would want to do that though and I'm trying to establish that as a consensus among others.


----------



## Paragon1 (30 July 2009)

persistentone said:


> 90% correct.   Unfortunately PD Ports has $170MM+ of corporate debt associated with it, and if we lose a lot of business there we trigger covenants on the corporate debt.
> 
> If the corporate bankers had a reason to push BBI into Administration, that technical default on covenants for the PD Ports corporate debt might let them do it.
> 
> I don't think they would want to do that though and I'm trying to establish that as a consensus among others.




True, the probability of a formal administration/liquidation is low - no defaults yet and strong cash flows in a tough environment etc.

But what about an informal liquidation similar to BNB. After breaking covenants the banks forced them to sell all assets over a three year period. They removed all interest payments and charged a 'restructuring fee' of 20% pa with a senior ranking. Subordinated noteholders will therefore get little or nothing after its all over.

BBI is a different though with strong cash flows and quality assets. However, has anyone handicapped the proability of BBI being turned into a 'zombie' company?


----------



## banska bystrica (31 July 2009)

Good summary from a poster over the road on yesterday's Fin Review article regarding the absence of competitive bidders for DBCT.

_"According to the AFR article, the consortium in the hot seat is Anglo, Xstrata and Rio. Macarthur Coal and Felix Resources have reportedly baulked at participating due to the difficulty of obtaining funding for essentially a regulated return. The AFR's reasoning is that a serious buyer either needs a very low cost of capital or be a strategic buyer who wants operational control. The consortium fits fairly and squarely in the latter camp and there aren't too many companies around with sources of low cost multi-billion dollar capital. Hence the absence of competitive bidders."_

My view was always that a consortium of majors would buy DBCT. It's just too expensive for small players. QIC would also have to be a serious bidder but probably only for 49%.


----------



## Mitsimonsta (31 July 2009)

BB - there is another possibility of a buyer that I had not thought of. Maybe the Future Fund?

A regulated return on investment would be very attractive for the Future Fund, and they have plenty of cash. It had not hit me until I read this article earlier this morning.

DBCT is export infrastructure of national importance, regulated returns, room for expansion if required. I would imagine this would be a good fit for the investment goals of the future fund.

Thoughts of the panel?


----------



## investorpaul (31 July 2009)

New BBI announcement PD Ports debt facility of 75 m pounds extended for 3 months, it was due to expire on 31 July

BBI Announcement

Good short term news gives us a few more months to get things sorted.


----------



## banska bystrica (31 July 2009)

investorpaul said:


> New BBI announcement PD Ports debt facility of 75 m pounds extended for 3 months, it was due to expire on 31 July
> 
> Good short term news gives us a few more months to get things sorted.




Well I must have read a different announcement. That PD Ports news was neutral at best but mainly bearish. I shorted a few BBI at 7.9c on the back of it as I think the market will eventually wake up that this was not positive.


----------



## investorpaul (31 July 2009)

banska bystrica said:


> Well I must have read a different announcement. That PD Ports news was neutral at best but mainly bearish. I shorted a few BBI at 7.9c on the back of it as I think the market will eventually wake up that this was not positive.




Its better than them requesting their money today though? 

If they did, we dont have the money to give and would be up a creek without a paddle. Obviously 3 months is a very short period of time and the announcement highlights that the bankers want to keep their money within touching distance. However had the announcement said that the finances of PD Ports have requested payment of 75 m pounds today (due to expiry of the loan) and we dont have the cash it would be a bloodbath on the stock price.


----------



## nathanblack (31 July 2009)

investorpaul said:


> Its better than them requesting their money today though?
> 
> If they did, we dont have the money to give and would be up a creek without a paddle. Obviously 3 months is a very short period of time and the announcement highlights that the bankers want to keep their money within touching distance. However had the announcement said that the finances of PD Ports have requested payment of 75 m pounds today (due to expiry of the loan) and we dont have the cash it would be a bloodbath on the stock price.




and take it in context. this debt facility was extended in january for 6months, now again for 3months. do you really think that in 3months time it wont be extended again if bbi desire?

what it does is show bbi's ability to access funds, and buys time. that time we will payoff more debt through sweep and hopefully announce another sale.

further more, if you consider sparcs a done deal(ie it will convert to BBI), then being due same time aint an issue. and although the sp will probable fall 50% if/when dilution happens, its pretty much factored in. if they avoided dilution the upside is greater than the downside.

and its gotta be positive for beppa surely?


----------



## investorpaul (31 July 2009)

nathanblack said:


> and take it in context. this debt facility was extended in january for 6months, now again for 3months. do you really think that in 3months time it wont be extended again if bbi desire?
> 
> what it does is show bbi's ability to access funds, and buys time. that time we will payoff more debt through sweep and hopefully announce another sale.
> 
> ...




I think the short time frames of 6 months and 3 months indicates that the banks are still cautious. They know in a worst case scenario that they can ask for their money back in a very short period of time. 

3 months comes and goes very quickly so hopefully BBI can keep moving forward with their asset sales process so they dont have this hanging over their head for too much longer.


----------



## nathanblack (31 July 2009)

investorpaul said:


> I think the short time frames of 6 months and 3 months indicates that the banks are still cautious. They know in a worst case scenario that they can ask for their money back in a very short period of time.
> 
> 3 months comes and goes very quickly so hopefully BBI can keep moving forward with their asset sales process so they dont have this hanging over their head for too much longer.




i agree 3months is a short time, and i agree the reason is so the banks can limit the risk and keep control over BBI and particularly getting back there money.

but every indication is that the banks look at the current situation then determine the risk before extending again, there is no prejudice about the company for any reason including the BNB assosciation.

in 3months time IF dbct hasnt sold, nor PD Ports, then the bank will reasses again. and provided all payments are being met, the will extend again, probable over a similar 3-6month period.

sure its not ideal to need to negotiate every 3months, and creates uncertainty, but its a big company and the people incharge of debt will be different to those making sales, so the distraction shouldnt be significant.

the short term implications are neutral, nobody expected the facility to be pulled. medium term neutral, they need to keep renewing the debt. long term its positive because its gives guidence to managements ability to operate in these tough condition.

with more substancial debt due in feb 2010, you can only ASSUME a sale is imenent.


----------



## bellenuit (31 July 2009)

banska bystrica said:


> My view was always that a consortium of majors would buy DBCT. It's just too expensive for small players. QIC would also have to be a serious bidder but probably only for 49%.




But if it is going to be a *consortium* of majors, doesn't that imply that there is going to be no competition among the bidders. Or do you think there are several consortiums bidding?


----------



## banska bystrica (31 July 2009)

The Euroports sale ending up being 11.8X EBITDA. If they can get 11.8X for European ports that are struggling in the middle of a deep recession, then they should be able to get 12X EBITDA for DBCT. The major consortium bidding will not stuff around with a low ball bid knowing that QIC are also serious about buying a 49% stake in it. The consortium of major blue chips that are in there have the firepower and strength in their balance sheets to pay 12X. That gives a price of circa $2.8Bn.


----------



## nathanblack (1 August 2009)

banska bystrica said:


> The Euroports sale ending up being 11.8X EBITDA. If they can get 11.8X for European ports that are struggling in the middle of a deep recession, then they should be able to get 12X EBITDA for DBCT. The major consortium bidding will not stuff around with a low ball bid knowing that QIC are also serious about buying a 49% stake in it. The consortium of major blue chips that are in there have the firepower and strength in their balance sheets to pay 12X. That gives a price of circa $2.8Bn.




I agree thatt QIC are most likely a serious bidder, and probably only interested in 49% stake. There offer is likely to be very reasonable and creates a need for any consortium to also offer a fair price or miss out, some would argue a consortium would need to offer a premium to gain control, especially as it seems like BBI are quite willing to settle on 49%

i dont entirely agree with using the euroports EBITDA multiple to gain any insight into DBCT, because as we all know there were many terms in the sale which would effectively give the purchaser 65% of europrts for no additional cost. that would half the EBITDA multiple to about 6x.

Perhaps selling 49% for a premium to QIC and having similar performance targets factored in that could give QIC a further 10% is a possibility. A bit harder to do if we sell 100% to begin with, in that case we can only offer partial refund if it doesnt perform to expectations.


----------



## banska bystrica (1 August 2009)

nathanblack said:


> A bit harder to do if we sell 100% to begin with, in that case we can only offer partial refund if it doesnt perform to expectations.




Doesn't perform to expectations???? It's a *REGULATED* asset for goodness sakes. It doesn't matter whether one ship visits or 5000 ships visit. The income is known and guaranteed in advance.


----------



## nathanblack (1 August 2009)

banska bystrica said:


> Doesn't perform to expectations???? It's a *REGULATED* asset for goodness sakes. It doesn't matter whether one ship visits or 5000 ships visit. The income is known and guaranteed in advance.




but there can be bottlenecks and delays and other complications that mean it doesnt achieve the >85 capacity. just making an expansion and CLAIMING a certain throughput doesnt make it so.

if you bought a ferrari only because the manufacturer stated it would do 300km/hr, and nobody had tested it to see if it could infact deliver on the claim, you then drive that ferrari under test conditions and it only reaches a maximum of 250km/hr, do you have a claim for compensation?

from my experience in large scale projects of this nature, id be very surprised if it ran at full capacity in the first full year.


----------



## nathanblack (1 August 2009)

i guess what im trying to say is that if we are going to use 2010 or 2011 EBITDA multiples to value the asset, then i feel some guarantee that those EBITDA will eventuate needs to be provided to achieve top dollar.


----------



## banska bystrica (1 August 2009)

The regulator sets the price per tonne. The users agree to pay the price per tonne multiplied by the capacity of the port regardless of whether they use the full capacity. It's as certain as you will ever get when it comes to revenue forecasts.
Talk of "under-performance" when it comes to ports is only relevant when referring to unregulated ports like Teesport (PD Ports).
DBCT is NOT an unregulated port. The current users would be prepared to pay for a 100M tonne capacity so they will easily use the 85M tonnes. They have been screaming for years about not enough capacity at DBCT.
The EBITDA projections for DBCT are very reliable. You can almost lock them in.


----------



## nathanblack (1 August 2009)

"The current users would be prepared to pay for a 100M tonne capacity so they will easily use the 85M tonnes. "

i wasnt questioning demand, i was more questioning the ports ability to deliver on 85M t. If the infrastructure has teething problems it may only achieve 75M t for example, even though there are ships waiting.

ie the demand is there but DBCT cant supply the service.

Obviuosly, DBCT has been affected by cyclones in the past, i wouldnt want guarantees against anything like that. I only want to be sure it can and will handle the 85M t promised.

I know apart from the physical expansion, there have been handling changes which have reduced wait times and increased throughput, so i suspect it can deliver the 85M t or close enough not to worry too much.

So i guess its as good as a guarantee. Just thought it wouldnt hurt to factor in under delivery of output, and reward BBI if it can exceed projected capacity.

Something along the lines of :

actual capacity < 80M t : refund $100mil
80M t <actual capacity <90M t : no refund
actual capacity > 90M t : bonus $100mil

If DBCT projection are reliable, then it should be status quo, if they were cautious with the 85M t assumption we can be rewarded. I guess its a bit trivial as far as it would only increase the overall sale price by an immaterial amount and it would be 12months down the track.


----------



## mikes (1 August 2009)

dalrymple bay regulated by whom (price and performance) for whom, who appoints the regulator. 

( i look at tls and worry as i see the regulator as politician influenced and the tls competitor users and the tls customers in my view are very very favourably considered - only tls remedy is a capital strike and deferring maintenance (service reliability anyone) on regulated areas if cant get sense out of the regulated pricing/conditions. 

Remember the disaster which  happened several years ago when the victorian gas transmission industry operators delayed some maintenance.

feel happier though with news of current events in qld  and with bbi directors very closely connected to labour party luminaries. ( hope that selective donations to political parties and use of lobbiests are not banned and thankfully it is not china where there is a risk of being locked up).

also hope insured fully for a cyclone ( replacement cost, ongoing costs, loss of profits, etc etc.) and that the insurance premiums are fully paid up and are not in arrears.

if the chinese ( with their very cheap funds) bought the port, they could invite coal suppliers to quote on a delivered port basis and effectively bypass the regulator. - dont see why chinese cant buy as bbi owns ports in other countries and there is possibility of chinese involvement with iron ore ports in wa.  - they would keep rio honest.

holding beppa only


----------



## nathanblack (1 August 2009)

mikes said:


> dalrymple bay regulated by whom (price and performance) for whom, who appoints the regulator.
> *government. involves a tender process where people bid on how much they want to pay, then indexed to inflation, interest rates and other variables to come to a final price*
> 
> ( i look at tls and worry as i see the regulator as politician influenced and the tls competitor users and the tls customers in my view are very very favourably considered - only tls remedy is a capital strike and deferring maintenance (service reliability anyone) on regulated areas if cant get sense out of the regulated pricing/conditions.
> ...




*i think the chinese would be allowed to bid, certainly up to 49% anyway, but it would certainly require regulatory approval and we saw with OZL and the Wimmera asset it is possible to get rejected. i think we have enough globally successful local mining greats to bid for and own this asset.*


----------



## Paragon1 (1 August 2009)

Can someone please tell me what the asset level debt is for BBI's Australian energy assets? The last investor pack lists about 1.3bn for various individual assets but I reverse engineer an approximate figure of 1.8bn. Also what are your EV's under various scenarios? cheers


----------



## cpsharky (2 August 2009)

banska bystrica said:


> The Euroports sale ending up being 11.8X EBITDA. If they can get 11.8X for European ports that are struggling in the middle of a deep recession, then they should be able to get 12X EBITDA for DBCT. The major consortium bidding will not stuff around with a low ball bid knowing that QIC are also serious about buying a 49% stake in it. The consortium of major blue chips that are in there have the firepower and strength in their balance sheets to pay 12X. That gives a price of circa $2.8Bn.




I agree entirely. The 11.8X EBITDA figure you quote looks like it is based on the 2008 FY EBITDA of 63m Euro, an implied value of 354m and debt of 393m. So, not only is it about 12x EBITDA, it is 12X the EBiTDA at its *peak*. Even with the attached conditions this looks like BBI has done a brilliant job in an extremely difficult environment. The conditions sound like an excellent bargaining strategy for BBI IMHO. This is not simply a case of BBI taking on "all the risk". BBI gets a very good price now, and in return accepts some future risk. Anyone investing in BBI now is basically adopting the same attitude.

Fingers crossed for 13x EBITDA on DBCT. It really does look possible.


----------



## nathanblack (2 August 2009)

cpsharky said:


> I agree entirely. The 11.8X EBITDA figure you quote looks like it is based on the 2008 FY EBITDA of 63m Euro, an implied value of 354m and debt of 393m. So, not only is it about 12x EBITDA, it is 12X the EBiTDA at its *peak*. Even with the attached conditions this looks like BBI has done a brilliant job in an extremely difficult environment. The conditions sound like an excellent bargaining strategy for BBI IMHO. This is not simply a case of BBI taking on "all the risk". BBI gets a very good price now, and in return accepts some future risk. Anyone investing in BBI now is basically adopting the same attitude.
> 
> Fingers crossed for 13x EBITDA on DBCT. It really does look possible.




until further details comeout RE:europrts sale, its really hard to determine the EBITDA multiple. after all the entire proceeds of sale went back into the business by way of acquiring further ports and paying down debt. in a sense the consortium have instantly got back 40% of the price in added value??? similar to 40% discount? how does that change the EBITDA multiple?.

and until BBI disclose the performance goal that will give the consortium up to 65%, its folly to consider it a good deal. especially being mates with BNB connection.

if it came out in the wash, that they pay a high price today but are virtually gauranteed 65% then the deal was a failure. however i suspect the perfance incentives are fair and realistic.


----------



## suhm (2 August 2009)

thanks for the help with the figures. For me BEPPA is worth 0 or $1.04 and the odds of the former are probably a lot less than the 80+% or so implied by the price but I think this one is gonna take awhile to play out and they're selling their best asset DBCT so your losing future upside for BBI unless they get a massive price for it, which I think is unlikely at the moment.

I'll probably regret it and good luck for those who hold, but I couldn't put enough money into it to make it worthwile and not be worried about it.


----------



## random (3 August 2009)

Its pleasing to read that Macarthur Coal is upping its sales to Europe of Coking Coal due to an increasing demand for steel. (Looking good for second half of this year definitely).

I'm not talking about the benefits for dbct here because its flat chat anyway (although its still great) but hopefully some of this coal will find its way to the ports in Euorports portfolio.

This added to existing trade volumes can only compound overall trade which is a good thing. Maybe things really have started to turn!

On a side point we keep hearing about the price negotiations of iron ore but little in the press about pricing on our premium coking coal and lets face it iron ore isn't much good to you if you can't heat it. Doesn't have a direct impact on us of course but helps the margin on our coal companies in the Bowen Basin.


----------



## Mitsimonsta (4 August 2009)

Nice movement in BEPPA prices today, BBI looks flat in comparison.

Possibly a good time to swap over I guess. Not bothered myself, hoping that BEPPA continues to rise.

Hold BEPPA.


----------



## fureien (4 August 2009)

is there a reason why beppa is rising compared to bbi?

actually i sort of know why bbi is dropping, but cant see why beppa would keep rising. its frustrating. i sold out of beppa and it kept rising, thinking i could buy back in when it drops again....come on people take profits!! 

at least i can be content trading bbi for now. but i missed out on an extra 30% in profits in just 4 short days -_-


----------



## Mitsimonsta (4 August 2009)

I don't think there is any rhyme nor reason why BBP and BEPPA move the ways they do.

The market is irrational.


----------



## nathanblack (4 August 2009)

Agree, no reason behind it 

Lets wait and see where it closes tomorow or end of week before we can decide if its a significant rise.

cheers


----------



## nathanblack (4 August 2009)

Some personal calculations i've made, may be wrong with some assumptions, very open for discussion. Im trying to figure out the likelyhood/merit of a beppa restructure in the future and the implications for BBI holders. im assuming at time of restructure Beppa=50c, BBI=25c. rounded beppa on issue from about 780mil to 700mil for ease with calculations and because some may not accept the offer.

What if we use NAV to do analysis? 

about 2.4bil shares on issue. nav 90c/ share or $2.16bil

now assume full conversion of beppa at 1:2 ration. additional 1.4bil shares on issue for a total of 3.8bil.

but the NAV has increased by $700mil to $2.86bil, or an implied NAV/share of circa 75c

not bad for beppa holder, they have exchanged 1 beppa(50c) for 2BBI(25c each). the beppa had a value of $1 and the BBI share althought trading at 25c has an implied NAV of 75c ($1.50 for the 2BBI).

But its a bummer for BBI holders, because sparcs will dilute them and lower that NAV. impossible to calculate by how much because it dependant on DBCT timeframe. Worst case they convert at say 10c is 1:10, but could be as good as 1:4(25c).

also the euroports announcement had a writedown of $120mil, so the 75c NAV is already out by a bit. 

i guess my main point is, sparcs can benefit from conversion to BBI, BEPPA can benefit depending on exact terms. 

But if NAV will be 75c - sparcs(conversion) - euroports(writedown)- further possible writedowns(PD Ports), my best estimate for NAV/share range between about 40c and 60c post beppa restructure and depending on severity of sparcs.

thats before NAV/share is reduced further by any cap raising. and at 25c we issue 4 shares to gain $1 on the balance sheet. NAV will quickly evaporate.

if i own a BBI worth 25c with an implied NAV/share of 40c, theres not alot of upside is there? not a long term hold under those circumstances. perhaps a dividend play only?

if my logic is even slightly right, i think i'll convert my Beppa then sell. Not enough upside in BBI for me longterm with that Dilution of Nav/share.


----------



## nathanblack (4 August 2009)

If the economy improves and asset values go up 20% then the NAV/share will increase by same 20%, although technically BBI dont revalue there assets on the books.

But what about looking at it from and EPS basis? We could argue that earnings wont be drastically hurt, alot of lost revenues but also alot less interest payable. But with that many shares on issue can the EPS justify the SP and justify holding for income? If BBI is 25c and there are 3.8bil on issue, to earn 2.5c/share would require $450mil(will be substantially more depending on sparcs conversion price).

and if EPS was 2.5c, how much could BBI afford to distribute as dividend?

Im really keen on Beppa, but as you can see a bit bearish on BBI longterm. But short term 7c-25c is a nice reward.

current risk reward scenario:
BBI 7c NAV 90c...big tick

possible future risk reward scenario:
BBI 25c NAV 40c...cross

some of that descrepancy can be put down to the change in risk from high to quite low.


----------



## mark_au (5 August 2009)

BEPPA is showing further growth today, its really leaving bbi behind

Im sure that the announcement of the change of address isnt responsible LOL


----------



## Mitsimonsta (5 August 2009)

Yes Mark, I had a giggle at that one also. It just seems to keep going up - I am now in triple figures on it.


----------



## nathanblack (5 August 2009)

mark_au said:


> BEPPA is showing further growth today, its really leaving bbi behind
> 
> Im sure that the announcement of the change of address isnt responsible LOL




LOL. maybe all the invoices are getting sent to old address, so they have lots of incomings but no outgoings. 

in all serious its been a great spike. i got in and out within 24 hours and did pretty well.


----------



## mark_au (5 August 2009)

nathanblack said:


> LOL. maybe all the invoices are getting sent to old address, so they have lots of incomings but no outgoings.
> 
> in all serious its been a great spike. i got in and out within 24 hours and did pretty well.




well that's the question, do i trade em and hope that they drop, or hang on for the longer term. My initial plan was to hold them for the long term.

Whats the odds they pull back allowing us to buy in again at a lower rate????


----------



## nathanblack (5 August 2009)

mark_au said:


> well that's the question, do i trade em and hope that they drop, or hang on for the longer term. My initial plan was to hold them for the long term.
> 
> Whats the odds they pull back allowing us to buy in again at a lower rate????




i can't provide financial advice 

but look back over this thread, in particular discussions of "pump and dump". Lets just say i read nothing into this spike other than someone is buying, they have probably already sold out, and the market just hasnt realised yet.

i see real weakness in the market depth, but ofcourse we dont know who is waiting off screen to place orders.

yest i bought $100k at avg 14.5, got out of all at tick over 16c.(still stuck with a few, waiting for 17c)

i think 16c is overpriced, even if dbct news is leaking, because why isnt bbi following? i would expect a retrace to 13.5c by early next week.

so the real question is, are you holdings large enough to make it worthwhile.


----------



## Tysonboss1 (5 August 2009)

mark_au said:


> Whats the odds they pull back allowing us to buy in again at a lower rate????




There is a good chance this rise could just be a flash in the pan, But you know it might not be.

I am not game enough to try and pick it, I am holding on for the big win.

I don't think anybody has any idea on this one at the moment,


----------



## Tysonboss1 (5 August 2009)

nathanblack said:


> i think 16c is overpriced, even if dbct news is leaking, because why isnt bbi following?




Sparcs concerns could be capping BBI, the threat of diloution is real, Having experianced massive dilouion of one of my other holdings recently I can tell you it is not fun.

the recent announcements have not be overly exciting but are still good news for beppa, even the sparcs conversion is good news for beppa.

But the news has not been good enough to out weigh the risk of the sparcs conversion in regards to BBI.


----------



## mark_au (5 August 2009)

nathanblack said:


> i can't provide financial advice
> 
> but look back over this thread, in particular discussions of "pump and dump". Lets just say i read nothing into this spike other than someone is buying, they have probably already sold out, and the market just hasnt realised yet.
> 
> ...




Yea appreciate all that, there seems to be no real logic or at least none that we are privy to ;-)

If it was a general rise, i also would have expected bbi to rise in step, maintaining the several cents gap as per "usual".
Whats "usual" these days anyhow LOL


----------



## nathanblack (5 August 2009)

Tysonboss1 said:


> Sparcs concerns could be capping BBI, the threat of diloution is real, Having experianced massive dilouion of one of my other holdings recently I can tell you it is not fun.
> 
> the recent announcements have not be overly exciting but are still good news for beppa, even the sparcs conversion is good news for beppa.
> 
> But the news has not been good enough to out weigh the risk of the sparcs conversion in regards to BBI.




the BBI price is made up of risk and fundamentals. so we must ask why is it so low again?

if its low due to risk, then beppa should be low too. BBI fails=beppa fails.

so my logic is a change in fundamentals. whats that change? sparcs dilution. that dilution will water down NAV and EPS.

does that affect Beppa? if so is it negative or positive?
sparcs gone...good for beppa
lower nav...good for beppa. if nav per BBI is 75c post sparcs, you can either buy BBI at 7c and get 75c of nav, or you can buy beppa at 16c and get $1.

so BBI is less desirable than before, but BEPPA is overpriced IMHO. for 14c you can get 2BBI with exposure to $1.50 NAV. good asset sales will close gap on sp and nav.

so why the discrepency? either Beppa is overpriced OR BBI are factoring in further dilution(perhaps beppa conversion).


----------



## nathanblack (5 August 2009)

mark_au said:


> Yea appreciate all that, there seems to be no real logic or at least none that we are privy to ;-)
> 
> If it was a general rise, i also would have expected bbi to rise in step, maintaining the several cents gap as per "usual".
> Whats "usual" these days anyhow LOL




i dont think the gap is in terms of cents any more. its a percentage thing. i think the base prices are BBI 6c, BEPPA 12c. from that base a rise in one SHOULD happen to the other in percent terms,

eg BBI recently went from 6c to 7.2c (20%)
beppa at that time was 12c +20% (14.4c)

so the gap in percent remains 200% at all times, but rises in terms of cents. when they differ by significantly more there could be an oportunity to switch between the 2.

the above assumption will be revised with significant announcements, because some news is better for beppa relative to bbi (even bad news can be less bad).

cheers, and goodluck with your trading.


----------



## fureien (5 August 2009)

haha nathan, wow $100k, i was considering doing a short trade on it too sicne the trend is upwards but way too risky for me.

did u buy it all up at once or incrementially. and sell the same way? $100k is alot lol, market mustve interpreted as someone with information snapping it up, thats probably why its 16cents today lol.


in other news bbi and beppa  seem like parting friends. heading opposite directions

even with bbi at 7 cents atm, i think it will probably dip lower. because it did that last time. theres too many sellers against buyers. I have a buy order in at 6.6 cents


----------



## nathanblack (5 August 2009)

fureien said:


> haha nathan, wow $100k, i was considering doing a short trade on it too sicne the trend is upwards but way too risky for me.
> 
> did u buy it all up at once or incrementially. and sell the same way? $100k is alot lol, market mustve interpreted as someone with information snapping it up, thats probably why its 16cents today lol.
> 
> ...





i bought and sold in smaller parcels, to keep momentum. if it stalls buy to keep things moving. i wont be trying it again. real heart stopper. happy to just hold my usual now.

looking at volumes i suspect theres another buyer out there but could be wrong. i know which trades i account for.


----------



## nathanblack (5 August 2009)

volumes have totally dried up, really needs someone to feed the market right now. i think its easy to see how people read something into nothing with some moves. 14.5c close my guess


----------



## Tysonboss1 (5 August 2009)

nathanblack said:


> volumes have totally dried up, really needs someone to feed the market right now. i think its easy to see how people read something into nothing with some moves. 14.5c close my guess




yeah I have been tossing up selling some this afternoon, but I wouldn't be able to move enough to make it worth while without lowering the price to much, I was thinking about selling off 200k units.

I have sitting at the computer for to long with my finger hovering over the sell button, Maybe it's best a just shut down the computer for the day.


----------



## Tysonboss1 (5 August 2009)

Tysonboss1 said:


> Maybe it's best a just shut down the computer for the day.




yep, commsec is off till tommorrow. I am going to crack a VB and do some real work , we will see what happens tomorrow.


----------



## nathanblack (5 August 2009)

Tysonboss1 said:


> yep, commsec is off till tommorrow. I am going to crack a VB and do some real work , we will see what happens tomorrow.




enjoy the beer mate. 16c level is ok, but maybe your after more. yes tomorow will be interesting, if volumes stay thiss low.

cheers


----------



## nathanblack (5 August 2009)

I think pump and dump is not possible for us small fries. do the maths? even rough calculations on say $100k and 10% gains.

Less CGT, Less Brokerage. The profit versus the risk is too small in hindsight. The trade can always go against you and you've lost 10%, especially if your capital is otherwise committed and you can't sit and hold approach.

Maybe with deeper pockets it would be more rewarding, but im not game.

You live and you learn i guess.


----------



## fuzzie (5 August 2009)

I was doing the sums as you wrote and wondering if $5k was really worth the effort.  It would be ok if you could do it every week and have no losses I suppose, but I just don't have that trader gene myself. In any case I'm glad your experiment worked out for you.

I'm sitting on my beppa.


----------



## nathanblack (5 August 2009)

fuzzie said:


> I was doing the sums as you wrote and wondering if $5k was really worth the effort.  It would be ok if you could do it every week and have no losses I suppose, but I just don't have that trader gene myself. In any case I'm glad your experiment worked out for you.
> 
> I'm sitting on my beppa.




LOL

Hasnt quite worked, still stuck with $10k worth. And WAS NOT worth the stress. 

I would hypothesise that increasing bank to say $200k, would have similar consequences. The average buy price will increase more, then as you try to sell down you will probably get stuck with an even larger parcel.

Grade : D-

My timeline to sell all my beppa's is basically linear. start with a 20c value now and end with $1 in 3years. Rise of 80c in 3years, 40c in 1.5 years, 20c in 9months.

So in 9months i think a "fair" value would be 20+20 = 40c. obviously certain news is likely to fasten this move or slow it.

if beppa is significantly over that line, i will sell down, if its under i will buy.

not the best logic, but its part of my guestimates.


----------



## nathanblack (5 August 2009)

I kind of wish i hadnt booked my Philippines holiday for August, with the FY results and DBCT it could be a volatile time.

The province where i stay in Cabanatuan City is really remote and internet access is difficult without a trike ride into the city. But I've left some instructions for my brother to execute.

My brother will update me on the mornings action, atleast theres only a 3hour time difference if things turn ugly.

Anyway im off now for 2weeks, need to pack, and get to the aiport by 10pm. goodluck with your trades whatever they are.


----------



## bellenuit (5 August 2009)

nathanblack said:


> i think 16c is overpriced, even if dbct news is leaking, because why isnt bbi following?




I don't know if this is feasible, but they could go in opposite directions if there is a leak and somehow BBI securities are built into the purchase price.

Could BBI structure the deal so that instead of selling 100% of DBCT, they sell only 49% but also include a certain amount of new BBI shares (say 30% of BBI after the issue)? 

Pure speculation on my behalf.


----------



## hardyakka (6 August 2009)

Hi again all, I have been up to my neck in it and just caught up on the thread. 

A few observations have crossed my mind:

a) I see BBi and BEPPA continuing to move in opposite directions. This is because BBI carries all of the risk of dilution, writeoffs etc. 
b) BEPPA is unaffected by writeoffs etc to the sum of the existing net assets plus any amounts not recognised in that number, such as the DBCT profit on sale. Also as many have pointed out SPARCS will be gone, which is a positive for BEPPA.
c) There has been talk of restructure and I agree that it is necessary. But if you want to take the hard view, why would BEPPA restructure. In 2012, if the prices remain at these levels, BEPPA will dilute BBI holders out of existence. Thus ending up with zero BEPPA corporate debt and a heap of new shareholders. So if a suitable offer is not made to BEPPA holders they will just about end up in owning the vast majority of net assets via conversion to ordinaries anyway.
d) Following on from the point above, if a BEPPA restructure offer is not reasonably enticing it will simply not get through, especially considering it needs a 75% majority and related parties cannot vote.
e) What everyone forgets here is that DBCT is a significant asset in the BBI stable, any transaction would therefore be condistional upon BBI holders approval.
f) I do not think it legitimate to say 2 BBI are comparable value to 1 BEPPA, except maybe in current market price terms. This is because of the the significant risks associated with BBI.
g) PD Ports etc, I would like to see them retained and maybe realised a few years down the track when a decent price may be obtained.

We have already started to see the availability of BEPPA in the market dry up significantly compared to a few months ago. IMO the recent markets movements have caused many investors to re-examine the market critically. I think investors have started doing their own analysis and are seeing where there is value. those of us who got in early and took the greater risks are IMO soon to receive a greater reward.

In closing I have seen many comments along the lines of "BBI/BEPPA must be a dog because look at their price and the market is always right". Well I agree that the market is always right as it will self correct any mis-pricing etc eventually. the operative word is "eventually", the time gap betweenoccurrence of the mis-pricing and the market correction is what provides the opportunity. I believe the correction for BBi will be complete upon announcement of DBCT sale and change of name.

Cheers


----------



## banska bystrica (10 August 2009)

A recapitalization plan. 

This scenario requires two critical things to happen first:

1. Corporate debt must be reduced dramatically. (The only way that can happen short term is for DBCT to be sold for circa $2.7Bn).
2. A cornerstone investor with large pockets must be willing to inject new equity into BBI.

If the first happens, the company then can go about unlocking the value in BBI. This will not be of any interest to those who do not believe the book values of BBI are a true reflection of the real asset values because a restructure that is beneficial to ALL stake holders can only happen if the NAV right now is a large multiple of the current BBI security price.
On my calculations, the NAV after DBCT sells for $2.7Bn (An “if” at this stage) is circa $2Bn. This is NET of hybrid debt (SPARCS and BEPPA). Throw BEPPA and SPARCS back in (assuming they will be converted via my plan) and we have an NAV of circa $3Bn or roughly $1.15 per BBI security. Now we all know BBI is trading at roughly 7c. That is a massive discrepancy and hence the opportunity.

To recapitalize BBI, they can go down many avenues as other companies have done recently. The following is just one option:
Please be aware that this is all “back of envelope” stuff. People with far more corporate restructuring acumen than me can probably come up with something more sophisticated.

After DBCT sells for $2.7Bn (a big IF I know but bear with me), corporate debt will be reduced to the NGPL amount maturing in June 2013. That equates to US$250M or roughly $300M AUD.
One would suggest that the BBI price would realistically be re-rated back to the 15c-20c mark. Note, it doesn’t really require this to happen for the restructure to work. More important is the willingness of a cornerstone investor and/or institutions to recapitalize BBI with circa $500M cash and be prepared to accept BBI securities at circa 20c (even though the market price may be a tad lower). For this to happen, the new investors must be:
1. confident that the NAV is accurate (give or take 20%).
2. sure the company is “clean”. That means management of the assets must be internalized and all hybrid securities are converted to equity.

If that happens, the next step is conversion.
Currently there are 2.6Bn BBI securities. The new cornerstone investor would be issued 2.5Bn BBI’s at 20c and contribute $500M cash.
The SPARCS and BEPPA would be converted at the same price. 20c. That means SPARCS and BEPPA holders receive 5 for 1. That adds an additional 4.5Bn BBI’s to the register. (120M SPARCS plus 780M BEPPA = 900M bits of paper).
Throw in a 1:2 rights issue for existing BBI security holders and you have another 1.3Bn BBI’s issued and raise an additional $260M. Use that and part of the $500M from the cornerstone investor to clear the NGPL corporate debt.
Where does that leave BBI?
Corporate debt free
Zero hybrid debt
All assets kept except DBCT (DBCT being the catalyst for this restructure)
Number if securities now on issue: 10.9Bn BBI
Working capital of $460M
EBITDA of remaining assets: Circa $900M
Free cash flow generated per annum: $200M
Interest savings of circa $150M per annum (No corporate debt, no hybrid debt).
The NAV would be $3.76Bn ($3Bn prior to this plus $760M new cash)
NAV per BBI security: 34c.

With no corporate debt, management internalized and a change of company name, the market would more than likely price BBI close to NAV (circa 34c).
All free cash could be paid in distributions equating to roughly 2c per BBI. New investors at 20c can then expect a 10% yield on their investment at 20c per BBI.
OK, older investors who paid circa $1+ per BBI take a big haircut although they do have the opportunity to lower their average via the rights issue or on market.

Feel free to pick it to pieces.


----------



## drsmith (10 August 2009)

Recapitalisations tend to be at a discount to the share price, not a premium. Sometimes those discounts are very substantial.


----------



## banska bystrica (10 August 2009)

I also neglected to say that many instances of cornerstone investments ABOVE market price have been successfully implemented as long as the cornerstone investor has invested at significantly less than the ultimate NAV per share.

In my example, the "new" securityholders are paying 20c per BBI which is a whopping 41% discount to the 34c NAV fully diluted.


----------



## persistentone (11 August 2009)

banska bystrica said:


> A recapitalization plan.
> 
> This scenario requires two critical things to happen first:
> 
> ...




The problems I foresee here are:

1) A cornerstone investor will never agree to invest before BEPPA is resolved.  The new investor would never sign up to being diluted by that post-investment.   They will want BEPPA to convert first, and then they will want to massively dilute on top of the result.

2) The cornerstone investor will probably want to make 10% on his investment and then invest in a convertible note, so there's a good chance that our dividend might get sucked up by the new investor.

3) An investor in a convertible often shorts the common to hedge the investment, so that might in turn put a bar on the stock price for a while.

If this is the future for BEPPA, we really are in a hard place.


----------



## nomore4s (11 August 2009)

banska bystrica said:


> In my example, the "new" securityholders are paying 20c per BBI which is a whopping 41% discount to the 34c NAV fully diluted.




lol, I don't think too many investors are going to want to pay 20c in this sort of environment, especially when the stock is trading at 7c. 10c maybe but I doubt it, considering the issues BBI has.

Some of your posts border on fantasy imo.



persistentone said:


> The problems I foresee here are:
> 
> 1) A cornerstone investor will never agree to invest before BEPPA is resolved.  The new investor would never sign up to being diluted by that post-investment.   They will want BEPPA to convert first, and then they will want to massively dilute on top of the result.
> 
> ...




This is a more realistic post.


----------



## persistentone (11 August 2009)

nomore4s said:


> lol, I don't think too many investors are going to want to pay 20c in this sort of environment, especially when the stock is trading at 7c. 10c maybe but I doubt it, considering the issues BBI has.
> 
> Some of your posts border on fantasy imo.




The theory behind is post his sound.   If the BBI stock doesn't face dilution, there is no reason to believe that a much higher share price cannot be realized.

My only point is that the cornerstone investor will want to make sure BEPPA is put away *before* it steps up to invest, and that is likely to happen in a way that is highly disadvantageous to BEPPA and BBI.

So I find BB's 20 cents very believable.   I just don't think the BEPPA can game their share of the result so easily.


----------



## banska bystrica (12 August 2009)

Bought another 300,000 BEPPA this morning. If the total writedowns are less than $1Bn, that is about $500M better than my worst case scenario and one would think the Jan 1 - Jun 30 period would have been the worst of the GFC.

NAV would appear to be circa 54c now.


----------



## skyQuake (12 August 2009)

Do you have a guess on when the writedowns will be announced?

Just seems to me that you can find a better place to park your capital in the meantime.


----------



## hardyakka (12 August 2009)

banska bystrica said:


> NAV would appear to be circa 54c now.




What the impairment announcement is telling me is that:


BBI assets have been written down to a realisable value in the worst econimic conditions in a long while. So long as BBI is able to "hold on" this charge will be written back as economic conditions improve.
I note that there has been no marking to market of assets such as DBCT and NGPL. In the case of the former that would be a "write-up" of circa $700M (assuming a sale price of $2.7b) alone.

So a chunk of he BEPPA "safety cushion" has been eroded (in fact $400M than I would have liked) but IMO I am comfortable and see only upside for BEPPA.

As  has been pointed out bt many persons the risk is to BBI holders via dilution.

On another issue there has been some interesting commentary on recapitalisation, these have revolved primarily around debt/equity security considerations. 

As a BEPPA only holder as part of any recapitalisation proposal I would seriously consider accepting options at a discounted strike price exercisable several years into the future as part of a BEPPA value consideration. 

Cheers


----------



## banska bystrica (12 August 2009)

Let's not forget that the new NAV of 54c after today's announcement) includes a book value of $1.8Bn for DBCT.
A sale at $2.7Bn adds back $900M to the NAV which would mean a new post DBCT sale NAV of 88c.

BBI is not "safe" yet, but sell DBCT for anything above  $2.4Bn and the future looks much brighter.
If that sale is executed, BEPPA are ridiculously cheap (in my opinion) at anything under 30c in the dollar and probably still cheap at 50c. I think the strength of BEPPA in the market is a reflection of all the above. A keen buyer seems ravenous for any BEPPA when volume is offered. 

JB Were have been a big net BEPPA buyer over the last few weeks. Do they see what I see or do they have another scenario in mind?
I thank the sellers under 14c this morning for their generosity.


----------



## fureien (12 August 2009)

skyQuake said:


> Do you have a guess on when the writedowns will be announced?
> 
> Just seems to me that you can find a better place to park your capital in the meantime.




and where would that be? 



banska bystrica said:


> JB Were have been a big net BEPPA buyer over the last few weeks. Do they see what I see or do they have another scenario in mind?
> I thank the sellers under 14c this morning for their generosity.




who or what is JB were?
are u still holding the parcel u bought this morning? theres a huge seller at 16.5c atm is that u lol


----------



## banska bystrica (12 August 2009)

"JB Were" is a stockbroker. Thought that was well known. 

Of course I am still holding the parcel I bought this morning. The seller at 16.5c is hardly a big seller. He put on 400,000 to sell which is $66,000. Hardly what I would call a big sell order.


----------



## skyQuake (12 August 2009)

Park my money almost anywhere else.

Not saying this won't play out, but imo you can jump in when it starts to turn rather than hold and pray. I am fairly sure BB is spot on, but what timeframe?


----------



## jacobkball (13 August 2009)

I'm going to jump in with my first post on these forums, with a thank you to BB for the detailed insights and analysis sprinkled throughout the past 100 pages of this thread!!

I stepped in and got my feet wet when BEPPA were 10.5c, so I'm pleased with the way it's looking at the moment.

Skyquake - your graph is for BBI - if you did a similar graph for BEPPA, it would tell a very different story. Mine, for example, are up 55% as of today. Pretty good place to put my money, for the time being.

I'm going to ride this BEPPA train until I can't resist selling, and then will be moving all my funds into Silver. If we're looking at 10 times our money back for BEPPA, eg 10c for $1 in 2012, I think it's going to be many more multiples of that for physical silver, ie bullion / coins.

If anyone cares to look at graphs of US mortgage resets becoming due over the next couple of years, you'll see that there's a huge spike in Option Adjustable and Alt-A resets in 2010 / 2011. This could potentially make last year's Sub Prime crisis look small - so there's very uncertain times ahead, particularly with inflation / hyper-inflation a real possibility.

Anyway, thanks to everyone posting in this thread - it's been very enlightening!


----------



## banska bystrica (13 August 2009)

Welcome jacobkball,
I am extremely bullish on gold for the next 3 years. If you are bullish on silver, would it not make more sense to buy listed silver producers? Interested in your thoughts.


----------



## random (13 August 2009)

Hi jacobkball,
yeh, you don't have to convince me either.
I bought gold bullion and silver 3 years ago and they have done well and will do much better yet.

My investments are in a very narrow range at the moment, beppa, about 5 other shares and gold bullion and silver bars.

Personally i prefer the physical stuff to metal shares bb.

Added a few more beppa's yesterday simply because i feel time is running out.
Not to say they won't drop a bit again though.


----------



## jacobkball (13 August 2009)

Hi BB and random,

I think there's potentially good opportunities with stocks in silver mining etc, for sure. As the availability of silver decreases and the price soars, these stocks are most likely to follow.

The issue with buying them is that they're still paper. If, as mentioned before, we enter a hyper-inflationary period, the current fiat currencies could become worthless, as they're all backed by the US dollar. Those shares could literally become worthless.

You'll still, however, be able to use both physical gold and silver as money, regardless of what's happened to the currencies. That's why I'm very bullish on silver bullion. I'm also looking at buying some coins as well.

It's much cheaper for me to enter in on (around $17.50 per ounce AUD) and has the capability to outperform gold, giving me greater leverage. Why? Because silver supplies are actually being consumed, by manufacturing etc, as well as being hoarded as a store of value. Silver supply is not exceeding demand - that is, above-ground stocks are being depleted.

The traditional historical ratio between silver and gold is 16 - 1, that is, 16 ounces of silver to purchase 1 ounce of gold. The current ratio today is 65 - 1!! Either silver is grossly undervalued, or gold is grossly overvalued - you work out which one it is....

I'd be most interested to hear others thoughts on it, although I'll have to pop my head into the silver threads on this forum as well.

Cheers,
Jacob


----------



## Zarate (13 August 2009)

I keep hearing we will receive $1 for beppa in 2012. But does that ignore the massive dilution that it will have on bbi on conversion?

As optimistic as people here are, I do not see bbi being worth more than 50c in 2011 (which anyway is a great result). Even if it is 50c - assuming we get $1 of bbi's for beppa, that means we get 2 bbi shares so add 1.4bn shares to the 2.6bn outstanding. The price of bbi would then become approximately (50c*2.6bn)/(1.4bn+2.6bn) = 32.5c. so beppa holders get 65c.

at 6.8c it would be about 15bbi shares. (6.8c*2.6bn)/(10.5bn+2.6bn) = 1.3c. So beppa holders get 19.5c.

So based on the current shareprice of bbi, beppa is still underpriced.

Opinions?


----------



## random (13 August 2009)

Zarate,
It takes a little time but it is well worth the time and effort to go back to earlier posts  and read  up on this.
This issue is well addressed and posts should answer your querry in full.


----------



## Tysonboss1 (13 August 2009)

jacobkball said:


> The issue with buying them is that they're still paper. If, as mentioned before, we enter a hyper-inflationary period, the current fiat currencies could become worthless, as they're all backed by the US dollar. Those shares could literally become worthless.




Inflation of paper currency shouldn't devalue assets, Assets such as as shares and property would rise with inflation simply because there is more paper currency floating around to purchase such items with.


----------



## skyQuake (13 August 2009)

Tysonboss1 said:


> Inflation of paper currency shouldn't devalue assets, Assets such as as shares and property would rise with inflation simply because there is more paper currency floating around to purchase such items with.




But u'll lose around 1/2 of it due to Tax cause it 'appreciated'...
1/4 if you hold it over a year : D


----------



## Tysonboss1 (13 August 2009)

skyQuake said:


> But u'll lose around 1/2 of it due to Tax cause it 'appreciated'...
> 1/4 if you hold it over a year : D




But it also produces cashflow, which a bar of gold does not, and you can't claim depreciation on a bar of gold

Also isn't any capital gain from selling a bar of gold also subject to tax.


----------



## jacobkball (13 August 2009)

Tysonboss1 said:


> Inflation of paper currency shouldn't devalue assets, Assets such as as shares and property would rise with inflation simply because there is more paper currency floating around to purchase such items with.



Okay, think about it this way. If the perceived 'value' of the shares or property have increased by say 10% due to inflation, then it stands to reason that the cost of everything else, eg groceries, utilities etc would also have increased by 10% as well. End result? No net gain.

If the capital gain of that asset class, eg shares or property, exceeds the rate of inflation, that's where you make your profit. But this assumes that the capital gain is a result of growth / performance in that sector, not a result of inflation across the board.

I'll also point out that you'll want to separate paper 'assets' from real, tangible assets such as gold, silver and real estate. Shares are definitely the shakiest sector to have all your holdings in - as we've seen, those prices can come down very quickly, to zero.

That's why I've said earlier - I'm happy to ride the BEPPA train for a little bit, but I will be moving it out to real money very soon 

Do a Google search for 'mortgage reset charts' and you'll see where we currently are on the chart. There's troubling times ahead.

Cheers,
Jacob


----------



## Tysonboss1 (13 August 2009)

jacobkball said:


> Okay, think about it this way. If the perceived 'value' of the shares or property have increased by say 10% due to inflation, then it stands to reason that the cost of everything else, eg groceries, utilities etc would also have increased by 10% as well. End result? No net gain.




Well the goal of investing should be to protect your capital while also generating an income and growth from the capital.

Buying Gold achieves the first objective of protecting the capital (atleast from inflation) how ever it fails to generate income.

Where as other income producing assets, such as property and the underlying assets owned by listed companies will fluctuate with short term markets, longterm they will hold their value atleast with inflation, while also producing income that will increase over time with inflation.


----------



## Tysonboss1 (14 August 2009)

jacobkball said:


> But this assumes that the capital gain is a result of growth / performance in that sector, not a result of inflation across the board.




Well thats the case with gold and silver too. except you are not getting any income.

Simply put, if I had to choose between owning $1m of gold bars or $1m of shares and property, and I had to live solely of these assets for the next 50 years, I would choose the property and the shares.

Simply because you would have to start burning your capital from day one with gold bars, however with other you could live just of the cashflow of dividends and rent.

And the dividends/rent and also the capital value of the assets will keep their value inline with inflation. (offcourse there will be peaks and dips in the shorterm as there would also be with gold, but over time these assets by their very nature will keep pace with inflation)

alot of people think that gold and silver are the only hedges against inflation, this belief is wrong.

Also people think that there capital is safe in gold, this is also wrong as gold call fall in value and stagnate just as other assets can.


----------



## skyQuake (14 August 2009)

Tysonboss1 said:


> But it also produces cashflow, which a bar of gold does not, and you can't claim depreciation on a bar of gold
> 
> Also isn't any capital gain from selling a bar of gold also subject to tax.




Sorry if I wasn't clear, meant that in relation to gold. If hyperinfation does occur and gold takes off, lots of value will be eroded by taxation.



> Buying Gold achieves the first objective of protecting the capital (atleast from inflation) how ever it fails to generate income.



Exactly. Also you cant eat gold nor liev in it. (unless its a solid gold house)


----------



## jacobkball (14 August 2009)

Okay, we need to look at these various sectors in terms of what's happening right now.

Yes, they each have their cycles, up and down, depending on the economic situation at the time. We've had a property boom. We've had a share boom. We've also had share busts, and in the US, property busts as well.

Yes, ongoing cash flow in terms of dividends, rental etc is the goal, with capital gains the gravy on top.

What I am saying is that, in my belief, it is very near the time that silver and gold will boom. Not only that, it's very possible that currencies, eg the US dollar, will bust. That will leave only gold and silver as real money, which will then back a new fiat currency.

Those that have strengthened their positions in these two metals will be in a MUCH better position than those who have not.

We will then be able to move our money into real estate and businesses to take advantage of the next boom cycle.

These are just my thoughts on the matter - I'm not a financial advisor, nor do I have a crystal ball! I'm still learning about what's potentially ahead of us, by studying what's happened in years gone by.

Cheers,
Jacob


----------



## jacobkball (14 August 2009)

Sorry, didn't mean to hijack this thread, either!

Back to BEPPA - I'm still bullish about this, short term, providing of course DBCT comes through. If / when that happens, we'll all need to review our positions of whether we want to hang on, or cash in.


----------



## random (14 August 2009)

I don't know where!
I don't know why!
I don't know who!
I don't know exactly when!

But somebody definetely knows something is about to happen to beppa's and is manoevering through the terrain, popping out from behind the cover of the bushes to shoot down any beppa's who stick their head out in the open in the vicinity of "hill 15c".

If only i had my night vision binoculars with me.

Be alert but not alarmed citizens!


----------



## banska bystrica (14 August 2009)

The BEPPA buying is being done by JB Were as I said the other day. I don't know who they are buying for but they are serious. If someone offered 3,000,000 BEPPA at 16c, does one get the feeling they would be gobbled up in one chomp? If people want to ignore the signs, that's fine. I did almost plead with people months ago to sell their BBI's and buy BEPPA when the price was at parity or within 1c.

The only way forward for this company is:

1. Sell DBCT and pay down the majority of corporate debt
2. Recapitalize and at the same convert all the hybrids into BBI securities.
3. Internalize management.
4. Change name of company
5. Recommence distributions.


----------



## hardyakka (16 August 2009)

This market has taught me a valuable lesson. 

Roundabout November I started selling down blue chips to invest into small to medium sized companies, some that seemed distressed yet analysis showed they were solid companies thrown out with the bathwater in the general panic.

With hindsight what I got wrong was the timing of my sales of these companies. I took healthy profits on companies that have since doubled and trebled. Conclusion, stock picking excellent, timing lousy.

For a long while I have been a BEPPA advocate solely for risk aversion reasons and to date am happy with that call. But then, what about the timing issue.

We have all read about various restructure scenarios, are au-fait with the asset sales (reasonably), conversion, dilution etc etc. We are also starting to realise that BBI has survived the worst of the GFC with positive growth signs emerging domestically and offshore (eg France & Germany). Who now would sell PD Ports for the same price discussed just post Corus?

So what does this tell us, my take on this:

BBI has survived the worst of the GFC and its value will generally trend up now.
The decks are being cleared with the write down provision.
There will be an arrangement whereby BEPPA is cleared from corporate debt for a % of face value (IMO 50 to 70 cents).
There will be further asset sales, but not at distressed prices.

Stepping back this tells me two things: 1) there is still a heck of a lot of value in BEPPA (generally recognised); and b)  at what point in time is it best for an investor to realise this value ie timing.

The timing issue, which is driven by sales, restructures etc is IMO the critical issue unresolved.

Cheers


----------



## fureien (18 August 2009)

hardyakka said:


> With hindsight what I got wrong was the timing of my sales of these companies. I took healthy profits on companies that have since doubled and trebled. Conclusion, stock picking excellent, timing lousy.




lol i feel u right there man. same here happened to me


and interesting observation about bbi not having to sell at distressed prices


----------



## Tysonboss1 (20 August 2009)

I would have expected some sort of announcement in regards to the dbct sale by now.

Does anyone have a clue of roughly when some news will be released.


----------



## erasmus (22 August 2009)

At yearly results next week august 26 there is supposed to be an update on DBCT sale according to investor relations at BBI.


----------



## jacobkball (25 August 2009)

Well, tomorrow should be quite interesting then, in terms of our share prices!

I didn't expect BBI shares to go down so much in comparison to BEPPA - that's been a surprise to me.


----------



## drsmith (25 August 2009)

jacobkball said:


> Well, tomorrow should be quite interesting then, in terms of our share prices!



If there is good news then the directors will have done a very good job in keeping that information watertight.


----------



## Elvis3577 (25 August 2009)

Just replying to the two previous posts...
I think some people just got a bit nervous, and secondly I think it's their job to keep it quiet.  I know it doesn't always happen...
Feeling confident about tomorrow though.
And if I'm not wrong ,I think there's a live broadcast on their website as from 11.00 am.
It will be very interesting to see what's going to happen to the Sp. To what extend I mean.
Good luck everybody , c u on the other side!
( still holding both BBI and Beppa )


----------



## Elvis3577 (26 August 2009)

Looking pretty good  what I've seen sofar and the Sp is going up quite nicely too. I haven't read  everything yet, but it's looking promising !!


----------



## investormichael (26 August 2009)

Sold out at 9.8 cents  where does everyone think the company is heading now after todays announcements?


----------



## mark_au (26 August 2009)

Hi All 
the NTA listed in the report is $1.84, compared to $2.83 previous period
I'll have to read back to see how that compares with the estimates in this thread, but i think its higher than some of the projected calculations from key posters  which is even better news than we were expecting


looks like lots of sellers taking profits and buyers trying to get a bargain..


----------



## fureien (26 August 2009)

i had a sell order at 8 cents that i forgot to cancel 

thats about 35-40% extra profit i didnt lock in


/TILT/


----------



## hardyakka (26 August 2009)

The movement in the share price looks pretty reasonable for both BBI and BEPPA. I think both are a little overdone and expect a bit of a pull back for BEPPA to circa 16.5cents. However IMO the upward trend will be sharper and more consistent when the market digests the results.

I find the following very interesting regarding the change of control notification.

_"Accordingly, in the event of a Change of Control Event occurring as a result of the Responsible Entity of Babcock & Brown Infrastructure Trust ceasing to be a member of the Babcock & Brown Group, the directors of BBI EPS Limited reserve their right to decide whether to redeem, convert, or issue Equivalent Securities, based on the circumstances prevailing at the relevant time."_

My take is that we are likely to see a restructure of BEPPAs sooner than we think. So the question is what is it worth to BBI holders to remove $800M of liabilities from the balance sheet, thus clearing the way for capital raisings, an increase in net assets etc?

45 cents in the $ plus two BBI gets my vote (45cents including accrued interest).

the BBI board is very concious of the fact that the longer any restructuring package is left, the more expensive it will be to BBI, especially as we start to move to more normalised markets.

Cheers


----------



## ricee007 (26 August 2009)

I suppose I would consider 2* BBI + 45c...

If BBI was, say, 15c.... thats 75c.

I think I would vote yes, if it was done this year.

Regards.
Rhys


----------



## persistentone (26 August 2009)

ricee007 said:


> I suppose I would consider 2* BBI + 45c...
> 
> If BBI was, say, 15c.... thats 75c.
> 
> I think I would vote yes, if it was done this year.




And where are they going to get this cash?!   They can't even afford to pay the dividend.   Where are they going to come up with more than $300M for this payment?!


----------



## random (26 August 2009)

I'm sure that once the viability of bbi is acknowleged by a few more respected bodies and that opinion is that it is not going to fall in a heap it won't be hard to come up with 300 mil.
That is, come up with 300 mill to save 500 mill!!
Especially with a capital raising to follow. Not so far fetched. Bankers will see that as time goes on!

Personally i was happy with our cash flow stated in the report. Not too bad at all, all things considered.

I'm as convinced as ever of our ultimate success its just the timing I'm uncertain of but as you say persistentone it should be this year because as time does creep on it will cost more to dispose of beppa holders.


----------



## random (26 August 2009)

My apologies...... I meant to credit ricee007 with the comment about doing the deal this year and not persistentone who querried it.


Sorry.


----------



## jacobkball (26 August 2009)

Whoohoo nice move today 

I'd certainly be amenable to an offer like 45c + 2 BBI - that would be very tempting. I'm not sure they'd go that high, to be honest, but it will be interesting to see.


----------



## Zarate (26 August 2009)

Any ideas why beppa has been so outperformed? At these levels I wouldn't consider touching bbi (just keep my beppa's) unless it is at least under half the price of beppa.

Going to read this annual report with a lot of interest tonight.


----------



## ricee007 (26 August 2009)

Zarate said:


> Any ideas why beppa has been so outperformed? At these levels I wouldn't consider touching bbi (just keep my beppa's) unless it is at least under half the price of beppa.
> 
> Going to read this annual report with a lot of interest tonight.



Few points.

I don't think BBI will give $300M cash to BEPPA holders this year... but, I would say yes 

Zarate... BEPPA is less liquid, and less researched, and less on the market for one... also, BEPPA has, this year, been at par, within 1c, or EVEN UNDER BBI... the fact that it was more than double it was against the run of the year... It's still > 50% higher than BBI, which, these last few months year, is very high.

Perhaps BEPPA already had the survival of BBI more firmly considered in it's price?

JacobKBall, I could see them going to 75c... but, with more shares and less cash. Personally, I think BBI is best left to deal with BEPPAs in 2012 when they should be able to get a loan / pay back half / over cash for the half / offer reset terms /etc....

But, others accurately point out that wuold seriously hinder a capital raising. Others accurately point out that, based on todays FinReport, the necessity of a capital raising is not a foregone conclusion.


----------



## skyQuake (26 August 2009)

Just trade the price action 
Buyers were pretty aggressive today.

THink theres a bit more left to run early tomorrow.


----------



## fureien (26 August 2009)

skyQuake said:


> Just trade the price action
> Buyers were pretty aggressive today.
> 
> THink theres a bit more left to run early tomorrow.




i concurr. Despite having to slap myself for blundering with the accidental sell order -____-

i managed to secure an extra bit of profit between 9.5 and 11 cents. not much but hey, u grab watever u can.

The buyers were really aggressive, especially around the 9.6/9.7 mark. it fluctuated like crazy lol. I was watching it and i think i was the last person to have their order filled at 9.5 before it rose up again.  *pats himself on the back for uber timing for once* I had to leave for uni so didnt get to watch the end of day movement but it was favourable for me so 

I also think theres enough left for a bit more rise tommorrow. Im home all day so fingers crossed.

I was also reading the reports released today, i have to ask one stupid question

The "EPS" that they keep mentioning. Thats not Earnings per share right? i assume it stands for something else? cause it didnt make sense to me lol.

I hope everyone made a killing today. U guys were so quiet for once despite all the action. Probably all busy at the pub after taking profits


----------



## investorpaul (26 August 2009)

fureien said:


> i concurr. Despite having to slap myself for blundering with the accidental sell order -____-
> 
> i managed to secure an extra bit of profit between 9.5 and 11 cents. not much but hey, u grab watever u can.
> 
> ...





The EPS they are refering to is the BBI EPS securities which is the formal name for BEPPA.

Great rise today, I just wish I had more BBI and BEPPA - time to check the bank balance, I would be happy to pick up more BBI at 9.5c and BEPPA at 15c afters todays announcement


----------



## jacobkball (27 August 2009)

Well, judging by the depth, BBI looks like it will have a nice jump this morning.

Not much for BEPPA though.


----------



## Stakes (27 August 2009)

fingers cross but pre open doesn't look too good!!!! 
 hopefully there is a huge switch around once things start moving this morning


----------



## jacobkball (27 August 2009)

Hmm, that really did change, as there was quite an overlap of buyers/sellers 15 minutes ago!

Another interesting day on the cards.


----------



## Mitsimonsta (27 August 2009)

We have one idiot to blame for the opening price:







I understand wanting to be first cab off the rank, but why not 16.9c???


----------



## banska bystrica (27 August 2009)

I sold 1 million BEPPA yesterday at average a tick under 18c. Looking to sell more but there is just no volume buying. Frustrating.
There was not much in the announcements we didn't already know and I am very surprised the stock flew like it did. Hence, why I took profits in BEPPA.
I shorted BBI at average 7.3c in the first hour yesterday so a mistake there. However, I am quietly confident reality will set in and by next Tuesday (after the daytraders have to settle or get out) BBI will be back below 7.3c. I could be wrong. Time will tell.

From Wilson HTM:

"_BBI announced three pieces of news today: 

1. it intends to internalise management,
2. management has reducing confidence in the feasibility of issuing Equivalent
Securities with respect to the EPS, and 
3. it released its FY09 result.

We did not find any major valuation drivers in the announcements, particularly not worthy of the 90% share price increase seen today.
We have upgraded our target price from 15 cps to 17 cps. Our HOLD rating is
unchanged. BBI faces continuing challenges regarding fund level debt repayment and the potential dilution of its security holders from EPS and SPARCS conversion._"


----------



## Zarate (27 August 2009)

John Kendrew seems to share your view saying he was 'surprised' by the 90% jump.

would post the article but im not allowed.


----------



## alphaman (27 August 2009)

Mitsimonsta said:


> I understand wanting to be first cab off the rank, but why not 16.9c???



Looks fair enough to me. He simply met the highest bid at the time, which was 16.6c. Of course that doesn't guarantee a sale, but it certainly has a better chance than 16.9c.


----------



## fureien (27 August 2009)

lol bbi looking like its gunna run outta gas. I didnt sell this morning. So stupid. Thinking it wud go higher. so greedy of me.

Currently consolidating between 9.3-9.5

I put a buy at 9 cents today but didnt get processed. not that its a bad thing lol.


----------



## persistentone (27 August 2009)

Zarate said:


> Any ideas why beppa has been so outperformed? At these levels I wouldn't consider touching bbi (just keep my beppa's) unless it is at least under half the price of beppa.
> 
> Going to read this annual report with a lot of interest tonight.




That one is easy to answer.    BBI share value is in a life and death struggle.  You have immediate risk of huge dilution in 2009 from SPARCs.  You have the nearly 100% guaranteed outcome that in Administration BBI would see zero return to shareholders.   You have a still real risk of a dilution by the EPS shares in or before 2012.   So BBI has a much higher probability of returning zero, and bad news has an outsized effect on it, and likewise any (perceived) good news will have an outsized effect on it to the upside.

I think the BBI share price rise yesterday was just silly.    I calculate in my model that even for EPS getting a 20 to 40 cent return is about all we can hope for.    Had I owned EPS shares I would have been a seller at or above 18 cents, for sure.   That would have given me nearly the same return without the benefit of the good news that would get us to 20 cents.   I'm pretty sure that you would be able to buy those back at or below 15 cents.


----------



## persistentone (27 August 2009)

Mitsimonsta said:


> We have one idiot to blame for the opening price:
> 
> 
> 
> ...




Which tool are you using to see the buy and sell queues?   Is that a broker screen or some third party software?


----------



## jacobkball (27 August 2009)

persistentone said:


> Which tool are you using to see the buy and sell queues?   Is that a broker screen or some third party software?



That's just the Market Depth screen within CommSec.

I think it's easy to say, in hindsight, oh I should have sold at 18/19 cents, but it's impossible to gauge just how high, and how long, the price will jump.

I am, however, seeing a definite pattern with these shares with crazy/furious buying and selling whenever an announcement that's even slightly positive comes out!

People will get caught soon by selling out at what they think is the top, but it just keeps going or stays up there.

I just think, if that's the way the price moves with an announcement like that, imagine what's going to happen if a 'Sale of DBCT' announcement comes through.


----------



## fureien (27 August 2009)

thats why despite the news being clearly overrated people still buy or hold expecting that the dbct news will eventually come out and resistances like 11 cents which we saw today will be like nothing. Breakthrough like the hulk bashes through ur house.

In the announcement they didnt say any specific date about dbct right?
just that its in progress yaddiyaddiyada and that they have low offers all the way to 100%?


----------



## fuzzie (27 August 2009)

I think the most significant thing for BEPPA holders in the announcements was that the Change of Control Event may force the redemption of the BEPPAs because there are potentially problems with rolling over to equivalent securities.

There is no date given as the change is conditional only on lenders' approval. It does sound like it is imminent and I guess will probably occur prior to any DBCT sale.

So either redemption or a restructure offer is on the cards short term?


----------



## banska bystrica (27 August 2009)

fuzzie said:


> I think the most significant thing for BEPPA holders in the announcements was that the Change of Control Event may force the redemption of the BEPPAs because there are potentially problems with rolling over to equivalent securities.
> 
> There is no date given as the change is conditional only on lenders' approval. It does sound like it is imminent and I guess will probably occur prior to any DBCT sale.
> 
> So either redemption or a restructure offer is on the cards short term?




No. There is no "change of control event". They have negotiated with BNB liquidator that the management company stays in charge of BBI until 2012.
No coincidence that date...2012. That's when BEPPA resets.


----------



## persistentone (27 August 2009)

fuzzie said:


> I think the most significant thing for BEPPA holders in the announcements was that the Change of Control Event may force the redemption of the BEPPAs because there are potentially problems with rolling over to equivalent securities.
> 
> There is no date given as the change is conditional only on lenders' approval. It does sound like it is imminent and I guess will probably occur prior to any DBCT sale.
> 
> So either redemption or a restructure offer is on the cards short term?




They don't need a change of control event!   The EPS contract language clearly states if they don't pay dividends for one year they can initiate a conversion, and they will have stopped paying dividends for a year very soon.

Whether they do or don't convert now or later, this issue is going to hang over the BBI stock like a bad hangover until it is resolved.   For me the announcements gave me nothing new.


----------



## persistentone (27 August 2009)

jacobkball said:


> That's just the Market Depth screen within CommSec.
> 
> I think it's easy to say, in hindsight, oh I should have sold at 18/19 cents, but it's impossible to gauge just how high, and how long, the price will jump.
> ...
> I just think, if that's the way the price moves with an announcement like that, imagine what's going to happen if a 'Sale of DBCT' announcement comes through.




It's hard to say where the stock will go when you only have the chart as your reference.   But I have a very elaborate spreadsheet model and I have problems even with a *good* DBCT sale at getting a recovery on the EPS security much higher than 20 to 40 cents per share.    

So for me to see the shares go to 20 cents with no definitive sale announced was just a sick joke.

I agree with you that the market's attitude towards BBI seems to be changing.   I do sense the market wants to start being positive about the story.    It's just still very hard for me to build a decisive risk and reward here when my downside on the EPS is 15 cents and my upside may only be another 5 to 15 cents.


----------



## fuzzie (27 August 2009)

banska bystrica said:


> No. There is no "change of control event". They have negotiated with BNB liquidator that the management company stays in charge of BBI until 2012.
> No coincidence that date...2012. That's when BEPPA resets.




OK. After re-reading the Internalisation and Separation release, this makes sense. [..until 2012 (at the latest)...] and BBI(T) even has the sole right to say who comprises BBIS. So we have an external manager that is solely answerable to the managed entity, for a fixed fee. Not much room to gouge fees there!

It would appear the board is being careful to cross the t's and dot the i's. I can't see that such a team wouldn't be doing everything possible to make the right move with DBCT.


----------



## hardyakka (27 August 2009)

persistentone said:


> And where are they going to get this cash?!   They can't even afford to pay the dividend.   Where are they going to come up with more than $300M for this payment?!




Persistence,

We are over the worst of the GFC and BBI's performance will trend up IMO. BEPPA is a major impediment to BBI recognising its true value, primarily via dilution risk and it prevents a capital raising. If the BEPPA impediment is removed then it is a win-win, if BEPPA is paid out at 50 cents in the $ then that is about $400M in costs but adds about 18cents in net assets to each BBI ($400M/2.4B BBI). That is a good deal for both parties and the $400M can easily be financed by a capital raising (assuming DBCT proceeds are applied to senior debt).

But what I can see happening is management will fluff around and by the time a decision is made to try and buy back BEPPA at a discount we will be beyond the DBCT sale, markets will have further improved (along with the BBI price) and any discount on BEPPA will be significantly reduced. 

Have a look at the price movement in other hybrids to see the impact of restored confidence, here is a listing
http://www.macquarie.com.au/macsecmc/codi/CodiServlet?nav=start&documenttosend=income_security_doc
I bought GMPPA at $25, they are now over $61 between mid-may and today.

But then at the same time I am not overly concerned because IMO BEPPA will show that sort of movement by the end of the financial year.

On a separate issue one very interesting thing from yesterdays price movements is that BEPPA really only touched on levels it was at within the last month, so the affect of the announcements was pretty minimal. BEPPA is a more complex instrument and not as widely understood as BBI.

As you are aware all insto mandates have an small allocation to higher risk securities, considering their risk averse nature BEPPA is an ideal investment for that category. This is a probable source of demand for BEPPA IMO. 

Regarding change of control, the intention may not be to trigger a C of C event, however I consider it a distinct possibility. If the BNB liquidator sells the RE outside of the group simply because that is the best offer then an event is triggered. There is much less certainty now than ever before that a C of C event will not be triggered.

BBI value will not approach a reasonable % of net assets until BEPPA is dealt with, the sooner it does so then the greater any discount will be. The longer it delays and markets recover more then the less any BEPPA discount is likely to be.

Cheers


----------



## persistentone (28 August 2009)

hardyakka said:


> Persistence,
> 
> We are over the worst of the GFC and BBI's performance will trend up IMO. BEPPA is a major impediment to BBI recognising its true value, primarily via dilution risk and it prevents a capital raising. If the BEPPA impediment is removed then it is a win-win, if BEPPA is paid out at 50 cents in the $ then that is about $400M in costs but adds about 18cents in net assets to each BBI ($400M/2.4B BBI). That is a good deal for both parties and the $400M can easily be financed by a capital raising (assuming DBCT proceeds are applied to senior debt).
> 
> ...





If they had the cash to buy back EPS at $0.50 on the dollar (and they do NOT), then clearly they would just start buying back debt at 20 cents, then 30 cents, then 40 cents, until the remaining holders were demanding higher.

In their position - which is that it will take them six years to dig out of this hole by EBITDA alone - I would be putting the screws to the EPS and simply buying back debt at 40 cents on the dollar for as many *years* as would be necessary to clear off at least 60% of it.   Then I would look at bringing in a key investor to package an offer to the remaining EPS and to recapitalize.

I don't see how they will attract such an investor today, and I don't see how they can afford to pay off any of EPS until all corporate debt is gone.   The best scenario I see playing out would be a DBCT sale about $2.6B that makes corporate debt go away, and then start to use EBITDA to buy back debt over the course of many quarters.    That's slow and unglamorous, but a very good return on investment compared to any scenario that involves refinancing today.


----------



## Tysonboss1 (28 August 2009)

persistentone said:


> I don't see how they will attract such an investor today, and I don't see how they can afford to pay off any of EPS until all corporate debt is gone.   The best scenario I see playing out would be a DBCT sale about $2.6B that makes corporate debt go away, and then start to use EBITDA to buy back debt over the course of many quarters.    That's slow and unglamorous, but a very good return on investment compared to any scenario that involves refinancing today.




Sounds sweet to me, I quite like the current position of no divs and all profits beening funneled off debt. Good asset sales are a bonus.


----------



## hardyakka (28 August 2009)

Tysonboss1 said:


> Sounds sweet to me, I quite like the current position of no divs and all profits beening funneled off debt. Good asset sales are a bonus.




You are spot on. We can discuss until the cows come home different ways for value to be relected in the BBI & BEPPA prices. At the end of the day I really could not care less how it is done, so long as the value is added. 

What I am aware of is that BEPPA is holding back BBI value, and it will need to be dealt with somehow. As a BEPPA holder I may not be able to vote, but I know that BBi desperately needs funds and BBI holders cannot raise funds or even dream of distributions until BEPPA holders are dealt with. Deal with BEPPA and then BBI will start to see what it desires, real value reflected in the unit price with no threat of dilution or hindrance to capital raisings etc.

I am quite happy to be patient, but BBI unitholders need to appreciate the longer before BEPPA is dealt with, then the less any discount and ultimately greater the price that BBi will pay to deal with BEPPA.

Cheers


----------



## cpsharky (28 August 2009)

"As a BEPPA holder I may not be able to vote"

We do at the moment ....

(b)
Holders will have the right to vote at a general meeting of the Company in the following circumstances:
(1)
during a period during which a dividend (or part of a dividend) in respect of the EPS is in arrears;


----------



## Garpal Gumnut (28 August 2009)

The chart looks pretty crook on this, both long and short term.

I won't post it as it will demoralise holders.

gg


----------



## banska bystrica (29 August 2009)

The problem for BBI in relation to the sale of DBCT is if the potential buyers of DBCT are stalling, knowing that SPARCS can dilute BBI securityholders very heavily on November 17. If the buyers stall, BBI will be very keen to get a sale announced so that the 20 day VWAP can climb to greater heights than the current price of 8c. It may open the door for a lower DBCT price.


----------



## Tysonboss1 (29 August 2009)

banska bystrica said:


> The problem for BBI in relation to the sale of DBCT is if the potential buyers of DBCT are stalling, knowing that SPARCS can dilute BBI securityholders very heavily on November 17. If the buyers stall, BBI will be very keen to get a sale announced so that the 20 day VWAP can climb to greater heights than the current price of 8c. It may open the door for a lower DBCT price.




Yeah I guess the management have to weigh up what is best for bbi shareholders,

Should they hang out for the best price and suffer massive dilution,

or should they sell at a slight discount and avoid massive dilution,


----------



## joe7068 (30 August 2009)

I can't believe some of you guys actually think they will buy back BEEPA in order not to dilute the shareholders. This is ostrich like thinking. They don't have any money to be able to do that. The banks wouldn't lend them any money to do that. And please don't suggest they would as there isn't a a chance in hell. Why would they when they rank senior to BEPPA holders anyway.

The only way this stock can turn around is if they sell DP and the longer this takes, the less optimistic I am that they will be able to achive a decent price or what they're asking for.

They can of course sit tight as the banks are unlikely to pull the plug seeing they are earning their interest and don't want to put it in receivership as that would mean they would have to begin providing for losses.

The only way out for these people is if they can hang in there and wait until a good offer comes in.


----------



## Tysonboss1 (30 August 2009)

joe7068 said:


> I can't believe some of you guys actually think they will buy back BEEPA in order not to dilute the shareholders..




Sparcs is first, and beppa is not for years, 

But it's more about raising the share price so as to lessen the affect of the diloution.

obviously conversion at a price of 7c i far worse than at a price of 15c.


----------



## hardyakka (30 August 2009)

joe7068 said:


> I can't believe some of you guys actually think they will buy back BEEPA in order not to dilute the shareholders. This is ostrich like thinking. They don't have any money to be able to do that. The banks wouldn't lend them any money to do that. And please don't suggest they would as there isn't a a chance in hell. Why would they when they rank senior to BEPPA holders anyway.




Joe,

You are very certain on what will and will not happen. Do you have an insight into BBI & BEPPA that we have not picked up on? If so please share it.

Cheers


----------



## fureien (31 August 2009)

this might be just me, but im having an awful lot of fun trading bbi and beppa in and out. If they buy back the EPS or sell dbct, its like i have nothing to look forward to anymore lol. im not making millions but keeps me entertained at least


----------



## joe7068 (1 September 2009)

hardyakka said:


> Joe,
> 
> You are very certain on what will and will not happen. Do you have an insight into BBI & BEPPA that we have not picked up on? If so please share it.
> 
> Cheers




an insight in terms of inside information? no Of course not. I'm certain they don't have the money to buy a drink let alone BEPPA. 

There's no cash there.


----------



## nomore4s (1 September 2009)

I don't really know about the F/A but on the chart it looks like any sort of strength is getting sold into.


----------



## suhm (1 September 2009)

If you listen to the brr interview, the management specifically says it would be very difficult for them to payout the BEPPAs in cash, pretty obvious given their debt troubles and that unless the RE is sold off by the BNB administrators, there will not be a change of control event triggering the conversion of the beppas into bbi shares. They also specifically structured the deal to avoid the change of control event so I think any deal is highly improbable.


----------



## random (1 September 2009)

So about 124mill shares of bbi traded today during trading and many more cross traded after hours....... quite out of the ordinary. An average of over 70,000 per trade.

How long will it be until notification of a change in holdings by a major player is announced? and who was it?. But then for every seller there has to be a buyer doesn't there!

Little change in price though. 

Don't know quite honestly what it means but i'm sure who ever bought most of them didn't do it with the intention of making a loss.

Watching and waiting with curiosity more than anything else now.
No hurry. Just waiting.

Not holding bbi - just beppa's.


----------



## banska bystrica (1 September 2009)

random,
I suspect daytraders buying and larger holders dumping. I am short for a million at average 7.7c. Might be wrong but I am confident of further downside. The reaction to the report pushing the stock to 13.5c was insane. The report was solid operationally but the capital/debt management is in a mess courtesy of the greedy banks.
A sobering video conference was held at ABN Amro today. ABN Amro staff and BBI representatives (CFO Sellar and IR chief Liossis) were involved.

PS. No, I am not on the ABN payroll in any way. I don't work for anyone.....but myself.


----------



## Mitsimonsta (1 September 2009)

Alarms seem to be ringing for me now with some positions being taken by some people, and the trading that is happening since the results were released.

Very much annoyed at myself for not taking my profit last Wednesday when I had more than 100% gain. Really should have sold half, preserved original capital and let the profits run. 

Will see where the SP takes us tomorrow. Holding 31K units BEPPA only.


----------



## random (1 September 2009)

banska bystrica,
After last weeks rally i thought that the price would drop back but i salute your gonads at going short for 1 mill at 7.7c. The margin is pretty thin from here i feel but i admire your stand. Best wishes to you. 

Most day traders however buy for the very short term (hence the definition)and most buy with the hope that there will be a rise so that they can dump on only a few point rise. By recent events most would have done their doh in recent times or got nowhere by my reasoning on bbi. 

Beppa have dropped slightly but on minimal volumes - there just arn't enough shares there to play silly buggers with since its pullback from 19c. If a player (sorry investor) such as yourself who deal in high volumes exit you may not get back in but hey...... look who I'm talking to.

Anyway as i was saying with the volume of bbi that went through today i am surprised it not only held but went up a speck. That surprised me.....but in a good way.

Tomorrow who knows.

Mitsimonsta do not dispair - we have all been there. It will happen again to!
It equaits to having a ring dinger of a hangover and swearing off the grog forever.
 Never again ......but you do. 
Your human.


----------



## banska bystrica (2 September 2009)

random said:


> Beppa have dropped slightly but on minimal volumes - there just arn't enough shares there to play silly buggers with since its pullback from 19c. If a player (sorry investor) such as yourself who deal in high volumes exit you may not get back in but hey...... look who I'm talking to.





random,
I plan on exiting BEPPA in a drip feed way. I am not dumping at any price.
I do not plan on buying BEPPA back. If I buy anything it will be BBI depending on price when SPARCS convert but I will reassess as events unfold. I am not closing my short position on BBI just yet. I see further downside until SPARCS are converted. 
I thought BEPPA would be restructured but it appears as though the company are happy enough to let BEPPA trade on until 2012. They have much more pressing concerns.
Good luck to all whatever your strategy is.


----------



## ricee007 (2 September 2009)

BB, what are your thoughts on BEPPAs value in 2012?

Company seemingly wants to convert or redeem or reissue them in 2012... Do you, like me, thus think they will have a $1.20 valeu in 2012?


----------



## tracytop (2 September 2009)

What are your thoughts with regard to today's announcement about cornerstone investor recap??? Any details ???


----------



## ricee007 (2 September 2009)

tracytop said:


> What are your thoughts with regard to today's announcement about cornerstone investor recap??? Any details ???



There are no details, but I would imagine it is STRONGLY likely to be positive for BBI and VERY STRONGLY likely to be very positive for BEPPA.

Regards,
Rhys


----------



## banska bystrica (2 September 2009)

Let's see the detail first and I for one am not counting my BEPPA chickens just yet. Remember that BBI are in a very tight spot with the banks and the power clearly lies with the new cornerstone investor.

Think about it. If you had the substantial cash to inject into BBI, would you not try and get the absolute best deal possible?


----------



## Mitsimonsta (2 September 2009)

Of course you would. To quote an old Victorian TV Ad: It's your money Ralph.

I am expecting new cornerstone investor to add enough to remove corporate debt, and participate in a capital raising to maintain holding levels. I expect the investment + capital raising should be enough to pay the $205M due in October, plus the _*option*_ of paying out SPARCS in cash, rather than diluting BBI further. But in this case, you could see a 20c BBI SP so dilution would be alot less than any of us were expecting it would be.

Once we get top that point, I really do not care how it runs thereafter. Distributions for BEPPA can start again. Cash can be managed more effectively than the bank sweep. Interest rates for debt facilities are likely to fall.


----------



## drsmith (2 September 2009)

Any cornerstone investor will want most if not all of the equity value they see in return for any recapitalisation.


----------



## Jez (2 September 2009)

banska bystrica said:


> random,
> The reaction to the report pushing the stock to 13.5c was insane.




Me thinks that provided a good opportunity for those with inside info to jump in "under the radar"!

I have been known to be wrong with my conspiracy theories in the past though.


----------



## joe7068 (2 September 2009)

This is pretty good news for Beppa investors I would think.


However I wouldn't like to be a BBI holder as they will end up being skewered.


----------



## Zarate (2 September 2009)

joe7068 said:


> This is pretty good news for Beppa investors I would think.
> 
> 
> However I wouldn't like to be a BBI holder as they will end up being skewered.




Yeah, I don't fully understand the situation. If the bbi holders get screwed, they could vote against it? But even if the shareholders get diluted, this injection could go almost all the way to saving the company? So maybe they wouldn't vote against it.

Anyway it is neutral for beppa if it is voted against, and excellent if equity is raised.


----------



## Mitsimonsta (2 September 2009)

BEPPA depth is interesting.

Opening bid is 15c with 2 buyers wanting 29K units. I then see 7 offers at 15c and down to 12c for 32.2k units. 

Probably too late to trade today now, but it looks like there are a few sellers looking to get out and expecting bad news. I have the opposite opinion.


----------



## fureien (2 September 2009)

i am so confused lol. i dont get what this trading halt is about. but somehow i feel being good or bad news wouldn't matter, cause the market is just gunna react insanely again.


----------



## banska bystrica (2 September 2009)

No insiders were buying BBI the last week. I cannot be sure about BEPPA though.

As I suspected, the 400M volume was all daytraders.

Comsec clients bought 240M and sold 260M
ETrade bought 108M and sold 108M
AS Perth broker bought 42M and sold 42M
D2MX bought 34M and sold 33M

See, just punters in and out.


----------



## skyQuake (2 September 2009)

Mitsimonsta said:


> BEPPA depth is interesting.
> 
> Opening bid is 15c with 2 buyers wanting 29K units. I then see 7 offers at 15c and down to 12c for 32.2k units.
> 
> Probably too late to trade today now, but it looks like there are a few sellers looking to get out and expecting bad news. I have the opposite opinion.




Its suspended?

-------------------------------------------------------------------



  0253 GMT [Dow Jones] Babcock & Brown Infrastructure (BBI.AU) interest from a
"potential cornerstone investor" as a precursor to a recapitalization could see
a large sovereign wealth fund willing to take a long term view on cyclical assets, take a
majority stake in BBI, speculates one trader. With around A$750 million in corporate debt
due by FY11, trader says current estimated annual free cash flow of A$150 million
won't cover repayments, so an injection of A$400 million-A$500 million in return for
stake of 60%-70% could keep lenders happy and, subject to BBI hybrid noteholders agreeing
to not convert and massively dilute equity, could unlock equity value estimated around
A$0.40-A$0.50, suggests trader. BBI in trading halt, last 7.8 cents. (WEL)


----------



## nomore4s (2 September 2009)

Largesse said:


> 100charactersminimumissillybusiness100charactersminimumissillybusiness100charactersminimumissillybusiness100charactersminimumissillybusiness






Zarate said:


> 100charactersminimumissillybusiness100charactersmi nimumissillybusiness100charactersminimumissillybus iness100charactersminimumissillybusiness




This sort of thing is not allowed and we have the 100 character rule for a very good reason. If you can't post 100 charaters please don't post at all.

Anymore posts like this will receive infractions, no more warnings.

Thank you.


----------



## Mitsimonsta (2 September 2009)

skyQuake said:


> Its suspended?



Not suspended, just a trading halt.

Doesn't stop orders being placed in the system. Trading halt allows orders to be placed and cancelled. No trades take place.

Suspension is no trades, and no oders placed. IIRC it also means that all orders in the system are flushed.



nomore4s said:


> Anymore posts like this will receive infractions, no more warnings.



Excellent moderation, and not before time either. Hopefully we can bring the tone of the thread up a notch.


----------



## random (2 September 2009)

I'd be fibbing if i said that i wasn't tempted to sell out of beppa a couple of times over the last 6 months or so. But i didn't.
I didn't because i was scared that something like this "cornerstone investor" or like would appear once i had exited and before i get back in.

Yes, i know the savvy investor with the right timing could have done much better than i have.
I have and still do believe this is great opportunity to create wealth because of the fundamentals and my entry price of average 10.3 x couple hundred thousand.

With this announcement (and we don't know what it is yet) would anyone here  be selling today (if they could get out) at say 17c or are you happy with your holdings confident of good times. 

I'm referring here to beppa holders in this questionaire.

Banska bystrica would you continue to drip feed out.... or hold on now, even though we don't know what is to be revealed behind the curtain?


----------



## random (2 September 2009)

I wouldn't be putting too much faith in the buy and sells listed on the screen at the moment.

Friday might as well be in another solar system.
We certainly have an exciting week ahead i reckon.


----------



## Mitsimonsta (2 September 2009)

random said:


> With this announcement (and we don't know what it is yet) would anyone here  be selling today (if they could get out) at say 17c or are you happy with your holdings confident of good times.



Nobody can say they were confident of good times. However I do see a light at the end of the tunnel which I believe is good news for all concerned - BBI and BEPPA.

17c I would be happy with, an 8.4c average (a measly 31K units) would mean a 100% return plus chump change. Mind you, I was hoping that BEPPA would drive some big capital gains in my portfolio. I was hoping for about 400%, which would give me $10k return for just over $2.5K invested. At least a meaty amount I could do something with.



random said:


> Banska bystrica would you continue to drip feed out.... or hold on now, even though we don't know what is to be revealed behind the curtain?




Without putting words into his mouth, I think he was genuinely surprised by the trading halt as we were. Like all of us, we are waiting for a pending announcement with baited breath.

Mind you, I will make the point that they would not have called a trading halt without a reasonable expectation that the negotiations with a 'cornerstone investor' would succeed, or have a materially positive impact for investor value or security prices.


----------



## Largesse (2 September 2009)

Mitsimonsta said:


> Not suspended, just a trading halt.
> 
> Doesn't stop orders being placed in the system. Trading halt allows orders to be placed and cancelled. No trades take place.
> 
> Suspension is no trades, and no oders placed. IIRC it also means that all orders in the system are flushed..







I am sure skyQuake appreciates you explaining what the difference between a suspension and a trading halt is for him. After all, he is an absolute noob with no trading experience what so ever.




> Hopefully we can bring the tone of the thread up a notch




no chance of that, way too many muppets and hopers


----------



## Mitsimonsta (2 September 2009)

Largesse said:


> I am sure skyQuake appreciates you explaining what the difference between a suspension and a trading halt is for him. After all, he is an absolute noob with no trading experience what so ever.




Yeah, all these noobs in the thread have no clue what they are talking about.  What a silly nooby mistake to make eh?


----------



## skyQuake (2 September 2009)

Mitsimonsta said:


> Yeah, all these noobs in the thread have no clue what they are talking about.  What a silly nooby mistake to make eh?




Duhhh.. Yeah! :homer: Why thank you! Much appreciate 


Back to srs discussion, white knight rumours to avoid forced asset sales is always a good thing. Strategic placement is far more preferable to being at the mercy of banks.


----------



## Mitsimonsta (2 September 2009)

skyQuake said:


> Duhhh.. Yeah! :homer: Why thank you! Much appreciate




No worries mate 



skyQuake said:


> Back to srs discussion, white knight rumours to avoid forced asset sales is always a good thing. Strategic placement is far more preferable to being at the mercy of banks.



Well yes, but lets wait and see what 'they' actually come up with. I mean, we may end up selling our souls to the white knight yet.

That's assuming that a deal can be reached. They have another 24 hours to make something stick that will get past the securityholders.

EDIT: lol - i've been moderated on ASF... post removed. And my reply was so witty. Oh well.... the troll may be gone so a small price to pay. Cheers mods.


----------



## nunthewiser (2 September 2009)

nomore4s said:


> This sort of thing is not allowed and we have the 100 character rule for a very good reason. If you can't post 100 charaters please don't post at all.
> 
> Anymore posts like this will receive infractions, no more warnings.
> 
> Thank you.





i would just like to say after recieving 458 infraction points for this same thing is ............. HA! 

on a side note i will be looking at BBI for a nice lil skim on reopen .... been a great little trader of late ... i regard it as a slush fund only and care not about its fundamentals or bailouts from "potential cornerstone investors"

but im also a noob and may need guidance on this matter


----------



## Largesse (2 September 2009)

ask mitsimonsta, he is the expert on all things bbi and stockmarket

but be careful not to troll because he may unleash his wit on you


----------



## Mitsimonsta (2 September 2009)

nunthewiser said:


> but im also a noob and may need guidance on this matter




Do what the rest of us noobs are doing - waiting for the announcement and see what bountiful riches the great leaders of BBI have guided us to.

And then decide.


----------



## nunthewiser (2 September 2009)

Largesse said:


> but be careful not to troll because he may unleash his wit on you




hahahahahah now thats funny  wit everywhere 



Mitsimonsta said:


> Do what the rest of us noobs are doing - waiting for the announcement and see what bountiful riches the great leaders of BBI have guided us to.
> 
> And then decide.




thanks bud , will do just that ....... wait and decide


----------



## skyQuake (2 September 2009)

nunthewiser said:


> i would just like to say after recieving 458 infraction points for this same thing is ............. HA!
> 
> on a side note i will be looking at BBI for a nice lil skim on reopen .... been a great little trader of late ... i regard it as a slush fund only and care not about its fundamentals or bailouts from "potential cornerstone investors"
> 
> but im also a noob and may need guidance on this matter




Could trade differently this time. Punters have learnt that this thing dribbles up slowly and then starts running before panic buying kicks in to a final cresendo.

Which means its probably gonna gap up lots and run really hard really fast before all the buying power is exhausted.

Of couse if the Conerstone Investor news is REALLY good then all that may not even apply!


----------



## nunthewiser (2 September 2009)

skyQuake said:


> Could trade differently this time. Punters have learnt that this thing dribbles up slowly and then starts running before panic buying kicks in to a final cresendo.
> 
> Which means its probably gonna gap up lots and run really hard really fast before all the buying power is exhausted.
> 
> Of couse if the Conerstone Investor news is REALLY good then all that may not even apply!





yep will be totally expecting it to gap up and run hard . i will be on the sidelines for the immediate open until i can establish the pattern it produces .mainly play the 2 tick shuffle on it ... not my cup of tea for a hold of any length of time 

all easy to speculate on it now , will judge it when it reopens . 

you been trading it also ?


----------



## Jez (2 September 2009)

Problem is the "greed factor". I was watching BBI last week when it went to 13.5. I was loosing at 8 but seeing the news and rise, I got in and doubled my holding at 7.1 (7.55 cost base total) and because I had read BBI valuation - 30, I didn't recognise the turn at the top. I eventually got out at 10.5. Then, thinking that the profit takers had stopped, I got back in at 9 and out at 9.5. To top it off, I got back in at 9.25 and now am sitting on 1 mill units and 7.85 is my cost base after the wins are factored in.

At last trade, I'm even, but I hope the "greed factor" don't kill it for me on Friday! Such a big decision to make - Hold and Ride or set a sell price and take what I get!

After 10 years of spec trading, I'm only annoyed when I sell too early. Big losses don't bother me any more, (life goes on) as it's not on credit and I'm used to losses.

PLEASE, PLEASE money Gods, It's my turn!

SHOW ME THE MONEY!


----------



## skyQuake (2 September 2009)

nunthewiser said:


> yep will be totally expecting it to gap up and run hard . i will be on the sidelines for the immediate open until i can establish the pattern it produces .mainly play the 2 tick shuffle on it ... not my cup of tea for a hold of any length of time
> 
> all easy to speculate on it now , will judge it when it reopens .
> 
> you been trading it also ?




Yup, traded in and out a bit too much too might I add, got a huge parcel at average price of 6.1 and sold around 6.3/4 before the first pullback. Thought i was really smart. Didn't look at it again for 20minute, almost shat myself. 

It was making a potential reversal yday, so I go a bit... Its a fine trading stock, would be better if I could short it too.


----------



## skyQuake (2 September 2009)

Jez said:


> Problem is the "greed factor". I was watching BBI last week when it went to 13.5. I was loosing at 8 but seeing the news and rise, I got in and doubled my holding at 7.1 (7.55 cost base total) and because I had read BBI valuation - 30, I didn't recognise the turn at the top. I eventually got out at 10.5. Then, thinking that the profit takers had stopped, I got back in at 9 and out at 9.5. To top it off, I got back in at 9.25 and now am sitting on 1 mill units and 7.85 is my cost base after the wins are factored in.
> 
> At last trade, I'm even, but I hope the "greed factor" don't kill it for me on Friday! Such a big decision to make - Hold and Ride or set a sell price and take what I get!
> 
> ...




I dunno, I think I'd rather the hand of midas than the lump of gold. Even if it goes up to 40c, what then? Can that feed you for the rest of your life?


----------



## Jez (2 September 2009)

skyQuake said:


> Even if it goes up to 40c, what then? Can that feed you for the rest of your life?




You open a "can of worms" with that statement!

I'm not reliant on this being a winner. I could loose the lot like I did with ONE ($20K), HIH ($5K), AFG ($60K) and last year's GFC ($90K book value) and my regular job keeps me going.

I just want to live like Skase or Bond for a bit!


----------



## nulla nulla (2 September 2009)

nunthewiser said:


> yep will be totally expecting it to gap up and run hard . i will be on the sidelines for the immediate open until i can establish the pattern it produces .mainly play the 2 tick shuffle on it ... not my cup of tea for a hold of any length of time
> 
> all easy to speculate on it now , will judge it when it reopens .
> 
> you been trading it also ?




I hold, and i am as keen as the next person to take advantage of any spike that presents itself. However, i would cautiously point out that last weeks spike involved a turnover of 440 million shares or there-abouts which is approximately 4.5 times the previous spike, which saw it go over $0.155. 

There could be some large holders sitting out there waiting for the opportunity to unload on unwary speculators. In my opinion, the likelihood of it spiking again needs to tempered with awareness of the possibility of others looking to close out their trades at the expense of the unwary. Take care.


----------



## joe7068 (2 September 2009)

I can't really see how the noteholders walk away unscathed through this. With BEEPA trading at 16 odd cents why would the proposal avoid looking at the noteholders while slicing the balls off the unit holders through dilution. I can't see it happening like that. The noteholders will have to give something back. I'm sure they could buy the note at 50 cents in the dollar anyway at worst.

No one is going to walk away from this unscathed.


----------



## Gunlom (2 September 2009)

Very true BEPPA holders, mostly likely will have to take a cut, but as alot of us have only bought in recently, It's no big drama.

As a 100% BEPPA, I could take a 50c cut and still skip away singing and dancing as happy as anything! ( average buying of 9.1c ) I think there alot of people out there like me! 

If I get $1.20 per unit ( including distrubtions) by july 2012 , I'll be doing back flips up and down the street.

50c per unit is still more than enough.


----------



## ricee007 (3 September 2009)

joe7068 said:


> I can't really see how the noteholders walk away unscathed through this. With BEEPA trading at 16 odd cents why would the proposal avoid looking at the noteholders while slicing the balls off the unit holders through dilution. I can't see it happening like that. The noteholders will have to give something back. I'm sure they could buy the note at 50 cents in the dollar anyway at worst.
> 
> No one is going to walk away from this unscathed.



Well, to BBI, BEPPA is cheaper than a bank loan...

BBI needs funds... BEPPA provides a low interest rate for this fund, and does not *NEED* to be paid out in cash (like a bank debt)... if a cornerstone investor only took a minor role (for example, bought $100M of freshly issued BBI shares for 10c, and a BEPPA-Like preference share for $200M, expiring 2015).. then in that csae, that would be $300M cash BBI would know have... and go a LONG way to paying back the soon to fall due corporate debt, and / or SPARCS... but wouldn't allow them to touch BEPPA....

We just don't know.

It's certainly not a forgone conclusion that BEPPA will be involved (though, it is likely)...

There is an *UNRELIABLE RUMOUR* that you should NOT rely on, that, someone is offering $1Bn in convertible preference share, and buying 49% of DBCT.... such a transaction wouldnt necessarily invoilve beppa....

Personally, i'd think about 50c is a bit too low.... but, want 66c, at least... (maybe, 66c cash..... though, honestly, i'd probably take 66c in bbi shares, then sell)...

I mean, it's worth $1.0435... not much need for me to sell it at 50c now... If the corner stone investor was significant (will take care of some coproate debt, sparcs THEN a couple of hundred million into BEPPA [clearly, the lowest priority])... then it is INSANELY likely that I would get $1.20 in 2012... sure, I want all the BEPPAs to convert / get cash at 50c..... but, I might as well wait 3 years and get $1.20... it just wouldn't make sense for me to convert at 50c...


----------



## cpsharky (3 September 2009)

Rice, stop dreaming too hard about that $1.20 in 2012.
You have to look at your investment from both sides. The reality is that the cornerstone investor will be after as much as he can get for his buck. I personally think that means Beppa will need to have its conversion rights lopped off. I think Beppa holders will be told to accept no more than 2 BBI for 1 Beppa in a conversion should it happen (possibly 1 for 1 actually) or there will be no investment. There will be no cash handout or even equity handout to Beppas. You will be asked to sit until 2012 at which time you will only see $1 if BBI are trading at 50c (or $1 if 1:1).

Would you accept that sort of deal? I would.


----------



## banska bystrica (3 September 2009)

I hold 3M BEPPA after selling 2M recently. I don't think this deal will be any great news for BBI holders or BEPPA holders. The cornerstone investor is holding all the aces. Without him, there is no back up plan. BBI are gone on Oct 30 without him. I think he has played his cards perfectly. He has waited until BBI are nearly dead and buried. On that basis, all the positives of any deal will be with him. That's the reality. He can ask for waht he wants and if he doesn't get it, he walks away and then what? BBI holders get zero and BEPPA holders wait 10 years for the liquidators final report and probably get zero anyway.


----------



## cpsharky (3 September 2009)

I wonder if this will fire possible DBCT buyers up? In the end the best result is to sell DBCT at a good price, and now it would appear BBI has at least something up its sleeve.

All very interesting.


----------



## Zarate (3 September 2009)

I have read a few times that DBCT is worth $1billion. What is the go with that? Or are they saying $1billion for 49% share?


----------



## banska bystrica (3 September 2009)

Zarate said:


> I have read a few times that DBCT is worth $1billion. What is the go with that? Or are they saying $1billion for 49% share?




1 billion net after debt. Valued at roughly $2.8Bn and $1.8Bn owed to banks. Time will tell what happens.


----------



## Mitsimonsta (3 September 2009)

BB and just about everyone is awaiting the announcement. Would more than likely need to be today by 2pm or they are going to have to ask for a trading halt extension, more than likely to Monday morning.

Seems like someone is bullish on BEPPA, there is one buy order at 21c for 120K units. Next one down is 2 bids for 21.5K units @ 16c. I realise this really has no bearing at this time, just interesting.


----------



## boronia (3 September 2009)

banska bystrica said:


> 1 billion net after debt. Valued at roughly $2.8Bn and $1.8Bn owed to banks. Time will tell what happens.




Team, I have recently joined this site and found this thread. The passion and information are a great read. You have probably seen the following on BusSpec today but just in case you haven't...

_Babcock & Brown Infrastructure 

In addition to a capital raising announcement from Elders (delayed apparently because of this week's Bank Holiday in Britain), the market is expecting big news from Babcock & Brown Infrastructure today. Macquarie Capital, Credit Suisse and Gresham Partners are said to be advising BBI on a recapitalisation plan that will involve private equity giant Texas Pacific Group as a cornerstone investor. Well that’s the talk anyway. Private equity firms Kaplan Funds Management and Carlyle Group have also been speculated to be possible investors. A stake in BBI's Darylmple Bay coal terminal will also be sold as part of the deal, which will allow BBI to pay some of its $1.2 billion of debt, $500 million of which is due in six months. If BBI pulls this off it will be a coup for the debt-laden port operator. _


----------



## Zarate (3 September 2009)

Mitsimonsta said:


> BB and just about everyone is awaiting the announcement. Would more than likely need to be today by 2pm or they are going to have to ask for a trading halt extension, more than likely to Monday morning.
> 
> Seems like someone is bullish on BEPPA, there is one buy order at 21c for 120K units. Next one down is 2 bids for 21.5K units @ 16c. I realise this really has no bearing at this time, just interesting.





Just a thought on your pre-open analysis. Traders do sometimes put in bids when they want to sell something, and offers when they want to buy something - especially just before a market opens/re-opens. They do this to 'spoof' the market. I'm not neccesarily saying that this is the case here.

Thanks BB


----------



## Mitsimonsta (3 September 2009)

Zarate said:


> Traders do sometimes put in bids when they want to sell something, and offers when they want to buy something - especially just before a market opens/re-opens. They do this to 'spoof' the market. I'm not neccesarily saying that this is the case here.




Hence my "I realise this has no bearing on anything" comment....

That said, I do have an order ready to send to market on my BEPPA.


----------



## ricee007 (3 September 2009)

cpsharky said:


> Rice, stop dreaming too hard about that $1.20 in 2012.
> You have to look at your investment from both sides. The reality is that the cornerstone investor will be after as much as he can get for his buck. I personally think that means Beppa will need to have its conversion rights lopped off.



I think it would be much more likely that the investor would offer money for BEPPA now... as in, if you don't sell then you keep conversion rights... if you do sell, you sell them for, say, 50c.



cpsharky said:


> I think Beppa holders will be told to accept no more than 2 BBI for 1 Beppa in a conversion should it happen (possibly 1 for 1 actually)



I think thats just unrealistic, tbh. _I wouldn't accept that._

Look at Net Assets, especially after a cornerstone investor. NA could be, say, 40c. SP could be, say, 30c in 2012... I am NOT limiting myself to that in 2012, even if it means voting against a cornerstone investor. I just wouldn't vote for it. WHich surely means that I either get my shares converted now, or I get to keep them to 2012... In 2012, if BBI can afford to give me $1.20, they do... otherwise, I'll take $1.20 worth of BBI shares... thanks.



cpsharky said:


> Would you accept that sort of deal? I would.



No. I would accept cash, or BBI shares now.... I think I want around 66c... but, I won't limit my 2012 rights.


----------



## Mitsimonsta (3 September 2009)

The best way to go is that the Cornerstone Investor starts buying large tranches of BEPPA on-market after the deal is announced. They start paying up to what they believe is reasonable, you will see alot of sellers at 25c or more.


----------



## hardyakka (3 September 2009)

BBI and BEPPA have given us one hell of a ride. The worst of the GFC is over and we are now on the road to recovery, the smart money will move now to get in at the early stages of that recovery and I think that is exactly what is happening.

Any cornerstone investor would be crazy not to try and get a discount on BEPPA, by paying say 60 cents in the dollar they remove $1 of liabilities from the balance sheet, a gift of 40 cents, which I for one would not begrudge.

I hold just over 2M BEPPA and like any other person will look favourably on an equitable offer, but then at the same time I will not be taken for a ride. 

It does not contribute to the thread by speculating on the possible content of the announcement, I am going to wait and see what is on the table.

Cheers


----------



## Tysonboss1 (3 September 2009)

joe7068 said:


> I can't really see how the noteholders walk away unscathed through this. With BEEPA trading at 16 odd cents why would the proposal avoid looking at the noteholders while slicing the balls off the unit holders through dilution. I can't see it happening like that. The noteholders will have to give something back. I'm sure they could buy the note at 50 cents in the dollar anyway at worst.
> 
> No one is going to walk away from this unscathed.




I can't see anything happening to Beppa without shareholder approval.

So anything that does happen has to be good. Yes BBI has massive diloution risk however, Beppa is protected.


----------



## investorpaul (3 September 2009)

Mitsimonsta said:


> The best way to go is that the Cornerstone Investor starts buying large tranches of BEPPA on-market after the deal is announced. They start paying up to what they believe is reasonable, you will see alot of sellers at 25c or more.




I think your pretty close to the market. Here is what I would do if I was the "Cornerstone Investor":

1. In the weeks leading up, buy a whole heap of BEPPA. On the last 3 days before the trading halt I would buy as many as possible. I.E. They wont be registered until T+3 meaning it would be after the trading halt date and the market would get wind of my plan via my significant holding statement early.

2. Provide BBI with $500m-$1bn cash injection inexchange for a large percentage of the comapny. Also buy 49% DBCT for $1.4bn with an option or revision depending on asset performance to increase this stake over time or in the event of BBI head company facing certain unforeseen economic events.

3. BBI is now diluted to bugger but I buy BEPPA on market up to say 25 to 30 cents. I then put a tender to all BEPPA holders were they elect how many shares they want to sell at what price (Fosters did something similar). Some BEPPA holders will say 40c others 30c some $1. The cornerstone investor then buys everything up to a value of 60 or 70cents (or whatever they chose).

4. 2012 comes around and lets just say BBI doesnt buy out BEPPA, they then convert for BBI shares and the cornerstone investor ends up with an even larger holding.


----------



## Mitsimonsta (3 September 2009)

investorpaul said:


> I think your pretty close to the market. (snip)




Yeah, I have posted elsewhere but the gist was similar. Didn't think about buying in the 3 days leading up to the halt though.

There's been someone out these sniping all stray BEPPA below 15c, I have a feeling in my gut that it is the supposed 'Cornerstone'... I have learned over the last few years to trust my gut.

I see the following:

1) ~$500M cash injection by investor, and an undertaking to buy shares in an SPP to maintain ownership level.

2) SPP run for BBI holders, with BEPPA holders also invited to participate.

3) Enough cash to pay out the coming ~$500M of debt facilities ($205M Oct09, SPARCS & Feb10). Yes, I want to see SPARCS paid in cash.

4) With Corp. Debt out of the way and bank sweep removed, restart distributions to BEPPA. I'd then like to see BBI purchasing BEPPA on-market. 4.3c per BEPPA owed and soon to be 6c. My average buy price is 8.4c so it's a big slab of my original capital back that I can do other things with.

5) I suspect the Cornerstone would compete and buy BEPPA for ultimate conversion in 2012 to increase their holdings and probably ultimately full control of BBI with somewhere like 85% of the shares on issue. If this looks anything like happening, I am holding my BEPPA and waiting for about 60c or more.


----------



## joe7068 (3 September 2009)

BEEPA holders should sit tight and watch.

Re-equitizing BBI will only make 100 cents in the dollar look more achievable. Don't fall for any tricks from these guys. The real problem for BBI is at the equity level which is dragging down the rest of the tranches.

Do not accept anything less than 100 cents in the dollar and don't go for the crap they will spin that the notes are only trading at 15 cents. The fact is that is brought on by the weakness of the equity position not the debt.

Furthermore don't accept ANY haircut unless the senior debt holders are prepared to take a haircut as well. Just because senior debt doesn't trade like a security doesn't mean theirs is worth 100 cents in the dollar while ours is at a huge discount. That's just bull****.

If the deal doesn't look good to BEEPA holders then refuse it if its put to a vote and simply accept the assets are to be sold down.


----------



## Largesse (3 September 2009)

joe7068 said:


> BEEPA holders should sit tight and watch.
> 
> Re-equitizing BBI will only make 100 cents in the dollar look more achievable. Don't fall for any tricks from these guys. The real problem for BBI is at the equity level which is dragging down the rest of the tranches.
> 
> ...





nah mate, that just called seniority of debt.

you may not like it but it's a fact of life and business


----------



## banska bystrica (3 September 2009)

I own a lot of BEPPA and I feel a very severe haircut coming for ALL...... maybe SPARCS holders get a reprieve as their $1 is due and payable in November. Might be easy just to let them convert. The dilution with this proposal will be so torturous it will not be pretty. A very stiff rights issue (has to be at least 4:1 at the current market cap) where Mr Cornerstone underwrites it will probably be in order or maybe Mr Cornerstone takes a convertible note?

BBI are caught between a rock and a hard place. Oct 30 is looming and they don't have the cash. They said so at the ABN Amro conference. We all know that anyway as anything above $50M is swept to the banks.
The cornerstone investor has played this perfectly. His timing is impeccable. Wait...wait...wait some more. Hope DBCT offers were all low ball and then pounce at the 11th hour.
Mr Cornerstone will demand plenty and he will get it. There is no alternative. If this deal falls through, expect a BBI price circa 2c and a BEPPA price circa 4c. Ugly but that's the reality.
I would accept 20c worth of BBI shares for each BEPPA in any deal because if the deal falls over, I will get three fifths of a banana sandwich. That's all.

Anyone who thinks they will ever see $1.00 for BEPPA is living in a fantasy land.


----------



## Mitsimonsta (3 September 2009)

Nice to see you still here BB after that disgusting post by TTC over the road.

I sent you a PM with my email, sign me up at the blog when it opens. I can provide webspace for you to get started if you like.


----------



## kommy (3 September 2009)

BB understand your pessimism, but lets wait until the announcement tomorrow!

My take is that if the deal is announced tomorrow then it can't be too bad as they would have spend a little time negotiating it. If it gets extended then your pessimism is warranted but until then its too hard to make a call.


----------



## drsmith (3 September 2009)

banska bystrica said:


> A very stiff rights issue (has to be at least 4:1 at the current market cap) where Mr Cornerstone underwrites it will probably be in order or maybe Mr Cornerstone takes a convertible note?



I was thinking something along the lines of Mr Cornerstone contributing equity in the form of a preference share/convertible note that ranks ahead of BEPPA.

With regard to your recent negativity have you looked at the reconciliation of EBITDA to operating cash on page 15 of the analyst's presentation and deducted the figures from the first half?


----------



## banska bystrica (3 September 2009)

Free cash flow for the six months to June 30 was $29M. This is a major collapse in free cash flow and it is obvious less and less free cash is flowing from the assets to the corporate level. The ICR on corporate debt is alarmingly low. They are being suffocated by the interest margins the banks are charging. I had sold 2,000,000 BEPPA (most since the report came out). I also shorted the head stock.
I still own 3M BEPPA and await the devil in the detail tomorrow morning. Any capital injection of $700M with a current market cap of $200M can only mean one thing. Massive dilution. How it all affects BEPPA/SPARCS/BBN020 is anyone's guess.


----------



## Mitsimonsta (3 September 2009)

By what time do they need to release to market in order to commence trading at market open, or request an extension of trading halt?

9.30am AEST?

I think there will be no trading tomorrow, negotiation will continue over the weekend and we will have a deal public on Monday morning.


----------



## hardyakka (3 September 2009)

banska bystrica said:


> I own a lot of BEPPA and I feel a very severe haircut coming for ALL...... maybe SPARCS holders get a reprieve as their $1 is due and payable in November. Might be easy just to let them convert. The dilution with this proposal will be so torturous it will not be pretty. A very stiff rights issue (has to be at least 4:1 at the current market cap) where Mr Cornerstone underwrites it will probably be in order or maybe Mr Cornerstone takes a convertible note?
> 
> BBI are caught between a rock and a hard place. Oct 30 is looming and they don't have the cash. They said so at the ABN Amro conference. We all know that anyway as anything above $50M is swept to the banks.
> The cornerstone investor has played this perfectly. His timing is impeccable. Wait...wait...wait some more. Hope DBCT offers were all low ball and then pounce at the 11th hour.
> ...




Hi BB, 

Good to see you back, you have been getting a bit of crap across the road, I get the feeling that many posters there are simply envious. Not that I would know that as I was banned from there yonks ago<s>.

I do not concur with your view on the value of BEPPA, I would be looking for greater value but via an alternate solution that IMO would be agreeable to all.

BBI does not want dilution or cash outflow and would like to increase net assets by removing a significant portion of the BEPPA liability for zero cost. This can be done if 50 cents in the $ of BEPPA is converted to a preferred note with a coupon of say 350 bps above BBSW and the income flow is secured against DBCT or NGPL cashflows (after senior debt rights), this ensuring a quality credit rating. If the notes are listed they can be traded and persons can access capital. Also there can be stepups or capital redemptions every say 5 years. Hence BBI can redeem or buy back the notes once it has recovered.

No dilution, no outflow of cash, secured high return to note holders. If you bought BEPPA below 10 cents then that would equate to a return of 40% pa (assuming BBSW +350bps =8% on 50c in the $ of BEPPA).

Cheers


----------



## Tysonboss1 (3 September 2009)

banska bystrica said:


> I own a lot of BEPPA and I feel a very severe haircut coming for ALL......
> 
> I would accept 20c worth of BBI shares for each BEPPA in any deal because if the deal falls over, I will get three fifths of a banana sandwich. That's all.
> 
> Anyone who thinks they will ever see $1.00 for BEPPA is living in a fantasy land.




I understand where your coming from, however I don't share your feeling of impending doom.

BB you always seem to get a touch of cold feet leading up to these sort of announcements, 

I am actually quite looking for to the annoucement, I have a positive out look.


----------



## Mitsimonsta (3 September 2009)

Tysonboss1 said:


> I understand where your coming from
> 
> (snip)
> 
> BB you always seem to get a touch of cold feet leading up to these sort of announcements




If I had as much cash invested as he has, along with the awesome profits so far and sitting on the paper profit he is with a trading halt pending reapitalisation, I would be hell worried too.

I've spent $2600 on BEPPA - that is alot in my portfolio - and I am very nervous. Still, we all have to start somewhere.


----------



## banska bystrica (4 September 2009)

B & B Infrastructure awaits white knight:

Matthew Stevens | September 04, 2009 

Article from: The Australian 
HIDDEN beneath the complication and debt that has overwhelmed Babcock & Brown Infrastructure is an "Aladdin's Cave" of value for an investor with patience and deep pockets.

But anyone expecting this morning will bring the "abracadabra" moment that immediately opens the way to new riches is going to be disappointed. 

BBI is expected to come out of 48 hours of trading halt today with confirmation that it is pursuing a recapitalisation through an equity raising rather than asset sales. 

BBI is expected to confirm a broad framework for a recapitalisation that will likely involve investment both in the headstock and directly in some of the core operating assets. 

It is speculated BBI could raise up to $500 million through a placement equivalent to 75 per cent of the headstock at a small discount to the prevailing market price -- and possibly more through the sale of direct interests in some core operation assets. 

But today's statement is unlikely to deliver too much detail on the who, how, what and when of the progress towards introducing a new cornerstone investor to the only sustainable arm of the global folly that was Babcock & Brown. 

The company is apparently keen to make it very clear to its flotilla of penurious shareholders that there is a lot of water yet between BBI and a secure, more prosperous future. 

The one "W" question we can answer right away though is why someone would want to take a punt on BBI. 

The crucial thing to understand about the BBI situation is that, while there is an awful lot of debt sitting within its corporate walls, the situation is not quite as complicated as it might appear at first. 

Yes, BBI speaks for $9.9 billion of debt and about $3.5bn of it matures between now and July 2011. And that is before taking into account some $800m of hybrids, some $100m of which is due for re-set in November. 

But the fact is that around $8bn of bank debt is secured by BBI's assets and it is being comfortably supported by the largely regulated revenue flows of those operations. 

The immediate issue for BBI is that it has about $1.2bn of corporate debt which, while it is being serviced pretty comfortably from cashflows, is likely to be called by the banks as re-payment falls due between now and 2014. 

At headstock level, there are three multi-currency facilities maturing between February 2010 and February 2011 which would, at current exchange rates, require about $750m to repay. In the past, BBI would either have extended the terms of that debt or traded one or more of its strong pool of infrastructure businesses to cover the repayment. But that game of soldiers died with the GFC. 

BBI has been attempting to sell assets, including crown jewels such as the Dalrymple Bay coal port and its British ports business, without a whole lot of success for the past year or so. 

What deals BBI has been able to complete have essentially been done at pricing metrics that have proved so self-defeating and value-deflating that the concept of a heavily discounted, control-changing equity issue now looks very positive indeed. 

Over the past year or so, Australian corporates have raised $80bn in new equity which has promptly been delivered to banks in the form of debt repayment. 

Time and time again we have seen the compounding impact the stabilisation of balance sheets has had on individual company share prices. 

BBI is banking that it can repeat that virtuous cycle of recovery and the hedge funds are lining up to bet that it can. And here is how one of them is betting the BBI situation will pan out. 

First, BBI finds a cornerstone investor prepared to stump up with maybe $500m at say 6c a share. 

Then, given BBI continues to generate, post-capex, free cash at the current rate of $150m annually, it can quickly and easily start paying down the $750m of debt due over the next two years. 

Given refinancing risk is mitigated as the balance sheet is fundamentally re-cast, investor sentiment would then shift and there will be a re-rating of the stock. 

Now, if you use Asciano as a ready reckoner, then BBI might move reasonably quickly to maybe the 15c-a-share range, which means our cornerstone investor has made circa $700m-$800m. 

The reason why some reckon this is all a bit of a no brainer from an investor's point of view is that the bulk of BBI's business is not even as cyclical as, say, Asciano and neither do they face the same structural risks as Asciano. 

About 75 per cent of BBI's income flows from regulated assets where pricing reflects the cost of capital and locked-in rates of return. 

When Asciano went to market it was overrun by demand and ended up doubling its raising to $2bn. The net result is that the share price has tripled and Asciano is suddenly back in the game. 

The other thing to appreciate here is that BBI has prepared well for a white knight by internalising the management contract with Babcock & Brown at a cost of only $2m a year for four years. 

While that represents a near 50 per cent increase on the fee flow from 2008, it is only 10 per cent of the flow from years past and country miles short of the terrifying $350m price paid by Macquarie Airports for the recovery of its right to manage itself from parent Macquarie Bank. 

The management contract, mind you, remains a bit of a complication for the crew working on BBI's cornerstone investor option. 

The issue there is BBI's $800m worth of hybrids. They can be converted on the sale of the B&B management contract and their conversion would plainly be seriously dilutive. Dilution is not something any new investor would contemplate lightly. 

Given B&B is in the hands of an administrator and that the management contract is worth about $8m over 4 years, it would seem pretty likely that an early monetisation of the contract might be a serious option."

http://www.theaustralian.news.com.au/business/story/0,28124,26022835-5001641,00.html


----------



## banska bystrica (4 September 2009)

According to the Financial Review, the restructure is not complete and far from certain therefore the stock will probably be suspended before opening until any deal is actually finalised. Looks like our capital will be tied up for a while yet....... and oh so many opportunities elsewhere.


----------



## banska bystrica (4 September 2009)

The Australian Financial Review claims that the cornerstone investor is actually Brookfield Asset Management, the owner of the Multiplex Construction Group, not Borealis Infrastructure as previously thought.

The total recapitalisation process is touted to involve capital injections at the asset level, a restructure of debt at the head stock and the identification or reaffirmation of assets up for sale. In total the package is thought to be worth $1.5BN and aims to see a more sensible gearing level of 65% to 70%.

It is claimed that the deal will not launch today because the approval of all the lenders has not yet been achieved. 

However many still doubt that this highly complex transaction will get across the line and it is thought that at least one major asset sale will still have to take place.

It is thought that BBI wants to retain DBCT despite the fact that it has been on the market for months now and despite the consortium involving Xstrata, Anglo and Rio Tinto showing interest in the asset.

Credit Suisse and Macquarie Capital are advising BBI management and Gresham is advising BBI's independent directors. The AFR claims the negotiations are likely to be protracted and that this could lead to BBI being suspended from trading until the finer details of the recapitalisation are sorted out.


----------



## banska bystrica (4 September 2009)

Please obtain a copy of today's Financial Review and go to Page 47.

There has been a fight going on since last year between Lowy Financial Group (who own 7% of BEPPA) and BBI management.

It is a very sobering read and one that does not fill me with any great confidence.
Quote: "The BEPPAs are in a weak position. They need to play a reasonable game."

I still own 3M BEPPA and I am about to be stitched up. At least I am free carried. 

If BBI/BEPPA start trading today, I am out of my BEPPAs pronto.


----------



## deano9801 (4 September 2009)

news just in.....Notice of ceasing to be a substanial holder. asx web site. Does this mean it has been bought out by Norges Bank?


----------



## banska bystrica (4 September 2009)

As I said over the road and got blasted for it. Daytrader mugs were buying this last week and the instos were dumping to them.

Why were management not considering this sort of recapitalisation deal when I approached them when the stock was 15c in January? The haircut for everyone would have been far less severe. What would I know though? I'm just a private investor.


----------



## deano9801 (4 September 2009)

What do we all make of the "Debt Refinancing Update and Potential Recapitalisation " document? What will this do to the SP today?


----------



## Mitsimonsta (4 September 2009)

BBI Release out. Still negotiating. A couple of very worrying statements in there, including haircuts to both BEPPA and SPARCs, possibly at 'below recent trading price'... 

Will return to trade this morning.



> *ASX Release*
> 
> *4 September 2009*
> 
> ...


----------



## fuzzie (4 September 2009)

Surely talk of BEPPA holders taking a haircut refers to the big holders who bought in at face value and are expecting to get a decent wad of that value on the conversion date.

What I'm reading says to me they want cash back and don't like the idea of rolling over to new script as they still won't be getting great yields and there is a weak market for large trades to unload into.

For punters who bought in around the lows and see this as just being a good yielding return once distributions resume, maybe there is not so much cause to be so worried?

I would guess there is unlikely to be acceptance by those biggest holders of BEPPA's to take a 90% cut on face value, but as for holders with an average buy in around 8-10c who don't want to carry a big CGT bill this year, is there really so much bad news here?


----------



## hardyakka (4 September 2009)

BB,

The impression I get from the AFR article is that ideally major BEPPA holders want to avoid any significant discount on face value, generally most are agreed that this is simply not practical.

Another issue that crops up, which adds significant value from the “cornerstone investors” viewpoint is what will be their actual function. If the investor is going to undertake a funds management role, that would equate to an annual fee of a minimum of 0.5% of gross assets. That excludes any performance fee. Fund managers will often ensure that their funds hold an equity interest so as to ensure thay retain management rights, look at the Macquarie model.

So potentially what is there:

Fund management income stream in the form of a base fee;
Performance fee (this would be material and have massive upside considering the base BBI is coming from);
BEPPA resolution at a discount (40 cents in the $ discount adds about $300M to net assets);
Possibly marking to market BBI assets, considering the recent impairment charges this would take up the MTM of DBCT and NGPL, that would be close to $1.5 to $2B.
Capital raising from existing BBI holders, existing unitholders would be effectively contributing to the resolution of BBI problems.
In summary the upside IMO is massive, however at the expense of BBI and BEPPA holders who bought in at the peak.

Cheers


----------



## hardyakka (4 September 2009)

Mitsimonsta said:


> BBI Release out. Still negotiating. A couple of very worrying statements in there, including haircuts to both BEPPA and SPARCs, possibly at 'below recent trading price'...
> 
> Will return to trade this morning.




I do not see any problems at all with that statement. It is simply telling me that BBI securities are likely to be below their existing prices, ie maybe drop from 8 cents to 5 cents resulting from dilituion.

BEPPA/SPARCS holders will take a major cut and not see $1 of cash/shares in lieu, rather maybe 50 cents, a drop of 50% on a debt instrument. Any who bought in at the lows is still a major winner, 600 plus %. The losers are the investors who bought in at the peak.

Now lets watch the panic

Cheers


----------



## random (4 September 2009)

Late night last night.
Woke up little while ago.
Just saw that the announcement was made and read the forum
Did the only sensible thing that came into my head.
Made a fresh pot of tea! Oh yeah.
Tried all of them but keep coming back to Bushells all the time.
I like the that special briskness and flavour if you know what i mean.
Can think better now.

Not that worried really.
So the price drops on beppa.
Looks like we can look forward to a offer sooner rather than later on bbi conversion.
Bad news for *early *beppa holders .yes. for those who bought in around these prices nor so bad.
I''m in no hurry and will hold on still.
Its not great news but i wasn't expecting that it would be.
At the end of the day I'm sure we will be better off than when we entered (at around these prices).
9 min till opening.
Good luck to all of us.


----------



## Mitsimonsta (4 September 2009)

BEPPA down 30% early, coming back now... BBI GREEN???

God, this is crazy, crazy stuff. BEPPA might go green at some stage later today.

BBI management should be shot, I feel a BEPPA class action coming on. They basically paved the way for the cornerstone investor (or whoever is sniping BEPPA) at cheap prices.


----------



## random (4 September 2009)

BB,
I hope the 20,000 beppa's i just got at 10.5-11c wern't part of your portfolio.
I wouldn't enjoy it  if they were.


----------



## fuzzie (4 September 2009)

When beppa dropped to 10 I thought maybe I should put in a 5c bid, but I see it's back to 14 already.


----------



## Mitsimonsta (4 September 2009)

I don't think the cornerstone investor got enough BEPPA, watch for another negative press release.

Hodling.


----------



## random (4 September 2009)

Mitsimonsta said:


> I don't think the cornerstone investor got enough BEPPA, watch for another negative press release.
> 
> Hodling.




I think there is considerably more validity in your quote than you intended mitsimonsta. Todays release was not just to keep us shareholders informed (as required) but to shake the cage and see what falls out.


----------



## nomore4s (4 September 2009)

Mitsimonsta said:


> BBI management should be shot, I feel a BEPPA class action coming on. They basically paved the way for the cornerstone investor (or whoever is sniping BEPPA) at cheap prices.




lmao, you've got to be kidding me. There is alot of fantasy scenarios getting posted in this thread.

The fact is BBI are in a mountain of debt and they are trying every avenue to sort it out and you so called investors are now upset at management because the cornerstone investor is getting cheap prices, what a joke - how upset will you be if they go bust?
If BBI don't get the problems sorted you current holders could end up with nothing, but most of you are hanging on to best case/fantasy scenarios and imo any of those are a long way in the future and may never play out. There is a reason the market has currently ignored the so called value in BBI & BEPPA.


----------



## w.m.buch@bigpond (4 September 2009)

Why is BBI still relativly steady when the management are telling us huge dilution is on the way?
Why have Beppa dropped when it looks like they will be compulsory exchanged to BBI units? At todays BBI value 1Beppa = 12 BBI plus.
Confused by the markets reaction to the announcement


----------



## Mitsimonsta (4 September 2009)

There's going to be a big, big class action over today's release and events.

There's one way to guarantee a trading halt extension: play the 'delicately poised, confidential negotiations' card.

BBI's complete stuffup was to inform the ASX that there was no real possibility of a deal being reached in the next two trading days. Hence the extension to trading halt was (rightfully) rejected by the ASX.

Bunch of Morons. 

Now the Cornerstone needs enough BEPPA to nullify Lowy's votes, so somewhere above 8% and there was not nearly enough BEPPA traded today for that to happen.

QIC haven't got too brass Razoo's to run together right now, so their holdings aren't as stable as Lowy's.



nomore4s said:


> lmao, you've got to be kidding me. There is alot of fantasy scenarios getting posted in this thread.
> 
> The fact is BBI are in a mountain of debt and they are trying every avenue to sort it out and you so called investors are now upset at management because the cornerstone investor is getting cheap prices, what a joke - how upset will you be if they go bust?




They have purposefully and wilfully placed a negative announcement on their own securities in order to make the stock cheaper in the market for the Cornerstone, or whoever has been buying at 13c and below. If it was normal market conditions I would have no issue with it, but I believe that they have manipulated the market to benefit the Cornerstone.

There will be more negative releases. I do not know how they go from ultra-positive at the results release 9 days ago to this today. Nothing changes that quickly.

I am fully aware of the value in BBI and BEPPA, and I am also very aware of the mountain of debt. The house of cards is shaking, make no doubt about it. I just want management to stop pushing the walls. 



w.m.buch@bigpond said:


> Why is BBI still relativly steady when the management are telling us huge dilution is on the way?



Most of us are in BEPPA for less than a 10c average, and are in profit. We believe that we can still make a profit out of a deal when reached, and see some not so proper action from management.


----------



## skc (4 September 2009)

Mitsimonsta said:


> There's going to be a big, big class action over today's release and events.
> 
> There's one way to guarantee a trading halt extension: play the 'delicately poised, confidential negotiations' card.
> 
> ...




BEPPA volume is around 12m. At ~12c that's not even $1.5m. 

How much has the cornerstone guy saved? May be $1m? In a $1.5b deal?

Just daytraders my friend.


----------



## Mitsimonsta (4 September 2009)

It's not the saving now skc, it's the units at the other end. If BEPPA actually converts, it's going to be a conversion takeover.

Or, if converted to cash (my bet is just south of 30c, about 26c actually) all the units bought will return 100%.

Something is rotten in BBI.


----------



## skc (4 September 2009)

Mitsimonsta said:


> It's not the saving now skc, it's the units at the other end. If BEPPA actually converts, it's going to be a conversion takeover.
> 
> Or, if converted to cash (my bet is just south of 30c, about 26c actually) all the units bought will return 100%.
> 
> Something is rotten in BBI.




What is a conversion takeover?

So let's say converted to cash at 26c. The cornerstone investor paid 12c for them on all the volume today. 

He's due to make $1.5m when BEPPA converts. Wow. On a $1.5B deal.


----------



## Tysonboss1 (4 September 2009)

skc said:


> What is a conversion takeover?
> 
> So let's say converted to cash at 26c. The cornerstone investor paid 12c for them on all the volume today.
> 
> He's due to make $1.5m when BEPPA converts. Wow. On a $1.5B deal.




For a deal that involves beppa taking a cut in face value to go ahead it would have to be approved by the beppa holders, So taking a stake in beppa becomes very stratigic.

Also buying one Beppa share at 13c may result in it being converted to 5 BBI shares in the future, which gives the cornerstone a much higher % ownership on the other side of this.


----------



## Largesse (4 September 2009)

ROFL.

Mitsi think's he is the second coming of gekko... 

mate, seriously give up. BBI and by association BEPPA have their balls in a vice and the cornerstone has firm grip on the handle.

Why you guys keep thinking you are going to get FV for BEPPA is so far beyond me. There is positively NO chance of this happening in the current investment environment and under the current circumstances.


----------



## hardyakka (4 September 2009)

The announcement today was strictly in accordance with the ASX Listing Rules and did not breach any regulatory requirements. The supposed cornerstone investor did not buy anything cheaply, it paid market price.

Mits-the Listing Rules are very specific about what can and cannot be disclosed, it is not just a case of play the "confidential" card. The recent penalties on the James Hardie directors has driven home the penalties directores and executives can face for not complying with the Listing Rules. Have a look at the Guidance Note to Rule 3.1, it clarifies requirements.
http://www.asx.com.au/ListingRules/guidance/gn08_continuous_disclosure.pdf

I am just going to sit back and let events unfurl, as I said earlier I consider that there is massive unrecognised value in BBI.

Cheers


----------



## joe7068 (4 September 2009)

Tyson:

Can you stop spamming the site with that really stupid quip. It wasn't funny the first time, nor is it funny the 100th time you've posted it.

It's really annoying.


----------



## nomore4s (4 September 2009)

joe7068 said:


> Tyson:
> 
> Can you stop spamming the site with that really stupid quip. It wasn't funny the first time, nor is it funny the 100th time you've posted it.
> 
> It's really annoying.




Joe what quip are you talking about? If you're talking about his signature at the bottom of his posts - he is allowed to have that there.


----------



## joe7068 (4 September 2009)

That's a signature? Jeez Louise.

I'm sure he's allowed to post, but it doesn't make it less annoying.


----------



## nomore4s (4 September 2009)

joe7068 said:


> That's a signature? Jeez Louise.
> 
> I'm sure he's allowed to post, but it doesn't make it less annoying.




lol, well you better get used to it because it will be at the bottom of every post he makes unless he changes it or gets rid of it.

Mitsimonsta I really don't know what has upset you so much. BBI is just keeping the market updated. I think they are covering their @rses a bit as well, if it goes pear shaped from here they at least tried to keep the market informed.


----------



## artsmith (4 September 2009)

so whats the take on BBI now, its @0.07c, is this a manipulation to drive he stock down for the purchase of cheap Beppa 4 conversion?
And what is the view on what is BBI really worth?

cheers, 

artsmith


----------



## joe7068 (4 September 2009)

Am I understanding the announcement correctly?

BBI says they will convert the BEEPA etc. into ordinary units and then let the new investor run right over the stock through dilution.

Here's the thing though, I know these guys were never the smartest douchebags on the block, so of course they left things alone to the very end.

However if we going to get diluted like that why not give the present shareholders and even BEEPA holders the chance to participate in the prison style rape by allowing us to participate through a rights issue?

The banks seem to be ok with lending at the asset level and to be honest most of those assets are pretty stable income wise... (yes not all).


Given a period of 5 years or so those assets could be worked off at much better prices.

Just observing the screen all day on beppa leads me to believe that no 'cornerstone investor' is buying beppas.

It is starting to feel like a lottery ticket.

Why on earth would that significant investor be buying BEEPA's when BBI has already said that they are likely going to convert the hybrids and allow the investor to prison rape the unit holders?

What you said doesn't make sense.


----------



## joe7068 (4 September 2009)

oops 

sorry, I missed the part where we agree. Sorry about that. I should have taken a little longer to read your entire comment


----------



## Zarate (4 September 2009)

I was just commenting on other posters speaking of negative announcements so that the cornerstone investor could buy into beppa. There is no evidence of this on the screen.
----------------

I posted at then same time as you so disregard this comment too then i suppose lol.


----------



## banska bystrica (4 September 2009)

Largesse said:


> ROFL.
> 
> Mitsi think's he is the second coming of gekko...
> 
> ...




I agree. BBI/BEPPA/SPARCS all have their balls in a tightening vice. The pity is that there is enormous value in this company but existing holders will not see any of it.
As of about 10 mins ago, I am completely out of BEPPA and still have my BBI short in play and in profit.
I would consider buying BBI after all the raping has been done, depending on the final post-dilutive NAV and the prevailing BBI price at the time.


----------



## Zarate (4 September 2009)

Hey BB if you don't mind me asking, where do you, or where can you short sell bbi? There have been times that i would have loved to have bought beppa and shorted bbi. at 10c vs 8.6c this morning for example.


----------



## Tysonboss1 (4 September 2009)

joe7068 said:


> Tyson:
> 
> Can you stop spamming the site with that really stupid quip. It wasn't funny the first time, nor is it funny the 100th time you've posted it.
> 
> It's really annoying.




In short, No.

I am sure as you progress through this forum you will find many people have put qoutes into the signiture block, some serious, some not so.

My qoute comes from a military unit I used to belong to (actually the combat medic qualified guys wore it on their pt shirts). But if you don't like it just dont read it.


----------



## skc (4 September 2009)

banska bystrica said:


> I agree. BBI/BEPPA/SPARCS all have their balls in a tightening vice. The pity is that there is enormous value in this company but existing holders will not see any of it.
> As of about 10 mins ago, I am completely out of BEPPA and still have my BBI short in play and in profit.
> I would consider buying BBI after all the raping has been done, depending on the final post-dilutive NAV and the prevailing BBI price at the time.




BB, my hats off to you in the way you have managed your trade / investment. Not because you made money, but because you identified value, positioned yourself accordingly AND analysed and made the right decision when new 
information come to light.



joe7068 said:


> It is starting to feel like a lottery ticket.




Unfortunately, the same cannot be said to many other holders on this forum. Many still coming up with fantasy scenarios. And for them, BBI is indeed just a lottery ticket.


----------



## joe7068 (4 September 2009)

Okay… spent a little while working this out.

If the significant investor comes up with $1.5 billion and the stock is trading at 6 cents he will end up with

1,500,000,00/.06 =25 billion shares.

There are 780 million BEEPA’s and 146 million SPARCS requiring conversion at 6 cents which means they will have to issue

(780+146)/.06 = 15.4 billion shares

The total share outstanding will therefore be:

2.5 billion + 15.4 billion + 25 billion. (I think current unit holders outstanding is around 2.5 billion)

The current shareholders are raped in this instance. However I don’t really how this deal can work unless the significant shareholder gets a bigger ownership which means the offer will have to ask BEEPA holders to take a haircut otherwise the deal doesn’t go through.

Where would this be I have no idea, however my guess is that most BEEPA holders to cut and run at around 30 cents.


----------



## hardyakka (5 September 2009)

There has been a fair panic today, so I am going to look at this logically. Below are some numbers I have put together, follow those through and you will understand my logic. You can flex these as you chose, but it really boils down to the discount the market applies to the Net Assets of a revived Prime Infrastructure Trust 

*Known data*

*]Net Assets $1720M
Units on issue 2591M
Net Assets 67 cents
BBI conversion rate 7 cents
Total value of SPARCS and BEPPA $771M 

(I am ignoring accrued BEPPA interest and assuming both are converted at
the same time)

*
Conversion at 7 cents*

13605M units on issue ($771M @ 7 cents +2491M)
Net assets now 18.3 cents  ($1720M+$771M / 13605M)
BBI price drops to 1.33 cents (pro-rata with dilution ie 2491M/13605M  X 7 cents)
*
Investor comes in with $1billion*

Net assets now $3491M ($771M + $1720M + $1000M)
Units issued to new investor=75012M ( $1000M/1.33 cents)
Total units on issue 88618M (75012M + 13605M)
Net Assets 3.94 cents ($3491M/88618M)

*What does conversion mean?*

1M BEPPA would convert to 14M units (1/771 x 11014M)
14M units represents $560,000 of Net Assets (14M x 3.94 cents), ie 56 cents per existing BEPPA.

The 56 cents is a function of the Net Assets attributable to the ordinaries issued as satisfaction of BEPPA/SPARCS conversion.

*BUT*
What value would the market put on these Net Assets?
By this time:

Corporate debt will be virtually eliminated,
Sweep gone
Investment grade rating back,
No debt problems
Institutional buying will commence
Cashflows from expanded DBCT received
GFC recovery well underway.
Considering this I think the market would pay at least 50% of Net Assets as a market value for regulated quality income stream


So the if market price represents 50% of net assets, then the price for 1M BEPPAS would be $280k (Net Assets $560k x 50%)

What upside/downside is not counted above?

Downside-None as assets that are overvalued are fully impaired as at June 2009

Upside-The difference between the market value and book value of DBCT and NGPL, which I consider to be at least a $1billion.

Am I selling out of BEPPA..no, but I know its going to be a bouncy ride

Any comments?

NB- When checking I just noticed that I have used 2491 rather than 2591 for current units, the 100M makes little difference to the numbers.

Cheers


----------



## banska bystrica (5 September 2009)

Your figures assume BEPPA and SPARCS get converted at full face value. ie $1

The reality is that they will get converted at 10c in the dollar if they are lucky. So, if you use a 7c conversion price, BEPPA holders will receive 1.428 new BBI's for each BEPPA they hold. Then they screwed with dilution. The BEPPA price should now trade at 1.428X BBI's price which values BEPPA right now at 8.7c. 

The other problem right now is that there is a huge chance the new investor will walk. The fly in the ointment to BBI's plans was the ASX not granting a suspension. BBI needed NO trading and a last sale price of 7.8c. By allowing the stock to trade, the ASX have enabled the dargie death spiral to really gain momentum. We know BBI will convert the hybrids before any recap plan so the dilution is guaranteed. Because the dilution is guaranteed, more and more BBI holders will bail out as the price goes lower. This will send the ords and the hybrids into freefall. We saw the start of that yesterday. Once the daytraders realise they are playing a deadly game, both BBI and BEPPA will accelerate downwards and any plans to raise capital will have been scuttled.
In reality, I think any recap plans are in grave doubt now and unfortunately BBI played their last hand. There is no going back now.

It is not a guarantee that it is all over for BBI but it is for current BBI holders and BEPPA and SPARCS holders are shark bait for the BBI directors. None of us knew this but BBI showed how they felt about BEPPA holders when Lowy Financial was trying to negotiate in 2008 on a sensible plan on how to deal with BEPPA. BBI management ignored them and even threatened them with conversion on BBI's terms if they tried to pursue the matter further.
Quote: _"It's understood Lowy Financial, the biggest holder of the preference shares, started talks as early as mid-2008, when securities nose-dived below $1. The talks broke off in November after BBI threatened to issue new convertible securities...."_


----------



## nulla nulla (5 September 2009)

If I were a potential cornerstone investor and: the company I was being invited to invest in at say $0.075 per share was trading below this amount; and I had had access to the books and been able to evaluate the true market worth of their assets; I would probably find it very hard not to take advantage of the opportunity to soak up a considerable holding at the lower market price. 
The recent turnover is significantly higher than previous trading spikes. I am curious to see who will be disclosing recent substantial acquisitions.


----------



## banska bystrica (5 September 2009)

nulla nulla said:


> If I were a potential cornerstone investor and: the company I was being invited to invest in at say $0.075 per share was trading below this amount; and I had had access to the books and been able to evaluate the true market worth of their assets; I would probably find it very hard not to take advantage of the opportunity to soak up a considerable holding at the lower market price.
> The recent turnover is significantly higher than previous trading spikes. I am curious to see who will be disclosing recent substantial acquisitions.




This was the trading on the 400M turnover day two Wednesday's ago.

Comsec clients bought 240M and sold 260M
ETrade bought 108M and sold 108M
AS Perth broker bought 42M and sold 42M
D2MX bought 34M and sold 33M

Just traders having fun. No insto will touch this.


----------



## erasmus (5 September 2009)

I got home late yesterday and read the announcement i did not have time to sell,needed time to look at the ramifications of this announcement,that's a shame,i think a death spiral is a distinct possibility.If the cornerstone investor does come to the party and that's a big if,holders will be like my poor little avatar doggy.


----------



## hardyakka (5 September 2009)

banska bystrica said:


> Your figures assume BEPPA and SPARCS get converted at full face value. ie $1
> 
> The reality is that they will get converted at 10c in the dollar if they are lucky. So, if you use a 7c conversion price, BEPPA holders will receive 1.428 new BBI's for each BEPPA they hold. Then they screwed with dilution. The BEPPA price should now trade at 1.428X BBI's price which values BEPPA right now at 8.7c.
> 
> [/I]




BB,

The conversion terms of BEPPA (section 7 of the BBI EPS terms) give a conversion formula based upon Face value + accrued interest. I am puzzled as to where the terms allow conversion of BEPPA to BBI based upon current market prices which is used in arriving at the ratio of  1.428.

Cheers


----------



## Tysonboss1 (5 September 2009)

hardyakka said:


> BB,
> 
> The conversion terms of BEPPA (section 7 of the BBI EPS terms) give a conversion formula based upon Face value + accrued interest. I am puzzled as to where the terms allow conversion of BEPPA to BBI based upon current market prices which is used in arriving at the ratio of  1.428.
> 
> Cheers




In the annoucement they hinted to the fact that they think that Beppa holders will have to take a hit for the team,

They only way I can see this happening is if they come up with a new arrangement and get Beppa holders to accept the new terms, So the new terms will have to be acceptable if they have a chance of being passed.

There is plenty of value there for the cornerstone to extract without screwing Beppa holders.


----------



## suhm (5 September 2009)

I think that it would be unreasonable to expect that the ordinary shareholders would agree to be diluted into insignificance without BEPPAs agreeing to share some of the jailhouse loving from the new investor.

Net asset values are also predicated on BBI remaining a going concern, so in this concern BBI is at the mercy of the banks refinancing their loans on acceptable terms or the new investor bringing in cash to settle the debt.

Depending on how the conversion factor works, and how retail holders get treated in the 2nd round of dilution (given managements form to date and how retail holders have been treated in most cap raisings I don't have much hope in this regard and the new investor would want to keep a fair proportion of the upside), there may be value left in the BEPPAs depending on the price you pay.

I think there are far to many variables to tell at the moment, even going short BBI ordinaries would hold the risk of the new investor recapitalising the company at prices above the current sp, but with a large enough allocation to ensure they are the largest shareholder in the new entity.

Note. I've been burnt in the past buying convertible preference shares in a company in a death spiral so it may cloud my opinion. The contracts are so complicated, and they have so many clauses in place that they let management do almost anything they want.

http://www.bbinfrastructure.com.au/media/387445/bbi eps terms.pdf
http://www.bbinfrastructure.com.au/media/387442/bbi eps constitution.pdf

For probably 4-5m management could cause a change of control event and convert the BEPPAs as such an event would have occured with the administration of BNB without management ensuring the responsible entity stayed in place. Note 5.3 B 3

Edit: means they can convert BEPPAs whenever they want.

Looks a bit like russian roulette to me at the moment.


----------



## banska bystrica (5 September 2009)

hardyakka said:


> There has been a fair panic today, so I am going to look at this logically. Below are some numbers I have put together, follow those through and you will understand my logic. You can flex these as you chose, but it really boils down to the discount the market applies to the Net Assets of a revived Prime Infrastructure Trust
> 
> *Known data*
> 
> ...




hardyakka,

Very valid scenario IF management elect to convert full face value of BEPPA but they indicated otherwise in yesterday's announcement, didn't they?


----------



## Tysonboss1 (5 September 2009)

suhm said:


> I think that it would be unreasonable to expect that the ordinary shareholders would agree to be diluted into insignificance without BEPPAs agreeing to share some of the jailhouse loving from the new investor.




That's really the risk you take with an ordinary share like BBI.

An Ordinary share has no limit on it's potenial returns,  where as beppa operates more like a bond, where it's returns are capped. 

So no I don't think Beppa holders should be exposed to the same pain threshold that BBI holders are. they should be protected to some extent from the downside simply because they were not exposed to the potenial upside had everything gone well.

I mean if everything went well and BBI ended up at $2 paying an 10% dividend, Would BBI shareholders want to give up some of that gain just because Beppa was capped at $1 paying a 5% div, offcourse not.

So thats the risk BBI holders took, I hold BBI shares as well as Beppa and that was my thought process, I understood that BBI had more downside risk but also more possible upside.

At the end of the day, BBI has a contract to repay $1 + interest to Beppa holders, It's not really any different to their loans from the banks.

By all means they can make an offer to Beppa holders for early conversion at a discounted rate, But Beppa holders are under no obligation to accept and the terms should not be a discount of more than 50% of face value, Infact I think 50% discount would be extremely generous.


----------



## hardyakka (5 September 2009)

banska bystrica said:


> hardyakka,
> 
> Very valid scenario IF management elect to convert full face value of BEPPA but they indicated otherwise in yesterday's announcement, didn't they?




BB,

*Conversion *

The key point that you have raised which could invalidate the scenario that I put together is the conversion ratio for BEPPA.

Management as I understand it must convert by reference to the formula in the trust deed, which is a function of BEPPA face value and the current weighted volume average BBI price, which I have assumed to be 7 cents.

The critical question is what rights do management have to vary this conversion formula. 

For example by converting BEPPA to BBI as a function of the current BEPPA and BBI price. This gives a ratio of about 1.4 BBI per BEPPA as against about 14 BBI per BEPPA when the face value is used.

As I understand it management has no such power to convert BEPPA by reference to market price as against face value. If there is this power canb you point me to it in the trust deed.

I appreciate that management could get this power by varying the trust deed which would require a vote of BEPPA holders.
*
BBI Announcement*

"The value outcomes of the transaction for BBI ordinary security holders, EPS holders and SPARCS holders are not certain and may attribute a value to those securities that is less than face value or recent trading prices."

The above is very cleverly worded and refers to a value outcome, ie final diluted value. IMO it recognises that BEPPA and SPARCS will be converted by reference to face value and diluted, whilst BBI will simply be diluted. 

Both of those scenarios will eventuate and result in a final value less than face value (BEPPA & SPARCS) and of current BBI price (BBI through dilution). 

IMO this would be in accordance with the trust deed conversion requirements. Management are basically saying forget your $ face value, you will be converted and diluted in a big way. The only plus from that is that an interest in Net Assets is effectively transferred from existing BBI holders to the converted SPARCS and BEPPA. Thus resulting in my assessment above.

Irrespective, risk has increased and rewards reduced.

Any thoughts?

Cheers


----------



## my03 (5 September 2009)

I guess the big question for pref holders is that, after reduction of face value, after conversion and after dialution, will I end up on top of what the current SP? I think thats the main factor in influencing pref holders to bail. We can all speculate but we wont really know until it is announced, and there are many more sessions till then alot of days for the things to sink in, alot of days for people to panic.


----------



## investorpaul (5 September 2009)

Hardyakka - I agree that the announcement leaves the potential for BEPPA to convert at fce value and then b diluted (ie making them worth less than face value as per the announcement.

However say we get 14BBI per BEPPA instead of say 7 BBI per BEPPA my fear would be the cornerstone investor says I want 100bn BBI shares as opposed to 50 bn BBI shares (or however many they are buying).

Either way BBI is screwed, BEPPA is screwed but slightly less. The upside for BEPPA after conversion and if everything works out may be 20 or 30 cents at very best, but the risk is now HUGE. It is either all or nothing


----------



## hardyakka (5 September 2009)

A few other thoughts FYI which I am sure is giving the BBI RE board a few headaches.

BEPPA can be converted when management choses, but to issue more than 15% of new capital the issue must be approved by unitholders. So management need to ensure they have sufficient voting clout to get this across the line.

Secondly I am sure that the precedent set by the James Hardie case regarding duties of directors and executives keeping the market informed at at the back of their minds. Especially considering the turnaround between the year end announcement and yesterday. Did they keep the market informed?

That would be an interesting question for ASX Market Supervision to look at and report to ASIC on.

Only a few thoughts that are likely to give the BBI board food for thought


----------



## persistentone (5 September 2009)

Does anyone have a link to the prospectus for the New Zealand Bonds BBN020?

These may have been issued in connection with PowerCo, and if yes do they show up as asset level debt for PowerCo?


----------



## investorpaul (5 September 2009)

hardyakka said:


> BEPPA can be converted when management choses, but to issue more than 15% of new capital the issue must be approved by unitholders. So management need to ensure they have sufficient voting clout to get this across the line.




is it just a majority vote by BBI holders to approve the issuing of new capital or do they require a higher % like 75%?

If so the cornerstone investor will need a stake and/or mates with a stake to get the deal across the line?

If he doesnt have/cant get the votes why would ordinary shareholders dilute themselves to oblivion via approving the issue of new capital.

If you face losing your investment via dilution why not stick it to the board vote down the proposal and see the company wound up. At least then you can get some joy out of the board losing their jobs and being in charge of a company that failed.


----------



## drsmith (5 September 2009)

A snippet from yesterday's announcement;



> Furthermore, associated sales of assets may be at amounts lower than their current book values.




Interesting the directors should say that only a week after the release of the annual report.

BBI is now caught between the corporate knackery and a potential Mr Cornerstone who will be about as forgiving as the baby eating bishop of Bath and Wells. Furthermore, the directors primary interest out of all this will be to preserve their own jobs.

Should Mr Cornerstone come to the party, BEPPA and SPARCS holders will be offered two options and neither will involve anything remotely near their present terms. That's clear from yesterday's announcement.

As a guess, Mr Cornerstone's terms may well be something along the lines of 10% of a recapitalised BBI for existing BBI/BEPPA/SPARCS holders, perhaps more if the option of an equity contribution is also offered to existing holders of the above as part of the deal.


----------



## hardyakka (5 September 2009)

investorpaul said:


> is it just a majority vote by BBI holders to approve the issuing of new capital or do they require a higher % like 75%?
> 
> If so the cornerstone investor will need a stake and/or mates with a stake to get the deal across the line?
> 
> ...




Basically it is an ordinary resolution. Have a look at ASX LR 7, it goes into the detail. 

http://www.asx.com.au/ListingRules/chapters/Chapter07.pdf


----------



## skc (5 September 2009)

This thread always fascinates me... and the way it is unfolding requires the private investor to have a strong understanding on how corporate finance really works.

It would be interesting to hear:

1. How many holders here bought because they were first *made aware *of the stock by BB?

2. How many did significant amount of due diligence before buying?

3. How many has the required knowledge to do such due diligence?

4. How many has an exit plan-B in place if and when the asset sales don't work out?

It feels like to me that BB was a priest who got a lot of people believing in God, pointing to his own research and evidence that God in fact exist. Many people blindly followed, while others accepted / saw the same evidence and became believers. Then BB later discovered that God actually doesn't exist, but is now having a hard time getting the believers to understand the new evidences.


----------



## Tysonboss1 (5 September 2009)

I have been thinking about BBI's current situation this afternoon, And to be honest I think there is a huge chance that the deal with this corner stone investor is going to fall over.

That is unless They offer a worth while deal to beppa holders, I honestly think if they low ball the offer to Beppa, Beppa holders will let the deal collapse.

Here is one way I think the deal might just work.

- Offer conversion to Beppa holders at 80% of face value at 7c per share.

- Then offer a pro rata capital raising of 2new shares for 1 existing share, to existing share holders (including newly issued shares from beppa conversion) at 5c per share,

-have the deal underwritten by the corner stone.

-offer the cornerstone a bonus 15% holding for participation for 5c per share.

- cease all asset sale transactions.

It all depends on the personality of the cornerstone, there is a good opportunity for them to make a really good investment without them being total vultures about it. If they take to much of a hardline approach, I think this whole deal will come to nothing.

Or,

Let the deal fail and wait and see what our lenders do, This option would be a rocky road. But could still work out ok.


----------



## nulla nulla (5 September 2009)

investorpaul said:


> is it just a majority vote by BBI holders to approve the issuing of new capital or do they require a higher % like 75%?
> 
> If so the cornerstone investor will need a stake and/or mates with a stake to get the deal across the line?
> 
> ...




When Graham Hart of New Zealand took a cornerstone investment in Burns Philp the Receivers and Managers were appointed soon after and it looked like the Administrators/Liquidators would be next. 
Mr Hart decided liquidation was not an option and worked closely with the Receivers & Managers and the banks to turn the company arround. From memory the share price tanked arround $0.03 but through restructuring, recapitalisation and incredible management, Mr Hart took the company out of Receiver Management and the share price ultimately recovered to $1.25 or thereabouts. Then Mr Hart took the company private buying up the shares he didn't already own (and took over Goodman Fielder along the way).
BBI has significant underlying assets and is generating sufficient income to cover the interest and operating costs. It would be folly to wind the company up simply to put the directors out of work. If you want to flick the directors call a general meeting and replace them.
Maybe BBI needs someone like Graham Hart, a cornerstone investor that can work with the banks; ultimately pay them out from operating capital; organise recapitalisation; sales of noncore assets; and then restore the share price in the market.


----------



## hardyakka (5 September 2009)

When I step back, what has really changed.

In addition to what we already know, what has really changed?


Proposed deep value investor ie DVI (or is this just another board lie?)
Proven incompetence of BBI board (asset sales and disclosure)
Time to raise cash to meet repayments is running out.
Major encouragement of negative sentiment

Other key issues

There is massive value in BBI assets (price discount to net assets, NGPL and DBCT not marked to market, GFC impact in depressing values).
The banks do not want want to roll facilities, nor do they want a loss.

The deep value investor is not in this to make a few hundred million, more like a few billion. The source of this primarily being DBCT/NGPL mark to market and a slab of existing net assets.

This ignores the additional value to a fund manager in base and performance fees if the assets are put in a fund, these would be massive. Assets in a fund would be revalued annually, on a DCF or EV basis (apply that to DBCT alone and you see the upside).

The bank debt is being serviced but not repaid. I feel this would be rolled/refinanced on a reconstruction with short term facilities being repaid. In an admin situation the banks may lose principal and a secure income stream.

So how would our deep value investor go about unlocking this value, its simple when you think about it.


Create a situation of uncertainty, maybe negotiate for an asset and put in a low ball bid. 
Hold out a promise of hope to the board making sure they have minimal options.
The scare mongering will lower the BBI and BEPPA prices.
Do not acquire BBI, instead acquire BEPPA knowing the lower the BBI price the more BBI you will get on BEPPA conversion
No substantial shareholding notice is required as the deep value investor is accumulating non-voting BEPPA. 
On conversion guess who is likely to be the major ordinary holder and will require to lodge a substantial shareholding notification, yes the deep value investor.
So the above tells me that there will be a reasonable disguised demand for BEPPA.

The end result is that the deep value investor would, via BEPPA conversion, control the bulk or ordinaries and would not need to make a bid. The banks holding in BBI via BNb is a card up their sleeve.

Next the deep value investor uses that voting power to approve a new issue to all unitholders, underwriting it of course for a fee, and a capital reconstruction, say 1 for 100. When the banks see certainty here debt will be rolled, credit rating regained etc etc normality starts to return.

Again a lot of ifs, either way the risk/reward equation has changed. 

Well that is enough from me

Cheers


----------



## persistentone (6 September 2009)

Page 53 of the BBI 2009 report starts to summarize borrowings. Item 20 "Borrowings" shows a consolidated total borrowing of $6,979,705. Other places they report $9.1B in total asset and corporate debt. What is missing from item 20 on page 53 to reconcile to $9.1B in borrowings?


----------



## ricee007 (6 September 2009)

skc said:


> It would be interesting to hear:
> 1. How many holders here bought because they were first *made aware *of the stock by BB?
> Not I.
> 
> ...


----------



## Tysonboss1 (6 September 2009)

ricee007 said:


> [
> 
> Hmmm, no... God MIGHT exist in this case... BBI might be worth 15c soon, and I believe BEPPA will be worth AT A MINIMUM, almost twice what it is worth now...
> 
> But, again, too risky for me.




I hope your right, I would like to believe in god.

But what are you basing your statment on, I would love to hear your thoughts.


----------



## persistentone (6 September 2009)

skc said:


> This thread always fascinates me... and the way it is unfolding requires the private investor to have a strong understanding on how corporate finance really works.
> 
> It would be interesting to hear:
> 
> ...




BB's research has always been of high quality.   The fact that he has an opinion, states a clear set of facts, states his argument on those facts, and then states clearly how he will act on those facts is only a credit to him.  I wish we had 20 more just like him.

I created my own spreadsheet based on the same set of facts and came to a different conclusion than BB.   I calculated BEPPA as getting at best a 22 cent recovery on Administration and quite likely getting zero on Administration.   I didn't see a victorious path out of the debt death spiral they were in, so I am really glad I did that homework.   When I started to follow BBI the BEPPA were already near 10 cents, so it was an equal reward to the risk, and for me that meant pass.   Had I been around when BEPPA was trading at four cents, I would have been sorely tempted to pull the trigger.  Even though I came to a different conclusion, I am deeply indebted to BB for sharing facts and research that were instrumental to, and improved the quality of, my own research.

People who only follow instead of thinking independently will never make money.   Failure to accept responsibility for one's own actions, and looking for someone to blame for those actions, is not a path to success.   We have met the enemy and he is us.   That's my two cents.

P.S., I agree that BBI and BEPPA are situations that really require the investor to be analytical and savvy about how to calculate financial results.   It's a difficult exercise because of the amount of asset level and corporate debt they have, and because of the different characteristics of so many businesses that they own.   No doubt 80% of those investing shouldn't.


----------



## hardyakka (6 September 2009)

hardyakka said:


> There has been a fair panic today, so I am going to look at this logically. Below are some numbers I have put together, follow those through and you will understand my logic. You can flex these as you chose, but it really boils down to the discount the market applies to the Net Assets of a revived Prime Infrastructure Trust
> 
> *Known data*
> 
> ...




I am going to go out on a limb here and vary the above scenario adopting a "doomsday" approach. 

The key assumption I will vary is the price at which units are allocated to the deep value investor. Instead I will vary this to be $1000M at 0.5 cents rather than the diluted original 1.33 cents per BBI. 
*
Numbers affected are highlighted in bold and underlined*

I am not changing the rather high 7 cents conversion price of BEPPA/SPARCS, this allows for a little more prudence in my numbers. More likely the price would be lower than 5 cents, but leave that as unrecognised upside.

The same upside as noted in the original post exists except I now consider that the following should be added:

a) There will be a non-renounceable rights issue after a reconstruction.
b) The real value to the deep value investor is moving the BBI assets out of BBI into a fund. To do this cleanly they need 100%. So I can see a situation where any investors still in the game after the above has transpired will be bought out at a premium to current market prices.

BBI is now taxing my brain and I am more and more of the view that there is pretty good upside if you bought in below about 10 cents.

Cheers


----------



## suhm (6 September 2009)

I actually was made aware of this stock because of BNB, I had a look at all of the satellites, as the guilt by association can lead to some opportunities like AEP with AFG previously which had a net asset value of more than $5 with about $1.10 being net cash was selling for <1.70, that was a no brainer.

Problem for me with these BNB entities were that they were a lot more complicated, had a ton of debt so valuations in liquidation would be rubbery and I think the only ppl who would know how much the assets are worth would be other infrastructure groups, certainly not me. 

Cheers, for all the great posts though, BEPPA was about 12c when the posts on this thread got me interested in it again, but for me the risk reward ratio wasn't there. I should have read this thread earlier .


----------



## hardyakka (6 September 2009)

suhm said:


> I think the only ppl who would know how much the assets are worth would be other infrastructure groups, certainly not me.




Summed up nicely, the market really has no idea of the real value of the BBI assets is, having been in that industry for many years I have a small appreciation.

As BB has often pointed out there is incredible unlocked value in BBI, however the banks stance has basically resulted in that value likely being transferred to an offshore deep value investor. 

The sad thing is that Australian superannuants will likely be the recipients of the income streams from these assets, but they will pay full market price for them when acquiring the assets.

Still that is how the markets work, I for one will be looking to acquire additional BEPPA, my reasons for doing so are basically outlined above.

Cheers


----------



## ricee007 (6 September 2009)

Tysonboss1 said:


> I hope your right, I would like to believe in god.
> 
> But what are you basing your statment on, I would love to hear your thoughts.




Bbi im really not sure about...

For beppa, i doubt the cornerstone would be unwilling to give at least 20c... Even at 50c, it is a massive profit for the cornerstone. Furthermore, i doubt the majority of beppa holders (especially the fact that we are talking about a case where they require virtually all to be sold, not just a majority) would be willing to accept 15c or so or less. I just cant see that happening.

So, lets recap. The cornerstone gets a massive profit at, say, 30c...i dont believe virtually all beppa holders will be happy to convert at 15c.... .


----------



## banska bystrica (6 September 2009)

The problem for BBI and the cornerstone investor is the fact that BBI is still trading. I'm certain they were expecting a suspension pending finalising of the deal.
They would have been working their numbers around 7c but now it's all a big unknown? Will the market smash it to 3c and then what? The price will be so low that any deal will be rejected by SPARCS or BEPPA holders.


----------



## persistentone (7 September 2009)

hardyakka said:


> I am going to go out on a limb here and vary the above scenario adopting a "doomsday" approach.
> 
> The key assumption I will vary is the price at which units are allocated to the deep value investor. Instead I will vary this to be $1000M at 0.5 cents rather than the diluted original 1.33 cents per BBI.
> *
> ...




I think you are just kidding yourself that the investor is going to be so kind to us.   Two things you didn't consider are that the investor is most likely going to steal one of our key assets (probably DBCT or NGPL) at below book value and also a private equity investor is never going to accept a deal of this type that doesn't leave him in control of 51%+ of the equity.

These kinds of deals are typically based on a proposed valuation that is a calculation of a distressed EBITDA multiple, not based on net asset values.   So here is one typical deal that could happen:

1) All hybrids are converted 10 to 1 (I think the real number will be between 3 and 5 to 1 because if you don't lower the conversion ratio the BBI common are destroyed and will never vote for the deal, but let's use a favorable case for BEPPA and do this with a 10 to 1 conversion).   This gives us a new share count of 95.79B

2) Sell DBCT at $2016, which is an EBITDA of 9 against 2010 earnings.   That nets us $210M cash over the debt recorded on the books.   It would be a crime to sell it at this price, but please everyone stop being optimistic about the asset sales.   We have a private equity investor and these people are vultures and they will extract their pound of flesh.   Whatever asset we sell, the price is going to be ugly.

3) I took BB's old model which included a distressed EBITDA multiple against 2011 earnings for each asset, and I adapted that with my own more pessimistic numbers.   I then took a midpoint of the two estimates.  Excluding DBCT (which by hypothesis we have sold), the valuation for the remaining businesses is $7,184M using this midpoint number.

4) We subtract out the adjusted debt, which is now $6,379M ($9.1B - $915M hybrid debt - $1.8B DBCT debt)

5) We add back the net cash on hand which is now $470M ($260M + $210M net from DBCT sale)

6) This gives us a proposed market cap of $1,275M *pre-money*.

7) Assume the investor puts in $700M.  This gives us 116.6B new shares and investor takes 54.9% of company.   The new value per share is 0.6 cents.   Hybrids converting at 10 to 1 are valued at 6 cents.

It would be ordinary in a deal like this for the shares to immediately double in value because of the release of the company from crisis, so 6 cents might quickly trade to 12 cents.    But that's hardly a windfall for the BEPPA.

8) Assume the investor puts in $1B.   That gives us 348.3B new shares and the investor takes 78.4% of the company.   The new value per share is 0.29 cents.  Hybrids are worth 2.9 cents at 10 to 1, and trade up to 6 cents as deal nears completion.

At the end of this, we haven't really cleared our problems.   We have simply substituted a taskmaster (the banks) for a slave master (the private equity investor).    Sure, we avoid Administration, but most of the value we unlock here is for the investor and not for us.

Some things to consider that should temper your optimism:

1) A private equity investor will most likely do this deal with convertible preferred shares that pay out 8% or higher interest.  So we just substitute the bank's interest payments with payments to the investor.   He takes his common shares much later in the game when he is ready to cash out.

2) In any scenario I could develop, the BBI shares are just worthless.   At what point do BBI common investors revolt and flip the finger at BBI and refuse to do the deal, sending the company into Administration?   

To save the common and provide BBI some value, the new deal could instead shaft the BEPPA and propose a 3 to 1 or 5 to 1 conversion.    At that point do the BEPPA revolt and refuse the deal?  

So in my estimation, BBI are screwed, no matter what deal is done or not done.

BEPPA are at best looking at a risk reward that keeps them even in a best case and sends them to $0 in a worst case.

If anyone can invest on terms the new investor is getting, that is probably a sweet deal.

Let's see whether the new investor is actually a white knight and looks for a way to give value to shareholders.   You find such an investor in one out of 10 deals of this type.   So don't hold your breath waiting for it, but if it does kiss the ground and count your good luck.

For me, this isn't an investment; it's a crap shoot.


----------



## joe7068 (7 September 2009)

I don't see why they have to ask the BEPPA and SPARCS holders anything.

If I were this pathetic and dishonest management and wanted to get the deal done to save my own skin i would get approval from the present shareholders and then move to covert the hybrids.


----------



## persistentone (7 September 2009)

joe7068 said:


> I don't see why they have to ask the BEPPA and SPARCS holders anything.
> 
> If I were this pathetic and dishonest management and wanted to get the deal done to save my own skin i would get approval from the present shareholders and then move to covert the hybrids.




They might be able to convert on the normal EPS formula without permission, but I doubt they could change the conversion ratio without permission.


----------



## joe7068 (7 September 2009)

They can't.

furthermore I can't really see how they can screw over the BEEPA holders in a very big way without the unit holders walking away and letting it fall. 

see here: (approx numbers)

current unit holdings    2.7 billion

let's say we use a unit price of 3.5 cents.

This means the conversion rate would be 1/.035 = 28.5714

There are approx. 840 hydrids around including SPARCS.

say the cornerstone invests 1.5 billion at .02 cents

This is what happens:

2.7 billion + 840* 28.57+ 75 billion = 106.27 billion as the total issue after dilution.


If the units after dilution trade at 2 cents what happens to the Hybrids?

Say you had 500,000 BEEPA's prior to dilution after dilution they become

14,285,000 which at 2 cents = $285,700.

Frankly I can't see anyway out for them to screw BEEPA.


----------



## jacobkball (7 September 2009)

I, for one, cannot believe how much of a ride we're being taken for.

I'm amazed that so soon after a reasonably positive announcement, which pushed the shares up to nearly 20c, we have a negative announcement, which has halved that (and more).

It's been great for those who have picked these highs and lows so consistently throughout the whole process. Uncanny, even.

Based on these very strategic announcements, who's a winner? Management? Could they perhaps be selling high after the first announcement, then snapping them all back up, plus more, after the second, when everyone's panicking? Great way to reduce the debt owing on BEPPA.

Here's my take. After a further fall in prices, we'll get another announcement. Lo and behold, a potential buyer for DBCT has come forward! Negotiations in progress! Won't that just change the game and make things interesting 

Let's see where we go today!


----------



## jono1887 (7 September 2009)

jacobkball said:


> I, for one, cannot believe how much of a ride we're being taken for.
> 
> I'm amazed that so soon after a reasonably positive announcement, which pushed the shares up to nearly 20c, we have a negative announcement, which has halved that (and more).
> 
> ...




lets hope so... atm the moment it looks like its just going down down and down


----------



## Mitsimonsta (7 September 2009)

I sold out of my BEPPA (8.4c Avg) for 11.6c on Friday afternoon.

Had I waited until today, I would have been in loss territory. Preservation of capital is very important to me.

Absolutely kicking myself for not selling after the results announcement.


----------



## tracytop (7 September 2009)

Luckily , sold all my Beppa at 0.12 on fri.
Wont touch this share until everything is clear, either the deal lapsed or every existing s/h get diluted.

IMO, this deal will not get through. anyway, either results are negative.


----------



## Largesse (7 September 2009)

LOL!

I wonder how many people would've been saying "glad i topped up on BEPPA on friday afternoon" if the shares had rallied 25% instead of falling today....

people calling their buys and sells after the fact are so bloody pathetic.


----------



## persistentone (7 September 2009)

joe7068 said:


> They can't.
> 
> furthermore I can't really see how they can screw over the BEEPA holders in a very big way without the unit holders walking away and letting it fall.
> 
> ...




joe7068, if they convert the hybrids like BEPPA the way they are supposed to convert the BBI shares are worthless.   Will any BBI holder vote for the deal if there is nothing in it for them?   

So pick your poison:  either the BBI common or the BEPPA are going to be extremely pissed off campers, and it's going to be hard to get acceptance of the deal.


----------



## Largesse (7 September 2009)

and anyway, surely you guys can still see that 'huge value' in BBI regardless of the markets swings?

surely this is just another great opportunity to 'top up'?






buh bow.


----------



## tracytop (7 September 2009)

Largesse said:


> and anyway, surely you guys can still see that 'huge value' in BBI regardless of the markets swings?
> 
> surely this is just another great opportunity to 'top up'?
> 
> ...




I would only say, the huge value for potential conerstone investor, not existing s/h. Existing S/H will be wiped out if the deal pass through. If the deal failed, what is the impact? I think it is clear


----------



## Largesse (7 September 2009)

i'm so glad i shorted 20m units of BBI on friday.

such an astute and well considered move in hindsight.


----------



## persistentone (7 September 2009)

Largesse said:


> i'm so glad i shorted 20m units of BBI on friday.
> 
> such an astute and well considered move in hindsight.




From my point of view you have to announce the trade as you do it (as BB usually does) if you want to get credibility for the trade.

It's too easy for people to make claims after the stock has moved.   Oh, wait just saw your other posts.   Okay, joke.  I get it now.


----------



## learning101 (7 September 2009)

I bought 53k of BBI @ 4.7 cents. Hopefully this stock will recover. Or I am a total ass.

LOL 

101


----------



## Largesse (7 September 2009)

i'm going to change my account name to HindsightMillionaire.

would fit in really well around these parts


----------



## jacobkball (7 September 2009)

Mitsimonsta said:


> Absolutely kicking myself for not selling after the results announcement.



Well, aren't we all.... oh, except those who DID sell out at the top. Yes, it's 20/20 in hindsight. I held on to mine, reasonably confident after the 'upbeat' announcement that things had settled for the moment. I'm sure many others felt the same way too.

It just shows how quickly (and brutally) sentiment can change with these types of stocks. It's all part of the learning process for me, and believe me, I'm learning 

The way things can change with these guys, I'm holding on to mine.


----------



## 4fundamentals (7 September 2009)

Question:-

I don't know.... but I am kinda thinking,

Wasn't the actual BBI security always a "speculation" play.  I just find it hard to believe now, sure the price has dropped, but everyone knew that in FY11, corporate debt faciliites of around $585M would come due?

I'm not sure. If i'm being really stupid.  But I think markets overreact to any negative and positive news.

I think $0.044 is too low....that is essentially a drop of 28% from $.061 close.

Hmm. Do you think that this news created 28% decrease in the long term potential of the company? 

I just don't know if i'm game enough to put my money where my mouth is.


----------



## ironmonkey1 (7 September 2009)

Supposedly the deal gets through; does the market price in all or most of the dilution when its announced; or there will also be a sharp drop on the actual date of share issue?


----------



## 4fundamentals (7 September 2009)

Ironmonkey:

Very good points.  I guess i'm just thinking long term value. 

I'm still in at an entry price of $.051, I have a long term buy and hold type strategy...however i was kicking myself I didn't sell at $.10 (as i'm sure many are). 

I think your points are valid, that there may be some lower entry prices along the way.... I guess i'll sit and hold.


----------



## hardyakka (7 September 2009)

Well I'm out, the risk reward equation does not stack up for me any longer. I've seen an unrealised profit of over $200k turn into a realised profit of just over $30k.

I've tried to rationalise the outcomes logically, but now I simply do not trust what the BBI board is telling us. When I first read the announcement last Friday I let logical thought prevail over instinct and held, an expensive mistake but then thats life.

Good luck to holders and I may re-enter if the risk reward equation changes.

Cheers


----------



## drsmith (7 September 2009)

jacobkball said:


> I, for one, cannot believe how much of a ride we're being taken for.
> 
> I'm amazed that so soon after a reasonably positive announcement, which pushed the shares up to nearly 20c, we have a negative announcement, which has halved that (and more).



With regard to that so-called reasonably positive announcement, look at the reconciliation of EBITDA to operating cash on page 15 of the analyst's presentation and deduct the figures from the first half (the latter can be found in the previous 6-monthly analyst's presentation).

With regard to BBI's management, their primary focus will be to keep their own jobs.


----------



## drsmith (7 September 2009)

hardyakka said:


> Well I'm out, the risk reward equation does not stack up for me any longer. I've seen an unrealised profit of over $200k turn into a realised profit of just over $30k.
> 
> I've tried to rationalise the outcomes logically, but now I simply do not trust what the BBI board is telling us. When I first read the announcement last Friday I let logical thought prevail over instinct and held, an expensive mistake but then thats life.



A $30,000 profit is worthy of contraulations. It's far better than what the vast majority of BBI's loyal investorship will ever see.

As for the BBI board they have never been trustworthy. The primary objective of this vehicle was after all a highly leveraged fee machine for the now expired parent. The financial enrichment of it's investors was always secondary.


----------



## Mitsimonsta (7 September 2009)

hardyakka said:


> Well I'm out, the risk reward equation does not stack up for me any longer. I've seen an unrealised profit of over $200k turn into a realised profit of just over $30k.




Congrats Yakka... been some 'hardyakka' this BEPPA business eh?

$30K will be nicely reinvested somewhere I take it? Tips always appreciated!

I took $1K profit from my $2600 invested on Friday. Was feeling sick to the stomach that it was nearly $1500 less than what I could have had prior to the halt. All that changed this morning which put me into loss territory (and still is).

Right now I am thankful for my profit, and have learned some lessons from the results announcement spike.


----------



## jc_trader (7 September 2009)

"Sep 06, 2009 (The Australian Financial Review - ABIX via COMTEX) -- BAM | Quote | Chart | News | PowerRating -- Brookfield Asset Management is to become a cornerstone investor in Babcock & Brown Infrastructure under the embattled fund' recapitalisation plan. The success of the proposal requires stockholders to agree to a large dilution in their holdings by swapping hybrids and preference shares for ordinary stock. The $A1.5 billion deal will help the fund to lower its debt. "

Not good news


----------



## hardyakka (7 September 2009)

I reckon if I work out the $ return per hour of research then I would have made a lot more working the chip pan at maccas, but it was fun anyway.

The BEPPA price has bounced a bit, but reading that snippet on $1.5B bening put in by the deep value investor makes the risk reward equation even worse. The dilution is going to be 50% more than in the two scenarios I posted.

If I held any BBI I would get out of them now as they will be worthless once dilution occurs, and that is looking to be a certainty. The BEPPAs have replaced the BBi as the spec play.

But then I cannot tell the future so follow your instincts.

Cheers


----------



## hardyakka (7 September 2009)

Mitsimonsta said:


> Congrats Yakka... been some 'hardyakka' this BEPPA business eh?
> 
> $30K will be nicely reinvested somewhere I take it? Tips always appreciated!
> 
> ...




I am steering away from speccies, AJA is a property trust paying a yield of about 16%, looks pretty good to me on analysis. I first acquired some in the 20s and just doubled my holding again. 

They seem to be highly geared but this is the japanese market and there are some quality posts over the road on AJA. Not that I ever go there as I was banned a long time ago <s>, I posted on this forum how to "correct" such matters

Cheers


----------



## jono1887 (7 September 2009)

hardyakka said:


> I reckon if I work out the $ return per hour of research then I would have made a lot more working the chip pan at maccas, but it was fun anyway.
> 
> The BEPPA price has bounced a bit, but reading that snippet on $1.5B bening put in by the deep value investor makes the risk reward equation even worse. The dilution is going to be 50% more than in the two scenarios I posted.
> 
> ...




How long will it be until the dilution takes place?? And what do you think the price will fall to after the dilution??


----------



## banska bystrica (7 September 2009)

jono1887 said:


> How long will it be until the dilution takes place?? And what do you think the price will fall to after the dilution??




Probably quite a few weeks but it may not happen at all. If it does happen, the dilution will be horrendous rendering the current BBI virtually worthless (1c or less in my opinion) and if it doesn't go ahead, administration is highly likely as the $205M due on Oct 30 will be called in.
If you own BBI, you are stuffed either way. 

The only way I will enter BBI is via an institutional/sophisticated investor  placement *AFTER* the BBI/BEPPA/SPARCS massacre takes place.


----------



## ironmonkey1 (7 September 2009)

banska bystrica said:


> Probably quite a few weeks but it may not happen at all. If it does happen, the dilution will be horrendous rendering the current BBI virtually worthless (1c or less in my opinion) and if it doesn't go ahead, administration is highly likely as the $205M due on Oct 30 will be called in.
> If you own BBI, you are stuffed either way.



Doesn't the market price the CI's portion of the dilution in the day(or few days after) of the announcement?(if the deal is going ahead)

Im guessing the SPARCS portion of the dilution will be priced gradually as November approaches(or prob a few days before the conversion date).


----------



## seen (7 September 2009)

I was one of the lucky ones that bought BBI for 6.3c and sold at 10.5c after the report. 

After monitoring BBI, I too have a feeling that management is up to something sneeky. Not to the long term favour of BBI investors, but for the lucky/skillful traders, it still looks attractive because of the massive swings on the first couple of days after an announcement.


----------



## $$Punt$$ (7 September 2009)

Anyone notice that when BBI SP shoot up, so does BBP. Now BBI is falling sharply, so does BBP. Though they are seperate entity now, many investors think they are still brothers in arms. Any comments????


----------



## boronia (8 September 2009)

Here's an alternative take on why the ASX refused a trading halt by BBI recently (from BusSpec this morning)

Over at Babcock and Brown Infrastructure, there's consternation that BBI's potential rescue deal via a cornerstone investor could actually be worse for retail shareholders than a wind-up. Matthew Spence of Merrill Lynch has calculated that existing shareholders could own under 9 per cent of the company after a placement is made and the likely conversion of all hybrid notes. Then again, it’s a matter of opinion whether the alternative, an asset fire-sale, would deliver much more value. At least the ASX has sided with the average punter, refusing a BBI request to leave shares in suspension until the cornerstone deal is done. That way shareholders can chose whether or not to keep or sell their stakes, sometimes the only choice investors have.


----------



## deano9801 (8 September 2009)

My first trade was BHP, and was so bored I went to the other end of the spestrum with BBI. I initally investested $2500 in both BBI and BEPPA and sold Beppa at .11 and BBI at .047. I'm walking way with $2100, but have learned a heap. So thanks to BB and the rest of you. Just have to learn how to control the emotions when on a roller coaster- felt a bit sick afterwards!. Love to look into some more speckies if anyone would like to share.


----------



## jono1887 (8 September 2009)

well it looks like the slaughtering has stopped and its now stablised at .045.... where to from here??
it the market waiting for another announcement??

edit: perhaps i spoke to soon.. looks like its going down again


----------



## skyQuake (8 September 2009)

jono1887 said:


> well it looks like the slaughtering has stopped and its now stablised at .045.... where to from here??
> it the market waiting for another announcement??
> 
> edit: perhaps i spoke to soon.. looks like its going down again




Would like to see a proper capitaulation before I touch this one. The upswings shows theres still hope/greed in some punters.


----------



## artsmith (8 September 2009)

i smell a rat with management, so i have decided to cut losses and bail, there seems to be too much manipulation on these stocks, 
lessons learned the hard way, start again with other stocks

good luck if your hanging in there, its beyond my knowledge base, i just started trading BBI when all hell and lies broke loose, and what a whack i got

cheers


----------



## stocksontheblock (8 September 2009)

artsmith said:


> i smell a rat with management, so i have decided to cut losses and bail, there seems to be too much manipulation on these stocks,
> lessons learned the hard way, start again with other stocks
> 
> good luck if your hanging in there, its beyond my knowledge base, i just started trading BBI when all hell and lies broke loose, and what a whack i got
> ...




I agree, I owned some - well a lot - of these a few months ago. I had quite a few at top $, and made - what could have been a very silly mistake, to buy them as they kept falling.

Lucky for me that I picked up a bundle in the very low cents, and when they jumed to 20 cents I bailed and thankfully ended up with a nice tidy profit.

However, I lost a few pounds sweating on this stock, and just dont see a future, thats's why I got out them, and have never thought about getting back in, no matter how cheap they become as I just cant see how they will do it.


----------



## $$Punt$$ (8 September 2009)

stocksontheblock said:


> I agree, I owned some - well a lot - of these a few months ago. I had quite a few at top $, and made - what could have been a very silly mistake, to buy them as they kept falling.
> 
> Lucky for me that I picked up a bundle in the very low cents, and when they jumed to 20 cents I bailed and thankfully ended up with a nice tidy profit.
> 
> However, I lost a few pounds sweating on this stock, and just dont see a future, thats's why I got out them, and have never thought about getting back in, no matter how cheap they become as I just cant see how they will do it.




The price is already so low....I would not sell but hang on to it and hope it will rebound pretty soon when the annoucement comes. Worst case scenario the company go under but its a risk I am prepared to gamble. On the balance of probability, the company going under within the next few months is slim.


----------



## stocksontheblock (8 September 2009)

$$Punt$$ said:


> The price is already so low....I would not sell but hang on to it and hope it will rebound pretty soon when the annoucement comes. Worst case scenario the company go under but its a risk I am prepared to gamble. On the balance of probability, the company going under within the next few months is slim.




Good luck! Hope it works out for you.

Think the same thing was said about BNB and ABC Learning, and the list goes on.


----------



## jono1887 (8 September 2009)

$$Punt$$ said:


> The price is already so low....I would not sell but hang on to it and hope it will rebound pretty soon when the annoucement comes. Worst case scenario the company go under but its a risk I am prepared to gamble. On the balance of probability, the company going under within the next few months is slim.




what makes you think that it wont go under?
btw.. whats the process after a company goes under.. do stockholders see anything at the end?


----------



## tracytop (9 September 2009)

jono1887 said:


> what makes you think that it wont go under?
> btw.. whats the process after a company goes under.. do stockholders see anything at the end?




Copanies will go under only if there is default on loan and administor called in by debtor. In that case, Normally s/h will have nothing left Especially for highly leveraged company like bbi, while debt holder will try to recover their losses through asset sale.


----------



## artsmith (9 September 2009)

it's  not a game of hope, i agree, the risks are high, 
and without sounding old school

"hold on to your money and rebuild, using simple maths"

there are far too many examples of company's going under, especially heavily geared ones

cheers and good  luck   ( "i mean "math" )

PS:: banks are still conservative in regards to refinance


----------



## nulla nulla (9 September 2009)

tracytop said:


> Copanies will go under only if there is default on loan and administor called in by debtor. In that case, Normally s/h will have nothing left Especially for highly leveraged company like bbi, while debt holder will try to recover their losses through asset sale.




A test of solvency is that a company has to be able to meet its' debts "as and when they are due". If the finance needed to be rolled over is not going to be rolled over on the date the payment is due and the company is not in a position to pay the due amount from funds on hand, then the company is insolvent. If the directors are aware that the company is (or will become) insolvent, they are required to appont an administrator themselves (voluntary administration) and not wait for a creditor to initiate the process.
If the directors allow the company to continue to trade, while they know the company is insolvent, then they expose themselves to personal liability for debts incurred by the company during this period.

Hopefully the banks will agree to an extension or a refinance package, while the board continues with its' struggle to stay afloat.


----------



## TheAbyss (9 September 2009)

Lot of hope in this thread for a while, now some objectivity has started to enter and the emotion is out of the equation.

There is an axiom along the lines of " A rising tide raises all boats" The emotion got BBI off the bottom for a while and the tide is still rising however the BBI/ Beppa boat is falling under the waterline. That speaks volumes. There are many boats going up with the tide so why would any sane person jump in one with holes in it?

This isn't an i told you so, just a suggestion that it is better to cut and run irrespective of whether you are positive or negative on this stock, just put your hard earned somewhere less foreboding.

There are now more than 50m units on the buy side of BBI after going to as low as 21m two days ago so this may bob its head up for a little while however be very wary as for every buyer the sellers are two fold now.


----------



## Largesse (9 September 2009)

QUICK! BBI IS GOING BACK UP AGAIN!

CHOO CHOOO! 

LOOK AT ALL THE VALUE! DONT MISS OUT!



bzzzzzzzt


----------



## jacobkball (9 September 2009)

Largesse said:


> QUICK! BBI IS GOING BACK UP AGAIN!
> 
> CHOO CHOOO!
> 
> ...



Alright, so you've made your point. Repeatedly. We all know where you stand. Must you continue being a total tool and make these types of posts?


----------



## learning101 (9 September 2009)

Well,

I bought at 4.7 cents and just sold at 4.5 cents. 

I have just entered the realm of the stock market and placed my very first order not too long ago. I bought BBI @ 6.6 and 7.2 and sold them @ 9.3.

I have recently been reading one of Dr. Alex Elder's books and am learning so much about trading, well more along the lines of learning about how much I need to learn and the basics of analysis, psychology and money management.

When I entered into BBI at 4.7c everything I had learnt so far was screaming at me not to do it. I arrogantly thought well I have been watching BBI for months now and it should go back up and I will make huge profits . Obviously I was stupid and got burnt.

I am however happy this happened because I learnt what happens when you go against your game plan. I will approach stocks without emotion now and especially without greed or fear.

As for BBI, I think I will stick clear of it and go to stocks that are stable with a nice balance sheet 

101


----------



## Zarate (9 September 2009)

To those that are trading bbi, unless you are trading momentum, I don't understand why you choose bbi over beppa. Unless maybe just now that beppa has hit 8c - almost double bbi.

Beppa has a chance of having some value, if it is converted at any substantial portion of the $1 face value but bbi can only go down from here with all the dilution..... or insolvency.

I suppose there is the odd chance of asset sales at decent prices but unlikely. I am holding a smaller parcel of beppa but it is only on the speculation that conversion is at a substantial portion of face value...


----------



## TheAbyss (9 September 2009)

learning101 said:


> Well,
> 
> I bought at 4.7 cents and just sold at 4.5 cents.
> 
> ...




Good call 101. Don't make the mistake of looking back and wondering what might have been with BBI. They may go back up and down for a few months yet but why lose the sleep when there are so many other less stressful opportunities? By all means review and learn but no regrets.

You have made some money and are up on the total BBI trade by the looks so enjoy, shout yourself a beer and find another vehicle.


----------



## learning101 (9 September 2009)

TheAbyss said:


> Good call 101. Don't make the mistake of looking back and wondering what might have been with BBI. They may go back up and down for a few months yet but why lose the sleep when there are so many other less stressful opportunities? By all means review and learn but no regrets.
> 
> You have made some money and are up on the total BBI trade by the looks so enjoy, shout yourself a beer and find another vehicle.




Thanks Abyss, I definitely won't look back and wonder "what if". Though I hope it goes up for those who have hung on rather than it bleeding them dry.


----------



## $$Punt$$ (9 September 2009)

jono1887 said:


> what makes you think that it wont go under?
> btw.. whats the process after a company goes under.. do stockholders see anything at the end?




There is a very good chance that the deal will come through based on the recent announcement but there's is no guarantee. So I guess its worth the punt for the next few weeks/months till the announcement. SP will normally spike after announcement so I am hanging on. I still think its worth the gamble.


----------



## jono1887 (9 September 2009)

$$Punt$$ said:


> There is a very good chance that the deal will come through based on the recent announcement but there's is no guarantee. So I guess its worth the punt for the next few weeks/months till the announcement. SP will normally spike after announcement so I am hanging on. I still think its worth the gamble.




well say the deal went through.. what exactly would happen. Debt would get refinanced?? Balance sheet in a better position??


----------



## skyQuake (10 September 2009)

jono1887 said:


> well say the deal went through.. what exactly would happen. Debt would get refinanced?? Balance sheet in a better position??




20:1 consolidation and massive dilution thanks to cornerstone investor imo. BBI won't look so attractive then...


----------



## jono1887 (10 September 2009)

skyQuake said:


> 20:1 consolidation and massive dilution thanks to cornerstone investor imo. BBI won't look so attractive then...




so what would be the best case senario?? and whats with all these buyers lined up... theres almost as many buyers and sellers now. Who would want to buy this in its current state?


----------



## jacobkball (10 September 2009)

Yes, these gains in BEPPA (from the low) are interesting, that's for sure. The news hasn't changed. The scenario hasn't changed. So what's left? Could it be the CI slowly chomping all these shares up? Surely the fact that BEPPA is rising means that someone out there is seeing something in it.

I honestly don't know. I still can't shake the feeling that we're being manipulated. Now that the price has been manipulated down so severely, will we see a slow rise back to previous levels?

I'm glad I didn't sell in panic a couple of days ago.


----------



## $$Punt$$ (10 September 2009)

jacobkball said:


> Yes, these gains in BEPPA (from the low) are interesting, that's for sure. The news hasn't changed. The scenario hasn't changed. So what's left? Could it be the CI slowly chomping all these shares up? Surely the fact that BEPPA is rising means that someone out there is seeing something in it.
> 
> I honestly don't know. I still can't shake the feeling that we're being manipulated. Now that the price has been manipulated down so severely, will we see a slow rise back to previous levels?
> 
> I'm glad I didn't sell in panic a couple of days ago.




My opinion is that there are a lot of short selling in the last few days due to doom day scenario and emotions which pushed the sp right way down. Today you see some recovery and less emotions. To those skeptics why are there so many buyers today???


----------



## skyQuake (10 September 2009)

$$Punt$$ said:


> My opinion is that there are a lot of short selling in the last few days due to doom day scenario and emotions which pushed the sp right way down. Today you see some recovery and less emotions. To those skeptics why are there so many buyers today???




Net 34,000 BBI reported short sold as of yesterday. 
Very hard to short. Nothing reported on monday.


----------



## Zarate (10 September 2009)

skyQuake said:


> Net 34,000 BBI reported short sold as of yesterday.
> Very hard to short. Nothing reported on monday.




Yea I called up comsec to ask about short selling bbi. They don't offer it. Do you know where bbi can be short sold?


----------



## skc (10 September 2009)

Zarate said:


> Yea I called up comsec to ask about short selling bbi. They don't offer it. Do you know where bbi can be short sold?




The situation is so bad already on BBI - the share price is trading at a price implying heavy dilution + may be a bit of option premium (on the odd chance that the cornerstone investor buys in at 7/8c or a buyer for some assets emerge).

Any short trade surely doesn't offer the greatest risk / reward!


----------



## learning101 (10 September 2009)

I am guessing a tone of day traders are looking to get in and get out with a nice profit.

I am also guessing that the price will go down further pending the announcement. Either the cornerstone investor will reach a deal or will not. If the CI does sign up then the prices will be further diluted and go down. If the CI does no sign up then BBI are in a world of trouble and prices will go down.

I am looking to rebuy in at a cheaper price pending the CI signs up. Diluted prices will offer a great buy. The reason I don't agree that the prices have already been diluted is that BBI should have announced to inform investors that the dilution process was underway (correct me if wrong).

If I was in BBI when the announcement was made i'd likely see red red red.

I won't enter BBI again until an announcement has been made and the prices have been diluted. If the CI doesn't deal up then I won't enter BBI ever unless Short Selling which I can't do with Comsec.

I am a novice and have just strted trading, this may not be the best way of thinking but it is the logic I have come up with 

Peace!

101


----------



## Zarate (10 September 2009)

skc said:


> The situation is so bad already on BBI - the share price is trading at a price implying heavy dilution + may be a bit of option premium (on the odd chance that the cornerstone investor buys in at 7/8c or a buyer for some assets emerge).
> 
> Any short trade surely doesn't offer the greatest risk / reward!




Whenever bbi and beppa prices start to converge there is good opportunities to buy the spread. The best recent example was beppa @10c vs bbi @8.6c

When beppa is trading at under 1.5x bbi, i think it is not a bad spread. That is where the risk / reward is imo.

But again I ask, does anyone know where you can short sell bbi? Not saying I will as I'd prefer to go with the momentum.


----------



## jono1887 (10 September 2009)

Zarate said:


> Whenever bbi and beppa prices start to converge there is good opportunities to buy the spread. The best recent example was beppa @10c vs bbi @8.6c
> 
> When beppa is trading at under 1.5x bbi, i think it is not a bad spread. That is where the risk / reward is imo.
> 
> ...


----------



## bellenuit (11 September 2009)

As I've mentioned on the other board, I've just got back from 2 weeks in Bali and have not had time to read every post related to the recent announcement. One thing that I can't quite fathom re BEPPA holders.....

Apart from getting some of the large BEPPA holders (e.g. Lowi etc) on board by offering them some of the action and thus having a sufficient majority to change the BEPPA conversion terms, what possible mechanism could they put in place that would not cause a massive depreciation of the BBI share price prior to any conversion (the death spiral scenario). 

The consensus seems to be that BBI will be diluted into oblivion by the CSI. But how could you structure a conversion deal for BEPPA holders that does not involve cash, when BEPPA holders know that any BBIs they receive will be worthless before they can sell them? 

It is the mechanics of the process that interests me. It doesn't matter whether BEPPA is converted at face value + back interest or some new agreed formula, any agreed value point ($1, $0.5, $0.2) is pointless when their is no floor under the value of the individual BBIs to be received. Trying to use a VWAP would just cause a death spiral leading up to the VWAP period. As the BBI price falls, then obviously the number of BBIs that would need to be issued would be seen to rise, causing a further decline in the BBI price during the VWAP.

I would assume the only way that it could be done is by offering a fixed ratio of BBI shares per BEPPA share, that is not dependent on the then current price of BBIs. Then, with full knowledge of the terms offered to the CSI, one could work out what the ultimate dilution will be (allowing an indicative value to be put on BBI) and hence assess whether it is a good or bad deal for BEPPA holders, considering the alternative choices. 

Is that how others see the mechanics of any BEPPA offer?


----------



## banska bystrica (11 September 2009)

From ABN Amro this morning:

_"*LIFELINE NEEDED*
With no asset sales to date, BBI suggests it is unlikely to raise sufficient funds in
time to meet its FY10 debt maturities.  As  such, BBI has engaged a potential
cornerstone. However, with the possibility that the preference securities could be
converted, the recapitalisation may erode security holder value. 

Asset sales process now unlikely to meet debt maturities 
BBI has A$2.7bn of debt maturing in FY10 and FY11, including A$300m of corporate debt
(due February 2010). With no asset sales to date, BBI suggests the sales process is difficult
and may not realise sufficient proceeds to meet its FY10 debt maturities. A portion of BBI’s
lenders (Holdco and Corporate) appears uninterested in refinancing. Previously, we thought
BBI had to raise funds to pay down corporate debt. Now it appears BBI needs to pay down
debt at the asset level as well. BBI has also flagged that asset sales, if they do occur, may be
below book values.
Engagement of cornerstone investor may result in significant dilution  
BBI is now exploring the possibility of a recapitalisation – having engaged a potential
cornerstone investor. Of significant concern, BBI has noted that BEPPAS and SPARCS may
need to be converted before any equity recapitalisation – this may be highly dilutive and
could erode security holder value. An interim agreement with the cornerstone also provides a
three-month right of first refusal over the sale of certain assets, potentially thwarting the asset
sale process. The process of finalising transaction terms and obtaining bank approvals is
anticipated to take several weeks, with no assurance that an agreement will be reached.
Until balance sheet is cleaned up significant risks remain; too much uncertainty 
Given the uncertainty of the outcome it is hard to find a reason to own the stock, particularly
as BBI is suggesting asset sales at a fair price look unlikely (and thus unlikely to produce any
equity value for security holders). A full takeover bid seems remote given BBI’s complicated
structure, high debt and overhang of SPARCS/BEPPAS. Given the hybrid conversion
overhang, a recapitalisation rescue similar to TPI or AIO appears unlikely. If no asset sales
or cash injection occur, then there is a risk that BBI will default on debt repayment. If a
recapitalisation does occur with a conversion of SPARCS and BEPPAS (as BBI is
suggesting), then dilution at the current price will erode much of the remaining security value"_.


----------



## banska bystrica (11 September 2009)

Further:

_"We view the engagement of a potential cornerstone as further indication that BBI is struggling to
meet future debt obligations. It would appear that a significant proportion of BBI’s lenders is not
interested in re-financing BBI’s debt and want their capital returned (and this now includes lenders
at the asset level).
It would also appear that asset sale valuations (expectations) on DBCT and PD Ports are
sufficiently different to consider a cornerstone, ie, vendor valuations of the assets are so low that
the remaining equity would be insufficient to meet other debt obligations. This is a bit surprising
as, less than two weeks ago at its FY result, BBI noted it was still working towards binding bids for
DBCT and PD Ports. Also, the cornerstone will have a three-month right of first refusal over any
bid for the assets, which could thwart the asset sale process.
The comment by BBI that BEPPAS and SPARCS will need to be converted before any equity
recapitalisation is a concern as it will be highly dilutive and erode security holder value. When BBI
presented to us last week, it highlighted that the internalisation of management structured with
BNB was designed so as not to trigger a change of control event that would lead to the conversion
of BEPPAS and thus to dilution. This will effectively be undone if BEPPAS and SPARCS convert.
Given the uncertain outcome it is hard to find a reason to own the stock, particularly as BBI
appears to be suggesting that asset sales at a fair price look unlikely (and thus unlikely to produce
any equity value for security holders). There is a remote possibility of a takeover bid (from the
cornerstone or otherwise), but this seems unlikely given BBI’s complicated structure, high debt
and overhang of SPARCS/BEPPAS. In the absence of any life line (asset sales or cash injection)
BBI may default on its debt repayment, which may lead to the business going into administration."_


----------



## banska bystrica (11 September 2009)

It is my opinion that the market will remain irrational today. I am therefore closing out my short position "on opening matchup" and locking in my profits. Anyone from over the road take note as I always like to let people know what I'm doing at the time, not days afterwards.


----------



## Zarate (11 September 2009)

So afr says that bbi might be or is?? selling dbct for $300mil. Does this mean 300mil net of debt? I already asked why they keep saying dbct is valued at $1bn and bb said it was net of debt.

So is this the case here? That would be very good news??


----------



## kineticqld (11 September 2009)

Thanks BB for your insight over the past 12 months - I've been lurking on these forums and have taken profits on BBI and BEPPA - even after I bought BBI at around $1 in early 08 and averaged down when BBI was at 3c. No matter how you are treated across the road - your posts are appreciated here by most I should think. 

Still hold small amounts of BEPPA and I'm spewing I didnt get in on IRN when it was in the 40s a few weeks ago. Please PM me when you get your blog going. Cheers.


----------



## banska bystrica (11 September 2009)

Zarate said:


> So afr says that bbi might be or is?? selling dbct for $300mil. Does this mean 300mil net of debt? I already asked why they keep saying dbct is valued at $1bn and bb said it was net of debt.
> 
> So is this the case here? That would be very good news??




The $300M (for 50%) quoted is free cash after debt. It therefore implies an Enterprise Value (EV) of $2.4Bn. BBI owe $1.8Bn on DBCT. That would be a very good result given the current market for infrastructure. My bullish projections gave an EV of $2.7Bn so $2.4Bn is a good result if that's the case.

That $300M will take care of the immediate debt repayment requirements and leave $100M for the Feb debt. If the cornerstone investor then tips in $600M which was quoted in the AFR and they also offer existing holders the chance to tip in $600M, that raises an additional $1.2Bn. BBI would be home and hosed. It's now all a matter of getting the deal done and how much of a haircut existing holders will have to accept. 

I wouldn't touch BBI with a nine foot barge pole but I can see an argument to buy BEPPA at under 10c. It's still a very iffy investment as there are too many unknowns. The big question is how do they handle the hybrids? If they forcibly convert them (which they can) how many BBI's do hybrid holders receive? Until we know those details, it's impossible to know if the current price for BEPPA represents value or not.


----------



## hardyakka (12 September 2009)

banska bystrica said:


> Further:
> 
> _"We view the engagement of a potential cornerstone as further indication that BBI is struggling to
> meet future debt obligations. It would appear that a significant proportion of BBI’s lenders is not
> ...




I have now taken a position in a few other stocks including IRN, but follow BEPPA out of interest.

The above commentary brings home one critical point to me. Very simply the board cannot be trusted to provide reasonable information. In making an investment decision that creates an unacceptable risk to me

Cheers


----------



## jono1887 (16 September 2009)

BBI's been quite for a while now and the price seems to be holding at 5c. Any reason why there is still such high volumes being traded even with the overlooming bad news for the company and with no good foreseeable future?

Who is buying into a stock that is highly likely to collapse at any moment or if not suffer heavy dilution?


----------



## banska bystrica (16 September 2009)

jono1887 said:


> Who is buying into a stock that is highly likely to collapse at any moment or if not suffer heavy dilution?




People who have no grasp of the fundamentals, punters, daytraders, technical traders etc etc.
As you say, it's either administration or at best heavy dilution for existing holders. 
I'm awaiting any news on the cornerstone investor deal and then may participate in the placement AFTER all the dilution has taken place and the risk of administration is removed.


----------



## ricee007 (16 September 2009)

banska bystrica said:


> People who have no grasp of the fundamentals, punters, daytraders, technical traders etc etc.
> As you say, it's either administration or at best heavy dilution for existing holders.
> I'm awaiting any news on the cornerstone investor deal and then may participate in the placement AFTER all the dilution has taken place and the risk of administration is removed.



I have felt the same way about BBI for a while...

I sitll think BEPPA is good value. However, I'm looking at buying into one more share, and it ain't going to be a risky one this time!


----------



## boronia (18 September 2009)

fyi

Adele Ferguson | September 18, 2009 
Article from:  The Australian 
A GROUP of international hedge funds has joined forces to offer an alternative lifeline to the debt-stricken listed Babcock & Brown Infrastructure group, which has $7 billion of assets but is teetering on the edge.

The so-called Bumblebee Recapitalisation Proposal emerges as BBI auditors Deloitte Touche Tohmatsu issued a warning in the annual report that net current liabilities of $110 million and various other issues cast "significant doubt" on BBI's ability to continue as a going concern. 

In a letter sent last night to the two BBI independent directors on a board of four, a global investment bank said it was acting on behalf of eight investors -- largely international hedge funds -- that had structured a new recapitalisation proposal which was at least $500m better than an existing deal now being discussed by the board, which involves a new cornerstone investor..............


----------



## jono1887 (18 September 2009)

So how do you think this will affect BBI on tuesday?
Is this good news or bad? And what kind of investor is considering buying into or investing into a business that has such a bad balance sheet...


----------



## jacobkball (18 September 2009)

Well, Tuesday's going to be very interesting, isn't it.

I guess it really depends on what the announcement states, whenever they release that, as to whether it's viewed as a positive solution or a negative one for shareholders.

You would think that a deal that is $500m better than the current one would be viewed more positively, but we don't know how they plan on skinning us shareholders alive yet 

The roller coaster ride continues.....


----------



## Largesse (18 September 2009)

hello BBI gamblers,


hope you are all prepared. day of reckoning is cometh.


Regards,

Largesse


----------



## $$Punt$$ (18 September 2009)

Largesse said:


> hello BBI gamblers,
> 
> 
> hope you are all prepared. day of reckoning is cometh.
> ...




Experience says BBI will spike in the first hour of trading when it reopens with a wide range of price movement during the day. Hope you all make some money and don't be too greedy. Good luck


----------



## seen (18 September 2009)

my punt is on BBI rising on the first day due to mixed signals and high volumes attracting many punters. but it is probably going to drop as volumes will probably be made up of traders.

just my silly guess and


----------



## TheAbyss (18 September 2009)

The new offer can only have a positive effect. Two bidders at the table is better than one. Even if it only means marginally less dilution it is still positive. Not a stock for me but holders can be happy with a competitive bid.

Wonder if the two bidders are privy to what the other bid is?


----------



## bandicoot76 (19 September 2009)

after reading the article in fridays financial review it seems to me that the new 'interested party' is more interested in acquiring some of BBI's prime assets rather than stock options so that should be a positive re dilution but the negative could be loss of quality assets at less than market prices... if it goes ahead  i wonder what existing bbi shareholders will be left with? still i guess something is better than the SFA we can expect from the massive dillution of the previous 'cornerstone investor' offer or the alternative of receivership! time will tell i guess... a 50/50 bet imo!


----------



## Stakes (21 September 2009)

hahaha BBI punters.... 

It looks like this announcement might be more than 'another spike'.... if things dont work out, and its not likely that they will, BBI will be in between a rock and a hard place if you ask me.... they've had their turn to bloom but things have taken their hit, we're just getting our punch in the nuts now....


----------



## jono1887 (22 September 2009)

Stakes said:


> hahaha BBI punters....
> 
> It looks like this announcement might be more than 'another spike'.... if things dont work out, and its not likely that they will, BBI will be in between a rock and a hard place if you ask me.... they've had their turn to bloom but things have taken their hit, we're just getting our punch in the nuts now....




Looks like the annoucement did not lead to another spike... quite disappointing actually. Not much movement at all... I was hoping to sell out on an upswing but no luck there. 

What date is their debt due next month??


----------



## drsmith (22 September 2009)

jono1887 said:


> Looks like the annoucement did not lead to another spike... quite disappointing actually. Not much movement at all... I was hoping to sell out on an upswing but no luck there.



That's because there was nothing substantial in the announcement itself (no agreement on any recapitalisation as such).


----------



## Jez (22 September 2009)

drsmith said:


> That's because there was nothing substantial in the announcement itself (no agreement on any recapitalisation as such).




YES!

Just like the last BS announcement, this was a BS announcement too. I should have sold earlier, but after the first announcement a couple of weeks ago, I held on saying to myself, this is going to come back like Centro. I sold out at 53 cents, lucky I got double that loss in gains this year from other real come-backs!

My Family Tax Benefits wont be hit so hard, is one positive!

Good luck to everyone else gambling on this "Dog"!


----------



## suhm (22 September 2009)

I'm pretty surprised how well the shares are holding up, considering managment to an axe to the NAV when reporting their results and especially now they say that sales are likely to be below book value and that bank debt holders might not get a full return of their money??

I was still looking at the BEPPAs to participate in an upcoming recap but at present its more like a crap shoot then an investment to me.


----------



## banska bystrica (23 September 2009)

What's the use in having "positive equity" on paper if your current liabilities exceed your current assets by $426.5M because you can be assured, in a liquidation, your positive NTA will be wiped out quicker than jack flash.

People need to see the situation for what it is. All this talk I read on forums of the "stock rallying to 20c, 30c" is just pure fantasy/hope without factual basis. The harsh reality is the situation is very, very bleak. There is nothing to look forward to if you are an equity holder because in my opinion the equity is worthless (in reality, rather than on paper in a perfect world). Any new equity will be in favour of the new investor, not existing holders.

If BBI go into VA, do you honestly give them a realistic chance of trading their way back to prosperity? If the publishers at Collins want a new meaning for the word "denial", they need look no further than the BBI threads on stock forums. I call it as I see it. 

In November 2008, the NTA was $1.00+, the stock price was 3c, there was no imminent threat of devastating dilution and time was on their side regarding asset sales, especially DBCT.
All that has changed and yet the stock price is now 70% higher than in Nov 2008. When the fundamentals change, investors need to be swift and protect their capital. 

I currently hold nil BBI and nil BEPPA. I might be prepared to participate in a cap raising at a rock bottom post dilution price. We just need to see what the board decides on.

The Board has two choices:
Massive dilution or administration.
By going with BAM, they act in the best interests of securityholders. Painful, but it ensures survival. BBI directors may just have to swallow the poison pill and let BBI holders wear the pain.


----------



## awg (23 September 2009)

He yous all, listen to BB

he has played his cards right

I sold out of Beppa a while back, in tranches, very small profit overall..oh well

sold BBI ages ago, very small profit

the odds are now

a) all holders will be diluted to the sh!thouse
b) admin =0
c) tiny chance for the BEPPA holders to make $


----------



## angk43 (23 September 2009)

Hi i'm new to this, any thoughts on BBP then as the stock prices of both run pretty similar figures.

Very concerned as holding a ffew BBP shares.


----------



## drsmith (23 September 2009)

banska bystrica said:


> People need to see the situation for what it is. All this talk I read on forums of the "stock rallying to 20c, 30c" is just pure fantasy/hope without factual basis. The harsh reality is the situation is very, very bleak.



The harsh reality of the situation has been very, very bleak for BBI since the commencement of the GFC.


----------



## select (23 September 2009)

BB,

You are a piece of work.

You have flogged BBI all the way DOWN from +40c. You slagged everybody that posted honest opinions. And now you have the hide to start bagging BBI to all that will listen.

Are you incapable of recognising that your research was wrong and you got BBI wrong? You screwed up big time. Lost big time and wasted OPPORTUNITY COST big time.

No scalps for you. 



banska bystrica said:


> What's the use in having "positive equity" on paper if your current liabilities exceed your current assets by $426.5M because you can be assured, in a liquidation, your positive NTA will be wiped out quicker than jack flash.
> 
> People need to see the situation for what it is. All this talk I read on forums of the "stock rallying to 20c, 30c" is just pure fantasy/hope without factual basis. The harsh reality is the situation is very, very bleak. There is nothing to look forward to if you are an equity holder because in my opinion the equity is worthless (in reality, rather than on paper in a perfect world). Any new equity will be in favour of the new investor, not existing holders.
> 
> ...


----------



## banska bystrica (23 September 2009)

The fundamentals of BBI changed after the Corus news hit in April. I'm very pleased that others on this forum also sold at circa 17c after buying in Nov 2008 below 3c (800K at 2.5c as posted by me in November). One has to be nimble to lock in profits in this game.
BBI will survive with a capital injection but it will be massively dilutive. No need to be exposed right now but perhaps post dilution via a placement might be an astute move? We await the details of any deal and then we can decide whether to trump up cash for the placement or not.


----------



## select (23 September 2009)

BB,

800,000 shares at 2.5c LOL, $20,000 worth? oh you big spender you. But no, you were in much higher and much deeper than that.

Have you forgotten to tell people how many you bought above 20c?

Or am I as mistaken about this as I was about BBI's fundamentals?






banska bystrica said:


> The fundamentals of BBI changed after the Corus news hit in April. I'm very pleased that others on this forum also sold at circa 17c after buying in Nov 2008 below 3c (800K at 2.5c as posted by me in November). One has to be nimble to lock in profits in this game.
> BBI will survive with a capital injection but it will be massively dilutive. No need to be exposed right now but perhaps post dilution via a placement might be an astute move? We await the details of any deal and then we can decide whether to trump up cash for the placement or not.


----------



## investorpaul (23 September 2009)

select said:


> BB,
> 
> 800,000 shares at 2.5c LOL, $20,000 worth? oh you big spender you. But no, you were in much higher and much deeper than that.
> 
> ...




Select - I can hardly see how you can place any blame/or whatever you want to call it on BB. He openly posted his research and positions. It is up to other people to make their own decisions in regard to buying/holding/selling.

As you would know companies/potential returns/the market are constantly changing. I even evaluate my blue chip holdings on  regular basis if the risk:reward ratio or the fundamentals change I may decide the sell. The exact same thing happened with BBI. If BBI had managed to sell their assets and remove debt the SP would have improved dramatically, this may have allowed them to do their own cap raising tat is less dilutive than the CSI proposal. The funds from which could have taken care of SPACs and/or BEPPA in the future.

Unfortunately it didnt work out but everyone going into BBI/BEPPA should have made themselves aware of the risks prior to buying. By the way if people followed BB in selling on the day the trading halt was lifted those who bought under 10 c would have made a small profit.


On another note: BB have you go your Blog/Site up and running yet, I always thought it would be good if a site existed where a small group of individuals (maybe 20) could contribute indepth discussion/research on particular stocks, with the site providing the avenue to share the research.


----------



## select (23 September 2009)

investorpaul, 

If you know the history of a poster you will know the poster.

Ask BB about Zinifex and Allegiance Mining. 

I believe he was very negative about Allegiance Mining prior to the takeover offer by Zinifex. Once the Zinifex offer was made he/she recommended people own Zinifex in spite of the takeover offer by Zinifex.

The reason given was that Zinifex management were credible operators and AGM shareholders should surrender their ownership of their nickel mine because only Zinifex management could do anything with it.

Zinifex ended up buying AGM but due to a deteriorating nickel price the mine was shut down.

After Zinifex got their hands on AGM they merged with Oxiana and became OZ Minerals.

The rest is history.

Also ask BB about AZC. And any other stock you care to think of.

You will find that BB has a history of exposure to stocks that become administration candidates.

By all means, join him/her in a private blog sight and limit the exposure to crap to just 20 people.


----------



## drsmith (24 September 2009)

banska bystrica said:


> The fundamentals of BBI changed after the Corus news hit in April.






banska bystrica said:


> People need to see the situation for what it is. All this talk I read on forums of the "stock rallying to 20c, 30c" is just pure fantasy/hope without factual basis.






banska bystrica said:


> BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?
> 
> Convert every BEPPA held into 35c cash and 2 BBI securities.
> 
> ...



The third quoted comment was posted in July 2009.

April comes before July does it not ?


----------



## banska bystrica (24 September 2009)

select said:


> investorpaul,
> 
> If you know the history of a poster you will know the poster.
> 
> Ask BB about Zinifex and Allegiance Mining.




Ah yes, the wonderful AGM. Followers bought in at 12c and sold at 90c. A wonderful result for all concerned. Zinifex then put in a takeover bid which propped the price to $1.00 during the GFC.
A most memorable result indeed.

AZC? Well, we all make mistakes. I underestimated management's incompetence. C'est la vie. I suppose "select" never makes even one bad investment. Talk about a piece of work.


----------



## banska bystrica (24 September 2009)

drsmith said:


> The third quoted comment was posted in July 2009.
> 
> April comes before July does it not ?




Followers know I sold all my BBI in April. I subsequently sold BEPPA later at a very healthy profit circa 16c after being free carried. A wonderful result.
You must be "select"s brother? Pick out little snippets of posts and try and create a drama.


----------



## banska bystrica (24 September 2009)

One must keep in mind the risk/reward ratio. The higher the risk, the higher the potential upside so obviously the strike rate will be lower when following this end of the market than if you were buying the ASX 100. That's just commonsense but some on here just don't understand probability theory.


----------



## banska bystrica (24 September 2009)

investorpaul said:


> As you would know companies/potential returns/the market are constantly changing. I even evaluate my blue chip holdings on  regular basis if the risk:reward ratio or the fundamentals change I may decide the sell. The exact same thing happened with BBI




Paul,

You are spot on. People need to have an understanding of risk/reward to have any chance in the market. People like "select" get eaten for breakfast by the market. Maybe that's why they get so angry?
Anyone who thinks investing at the speculative end of the market doesn't result in some failures, fails to really have any idea about successful investment strategy.


----------



## investorpaul (24 September 2009)

banska bystrica said:


> One must keep in mind the risk/reward ratio. The higher the risk, the higher the potential upside so obviously the strike rate will be lower when following this end of the market than if you were buying the ASX 100. That's just commonsense but some on here just don't understand probability theory.




I was going to say the same thing, most books I have read it states it doesnt matter if you have 9 losers for every 1 winner as long as your winner compensates for your losers and provides you with a positive return after that.

Ideally you would prefer less than one loser per winner or perhaps 1 or 2 losers per winner but at the end of the year if you have made money overall it doesnt really matter.

Obviously dealing at the lower end of the market is higher risk otherwise the returns would not be there. 

I think the other important thing to come from BBI/BEPPA is timing and a persons willingness to make quick decisions. Both times BBI/BEPPA spiked it dropped back fairly quick and you had to be on the ball to exit at prices near the top.


----------



## nomore4s (24 September 2009)

investorpaul said:


> I always thought it would be good if a site existed where a small group of individuals (maybe 20) could contribute indepth discussion/research on particular stocks, with the site providing the avenue to share the research.




Um isn't that what this site is?

This thread never ceases to amaze me but there always seems to be at least one thread like this on the go at anyone time.

Some holders still seem in love with BBI and somewhat blinded by the "potential" for untold wealth. A number of posters were warning of the high possibility of failure with this stock but were pretty much run out of this thread. Meanwhile there were alot of unrealistic hypotheticals being thrown around which were never going to happen.


----------



## nomore4s (24 September 2009)

investorpaul said:


> Obviously dealing at the lower end of the market is higher risk otherwise the returns would not be there.




lol, in a period were good solid companies with low debt & solid earnings were oversold there was very good rewards on offer with very little risk compared to this company.

I remember posting in this thread months ago there were better opportunities around but was told that nothing offered the same potential rewards as this company. Well since then this company has done nothing in terms of the sp while the general market has provided one of the most profitable rallies of all time.

The opportunity cost of this stock has been huge, especially since alot of the posters were pumping any spare money they had into this stock.



> I think the other important thing to come from BBI/BEPPA is timing and a persons willingness to make quick decisions. Both times BBI/BEPPA spiked it dropped back fairly quick and you had to be on the ball to exit at prices near the top.




Most posters in here were too blinded by greed and far to attached to BBI to exit for good profit when given the chance.


----------



## banska bystrica (24 September 2009)

I posted in Nov 2008 that I bought 800,000 at 2.5c. I subsequently sold them all (and more) at average 16c in April after the bad news on PD Ports was announced.
(540% profit..... beats most of the top stocks by a country mile).

I successfully traded BEPPA and eventually sold all my significant BEPPA holding at average 15.8c after being free carried for the last 3 million.

This has been a fantastic investment over the last 10 months.
When fundamentals change, I react accordingly. Never fall in love with any stock.


----------



## investorpaul (24 September 2009)

> Um isn't that what this site is?




The only reason I bought it up was that BB once mentioned something about having a small site of his own detailing some of his research, whether or not he has done it i dont know.



> This thread never ceases to amaze me but there always seems to be at least one thread like this on the go at anyone time.
> 
> Some holders still seem in love with BBI and somewhat blinded by the "potential" for untold wealth. A number of posters were warning of the high possibility of failure with this stock but were pretty much run out of this thread. Meanwhile there were alot of unrealistic hypotheticals being thrown around which were never going to happen.




No sure if thats directed at me or others??? 

but I agree with you that there are always posts claiming a stock will go to x or make you x and if posters follow this hype without their own research it is dangerous. What people reading the forum and interested in the stock have to do is remove those subjective comments and focus on the facts provided and then do their own research. I do believe it is good to discuss what could/could not happen as it allows one to identify the likely exit scenarios. With this though I agree that the scenarios posted need to be realistic and achievable.

Furthermore with hindsight it is easier to see what went wrong in a strategy but a number of months ago BEPPA had a face value of $1, asset sales would have saved the company and there was a potential to realise some of that $1 face value. If some posters cannot see that fundamentals and company direction can change with short notice (and thus remove the potential for a large upside) then they only have themselves to blame.

Those who went into BBI/BEPPA having done their own research would have been the first to see that the reward part of the risk:reward equation had changed dramatically and would have sold out in many instances for a decent profit. Those who were late to the party and/or did no research would have purchased at higher prices, failed to understand the key requirements needed to unlock value and are in many instances still holding in the hope that the CSI is going to do them a favour and provide a huge upside potential.


----------



## Largesse (24 September 2009)

i think its clear that..............................................................................





reading forums = research


----------



## investorpaul (24 September 2009)

Largesse said:


> i think its clear that..............................................................................
> 
> 
> 
> ...




Anyone who relies on forums as a source of their research is an idiot. Forums are used for discussing opinions and ideas.

Investigating Company reports, fundamentals, economic data and future outlook amongst other things is research. And researching a company is not a 30 minute exercise, it takes time to do it properly.

(although I do admit that there probably are people out there who read forums and go that sounds good, i'll buy that. But no one can take responsibility for others if thats what they do)


----------



## nomore4s (24 September 2009)

banska bystrica said:


> I posted in Nov 2008 that I bought 800,000 at 2.5c. I subsequently sold them all (and more) at average 16c in April after the bad news on PD Ports was announced.
> (540% profit..... beats most of the top stocks by a country mile).




 Stocks like this if traded correctly do provide opportunity but how many here did that?



investorpaul said:


> No sure if thats directed at me or others???




Just to clarify, my posts aren't directed at anyone, they are a general observation and can apply to different stocks and threads at different times. BMN a few years back is one that comes to mind.



investorpaul said:


> Anyone who relies on forums as a source of their research is an idiot. Forums are used for discussing opinions and ideas.




While that is correct there are people around who do get sucked into the discussions on forums like this one, if you look through this thread you will find examples of it, greed is a powerful thing. This is why we have such a strict policy on ramping.


----------



## banska bystrica (24 September 2009)

I do not advocate following a stock on what is posted on a forum. However, if someone followed exactly what I was doing and when I was doing it (and I always post what I am doing straight away unlike others who claim to have done this and that in hindsight), then those people would have made a motza.

Assets sales above book would have seen greater prices for both BBI/BEPPA but the game changed when Corus pulled out of Teesport (impairing PD Ports) and then the game changed dramatically when the company announced DBCT sale was not proceeding due to low ball bids. If anyone is still holding in hope, they only have themselves to blame.

There is very little upside now and a real risk of 100% downside.


----------



## banska bystrica (24 September 2009)

nomore4s said:


> Most posters in here were too blinded by greed and far to attached to BBI to exit for good profit when given the chance.




Investors who need their hand held shouldn't be in the market. I have no sympathy for them. They should get off their backsides and do the hundreds of hours research that is required. If not, go and put the money in a managed fund.


----------



## awg (24 September 2009)

investorpaul said:


> Anyone who relies on forums as a source of their research is an idiot. Forums are used for discussing opinions and ideas.
> 
> Investigating Company reports, fundamentals, economic data and future outlook amongst other things is research. And researching a company is not a 30 minute exercise, it takes time to do it properly.
> 
> (although I do admit that there probably are people out there who read forums and go that sounds good, i'll buy that. But no one can take responsibility for others if thats what they do)




Forums are a place that a stocks may be bought to your attention.

There are not enough hours in the day to research everything

In depth research as posted by BB is useful, to assist in considering matters that those less experienced in interpreting balance sheets, would not otherwise have access to, unless they pay for professional analysts reports.

whether people consider that BB ramped or generated liquidity, the fact that he posted his research, which was far more in depth than almost any other poster, is surely the essence of what a stock forum is all about.

BB made mistakes, and owned up to some of them, some he probably kept to himself..who hasnt done that

If persons bought or sold based on posts alone from BB, they have got no one to blame but themselves if they lost money.

I hope he keeps up the posts on whatever he is doing, as the quality of his posts kicks ar$e on most.

disclaimer..i bought and sold, and BBI/BEPPA was one of my lowest performers over the period

my


----------



## Julia (24 September 2009)

nomore4s said:


> lol, in a period were good solid companies with low debt & solid earnings were oversold there was very good rewards on offer with very little risk compared to this company.
> 
> I remember posting in this thread months ago there were better opportunities around but was told that nothing offered the same potential rewards as this company.



I can recall doing likewise and receiving a similar response.

People thinking for themselves is usually better than playing follow the leader.


----------



## nunthewiser (24 September 2009)

nomore4s said:


> This thread never ceases to amaze me but there always seems to be at least one thread like this on the go at anyone time.
> 
> .




LOL what ever happened to the FMG thread  was mighty active from 13 bucks down .....so many "bottoms " to choose from


----------



## YELNATS (24 September 2009)

Despite the spate of recent negative commentary, noticed that BEPPA is up about around 22% this morning and have used this as the opportunity to exit the last of my holdings, at a reasonable profit.

Thanks to all contributors for sharing their thoughts and analyses on BBI and BEPPA over the last 12 months or so.


----------



## drsmith (24 September 2009)

banska bystrica said:


> Followers know I sold all my BBI in April. I subsequently sold BEPPA later at a very healthy profit circa 16c after being free carried. A wonderful result.
> You must be "select"s brother? Pick out little snippets of posts and try and create a drama.



You might be nimble enough to trade this for a profit but what about the fools who have followed your own fantasy posts and are left holding the baby ?

Tough luck for them I suppose.


----------



## alphaman (24 September 2009)

Well, looks like the inefficient market priced in BBI's difficulties as early as last year, hence the apparent discrepancy with the useless "NTA".

This thread shows that despite all the "due diligence" and "research", it is actually very difficult to add value fundamentally.


----------



## banska bystrica (24 September 2009)

drsmith said:


> You might be nimble enough to trade this for a profit but what about the fools who have followed your own fantasy posts and are left holding the baby ?
> 
> Tough luck for them I suppose.




Yes, tough luck. "If" they followed me in then they should have followed me out. If they choose to be run over by a dilution train, then that's their choice.
I explained very, very clearly what I was doing at the time I was doing it.


----------



## AlexKidd (24 September 2009)

Anyone have any thoughts (good or bad) as to why Beppa is now trading at around the .13c mark?  BBI is not moving at all.


----------



## Jez (24 September 2009)

AlexKidd said:


> Anyone have any thoughts (good or bad) as to why Beppa is now trading at around the .13c mark?  BBI is not moving at all.




Have you heard the saying "No news is good news"?

I'm out on deciding, as I have sold all at a loss. Usually when I sell at loss, the price eventually sky rockets! If you are still holding BBI, I hope my selling helps you.


----------



## Gunlom (24 September 2009)

maybe allota people swapping from BBI to BEPPA, to hopefully get a return.

BEPPA in the case of the company surviving is worth more than BBI

just a guess though


----------



## jacobkball (25 September 2009)

banska bystrica said:


> There is very little upside now and a real risk of 100% downside.



Great call before the open yesterday, as it's only gone up 30% - 40% or so since then. Yes, I realise in the longer term, things are looking shaky....... right? 

I'm out now, with a decent profit. Glad I didn't panic like many others and jump out at the bottom.

If anyone out there can explain why the price has climbed so much, nearly to the levels it reached after the recent 'almost positive' announcement, I would be most interested to hear it. As far as I can see, nothing has changed from the last announcement.

Bring on the naysayers (you know who you are) - surely it's time for the price to crash again, right?


----------



## hardyakka (25 September 2009)

Having caught up on the BEPPA thread for the first time in a while I an asking myself what is going on?

Having followed this thread for nearly a year BB gave an open and honest opinion of his view of BBI/BEPPA based upon his research etc. Many disagreed with it, and that is fair enough as that is their call based upon the knowledge of the stock.

A number of persons are, with the benefit of hindsight, are dissecting these views and pointing out errors etc. But isn't everyone 100% right with the benefit of hindsight? So be reasonable folks.

If someone does invest on the basis of an opinion in a forum without doing their own reseacrch they deserve to be eaten alive, and they will get minimal sympathy. To me its the same as investing on the basis of what the guy in the pub said. But, a forum may give you a pointer to a stock that you can do your own research on.

Whether you agree with BB's views or not, don't bag them  because at least he had the guts to put the view forward, unlike the Selects of the world. 

Cheers


----------



## Jez (25 September 2009)

Share price jump through today. Was it something to do with the Xstrata coal train deal? Was no announcements, just inside info?


----------



## skyQuake (25 September 2009)

Well the market did rally 100pts from its lows... and BBI is a fairly volatile stock
Banks led though.


----------



## Iggy_Pop (25 September 2009)

Jez said:


> Have you heard the saying "No news is good news"?
> 
> I'm out on deciding, as I have sold all at a loss. Usually when I sell at loss, the price eventually sky rockets! If you are still holding BBI, I hope my selling helps you.




I also sold out at a loss yesterday, and normally the same happens to me. Between the two of us we have most likely "held " the price down. 


Look out now !


----------



## banska bystrica (25 September 2009)

jacobkball said:


> Great call before the open yesterday, as it's only gone up 30% - 40% or so since then.




BBI has gone up 30-40% since the open yesterday? Yeah sure. I also believe in the tooth fairy.........................................


----------



## jacobkball (25 September 2009)

banska bystrica said:


> BBI has gone up 30-40% since the open yesterday? Yeah sure. I also believe in the tooth fairy.........................................



Wait.... how did I get that so wrong? Oh yes, I'm referring of course to BEPPA, which any half-wit can deduce.

Perhaps it's Santa Claus you believe in? He's certainly been bringing everyone lots of presents lately


----------



## banska bystrica (25 September 2009)

jacobkball said:


> Wait.... how did I get that so wrong? Oh yes, I'm referring of course to BEPPA, which any half-wit can deduce.




If you mean BEPPA, then say BEPPA. This is a BBI thread good buddy and if you want to refer to BEPPA, then write "BEPPA".
There's a great arbitrage play going on with BEPPA/BBI. Short BBI, long BEPPA. That's why you are seeing BEPPA firming and BBI doing very little in comparison. The astute would know this already.

Off to bed for me. I've got a plane to catch in the morning. The MCG awaits BB's arrival.


----------



## drsmith (26 September 2009)

It is obvious to any reasonable person that jacobkball was referring to BEPPA as it is a subset of BBI.


----------



## Jez (26 September 2009)

drsmith said:


> It is obvious that BEPPA is a subset of BBI.




Hang on, I'll ask my bus driver if he knows that!

Seriously, there are many speculators here that know Jack-All about the share market, just wanting to give you an interest free loan, by purchasing the shares you are selling!


----------



## banska bystrica (27 September 2009)

jacobkball said:


> Great call before the open yesterday, as it's only gone up 30% - 40% or so since then. Yes, I realise in the longer term, things are looking shaky....... right?
> 
> I'm out now, with a decent profit. Glad I didn't panic like many others and jump out at the bottom.
> 
> ...




Jacob Ball,
How about you read my Nov 2008 posts on BBI? You obviously haven't been around this forum long enough to realize who the astute contributors are.
Cheers.


----------



## persistentone (28 September 2009)

Apparently my userid on HotCopper was suspended because I asked why moderation is so severe.   Amazing.  Can someone tell me how long the suspension is for?


----------



## persistentone (28 September 2009)

The BBI New Zealand bonds fell in value today, which is not the result I would have expected with a recap pending on BBI.   The NZ Bonds on true secured debt and should have been strengthened by rumors of a recap.

Anyone have a theory on that movement?


----------



## Tysonboss1 (29 September 2009)

Beppa has had a big run up latly, it's sitting at 19.4c at the moment with with market depth at 7 buys to 1 sell.

Whats happening here, can this be sustained.


----------



## fureien (29 September 2009)

day high of 21.5 cents, holding at 20 as i type. wut is going on??

ive been trying to hold out from buying the past few days cause i didnt think it was sustainable.../tilt


----------



## fuzzie (29 September 2009)

What I learnt today. ( and the last 3 weeks., 3 months, 3 quarter, 3 years...)

I've been on holidays for the last couple of weeks, with only limited internet access.

The big fall happened the week before I flew out and I had to make a hard decision, sell now and retain my initial capital or gamble the house while I wasn't watching. I decided to sell out as I asked myself really how willing was I to lose the money that hasn't already been creamed by those B&B (frandango, frangool, fill in your own f word) directors! A simple question of risk and reward!

I opted to cash out the majority, but I held a relatively smallish number.

Yesterday I checked the share price 

Today watching is like picking a scab. I know I shouldn't, but I keep on looking.

What I learnt is that I should have rebalanced the spec portfolio when it jumped to 18c a few weeks ago. I should have sold half my holding when it had doubled and been carrying free. I had read that theory before, but I'd never really LEARNT that lesson personally and painfully.

Today I sold half my remaining holding, so I'm now carrying a small parcel free and whatever happens from here on in is playing with the house's money. I can't read crystal balls, but I think there is still some value left in beppa.

I got here not from either fundamental analysis or outright spec play. I really haven't got the time (or more probably the knowledge) to do the heavy analysis that BB, Hardyakka and Persitentone have done. I'm an original PIF and AGL holder who initially ended up holding BEPPA from that wasteful Ainta, AGL, B&B playoff. PIF and AGL made sense. Cashflows covered distributions, it was the b&b engineering that made distributions appear magically out of negative earnings and valuations go crazy.

I think I've now lost the opportunity to recover those B&B derived losses from 2007 by playing beppa, but I have at least learnt a hell of a lot for how I invest in the future.

Good luck to the rest of you. Fortune favours the brave, and although I can't remember who said it, remember the stock market is also a place for moving assets from the patient to the impatient.


----------



## persistentone (29 September 2009)

fureien said:


> day high of 21.5 cents, holding at 20 as i type. wut is going on??
> 
> ive been trying to hold out from buying the past few days cause i didnt think it was sustainable.../tilt




There is supposedly a rumor that a coal company is buying BEPPA shares as part of a plan to secure ownership of BBI.   I guess they would take the assets they want and then try to find someone to offload the remainder to.   I have not confirmed the rumor, and it's probably just some wacko conspiracy to get shares higher to assist with some other plot. 

I originally calculated based on the published cornerstone investor speculation in afr that the best case outcome for BEPPA was 14.9 cents.   I further calculated before all the recent write downs that the best case recovery for BEPPA in Administration would be around 22 cents.    So I feel it is fully valued at these prices.   Had I owned any here, I would have been a seller at 18 cents and higher.

The way I figure it I would be making decisions as if this was a business, based on the objective outcomes I can calculate with the information that I have available.   I cannot be a gambler just hanging onto shares forever in the hopes of some miracle happening that I cannot know about in advance or predict.

So anyone selling at these prices is in my opinion not stupid.   If it goes to 40 cents based on some miraculous outcome, don't lose sleep about it.


----------



## jacobkball (29 September 2009)

banska bystrica said:


> I currently hold nil BBI and nil BEPPA. I might be prepared to participate in a cap raising at a rock bottom post dilution price. We just need to see what the board decides on.





banska bystrica said:


> If anyone is still holding in hope, they only have themselves to blame. There is very little upside now and a real risk of 100% downside.





banska bystrica said:


> There's a great arbitrage play going on with BEPPA/BBI. Short BBI, long BEPPA. That's why you are seeing BEPPA firming and BBI doing very little in comparison. The astute would know this already.





banska bystrica said:


> Jacob Ball,
> How about you read my Nov 2008 posts on BBI? You obviously haven't been around this forum long enough to realize who the astute contributors are.
> Cheers.



Yes, I am new to these forums. I did read through the bulk of the posts on BBI and BEPPA within this thread.

BB, I don't doubt that you've done very well out of trading these shares. It certainly looks like you did the research, and in that case, you deserve those rewards when you've put the work in.

If you're including yourself amongst the 'astute' contributors, I'm guessing you wouldn't still be holding NIL BEPPA, as you've pointed out the great arbitrage play going on. Perhaps you missed the boat on this one? Fair enough, no one gets it right 100% of the time. I personally don't believe that you've held NIL BEPPA since that quote, but it's all too hard to prove, isn't it. It's just supposition.

I've learnt some valuable lessons through these trades, and this forum, and that's even after I've made a decent profit (over 30%). Yes, it could have been more. But I've seen the trading halts and the announcements that come through that decimate the price overnight, so I made a call.

One thing I have learnt is don't take advice from people who don't put their money where their mouth is. If they say 'oh the sky is falling, you should sell out now', ask them if they're selling out too. And vice versa, of course.

The problem with these forums is that nothing can be verified. In most cases, it's because the people making the calls aren't even doing them.

So, in short - lesson learnt!


----------



## persistentone (29 September 2009)

jacobkball said:


> Yes, I am new to these forums. I did read through the bulk of the posts on BBI and BEPPA within this thread.
> ...
> If you're including yourself amongst the 'astute' contributors, I'm guessing you wouldn't still be holding NIL BEPPA, as you've pointed out the great arbitrage play going on. Perhaps you missed the boat on this one? Fair enough, no one gets it right 100% of the time. I personally don't believe that you've held NIL BEPPA since that quote, but it's all too hard to prove, isn't it. It's just supposition.




You are committing a fallacy here, similar in principle to the "might makes right" fallacy.   You are assuming from the fact that a share price rises that there was a *knowable reason a priori* why the share price should rise.  In this case I think that is clearly false.   There was not a reason that BEPPA should have risen to this price based on the facts we had a few weeks ago.   The fact that it did rise proves nothing more than sometimes stuff happens that we cannot predict in advance.   We will know the real reason soon enough, but it wasn't something we could realistically have calculated.

What changed for BBI after the failure to sell DBCT is that it ran a real chance of 100% capital loss in a short time period.    So your risk of loss was 100%, and against that you had to weigh the outcomes.    When I calculated all the outcomes from a cornerstone investor and weighted the probabilities against each outcome, I was looking at 11 cents as the average outcome price for BEPPA.   So trading at 8 cents, my risk was total capital loss and my expected return was 11 cents.   For some people, that would be an acceptable trade, with an expected 37% profit.   For others (like me), when I take a risk of total capital loss, I want a higher gain than that.

I don't know BB's expected outcomes based on the original known facts, but I think his logic was something similar.   On HotCopper (before they banned me for the simple act of asking a question about their moderation policy!), BB and I were among a handful of posters that made clear our aversion to the shares based on moderate upside against risk of total capital loss.   Almost all of the users who were either buying or urging others to hang on were doing so on mood, impulse, and imagination.   We had one joker there who actually made the argument that he was investing in BBI because the analyst reports averaged 7 cents.   Amazing.  There were very few numbers attached to any of it.   I don't respect gamblers who can't calculate the gamble they are taking.   No one gets my respect for rolling random dice and then bragging after the fact about a lucky toss that they took with disadvantaged odds they could not even calculate.   And no one gets my congratulations for taking a 2-to-1 payoff bet on a 1-in-6 dice roll when they win that bet.   It was a bad bet to make even though you win it.

All of that is background to saying I don't think anyone who is holding BEPPA now is astute just because they are holding BEPPA now.   Show me the post where they calculated 21 cents in advance and the reason for it.


----------



## jacobkball (29 September 2009)

Hi persistentone,

Great post. I agree almost 100% with what you've said, and you've said it better than I could! 

The part I do disagree with is this:



> BB and I were among a handful of posters that made clear our aversion to the shares based on moderate upside against risk of total capital loss.



as BB was very clearly bullish on these shares, based on the information at the time, and the research that he'd done. Of course, we know the information and circumstances have changed a lot in a short time, which is why we are seeing the prices today.

I do agree 100% on this:



> There was not a reason that BEPPA should have risen to this price based on the facts we had a few weeks ago.



and I am bemused by the 21.5c high of BEPPA today. If anyone looked at it rationally, they'd be right to be very bearish on BBI/BEPPA, in my opinion.

All this means is that given the information available to the public on any given day, people are allowed to be bullish or bearish. It is those who don't actually have any investment in the shares, eg Largesse, who should just be ignored completely when making a buy or sell recommendation. If you're not backing up your call, either way, by actually following through, it's useless. Again, that's just my opinion 

I do appreciate the views put forward in this thread, as it improves my understanding of 'how things work'.


----------



## persistentone (29 September 2009)

jacobkball said:


> ...BB was very clearly bullish on these shares, based on the information at the time, and the research that he'd done. Of course, we know the information and circumstances have changed a lot in a short time, which is why we are seeing the prices today.




BB went from super-bull to super-bear literally the day it became clear the asset sale program had failed.   To his credit, he read the change in risk and reward correctly.

Yes, he lost on buying BEPPA at its bottom, but per my original post I didn't calculate a great risk/reward on that trade, and I wasn't clearly seeing others post real numbers to prove otherwise.

Now that the shares trade to 21 cents, I'm sure all of the bulls are claiming to be real heroes and saw it coming all along.     But I only give credit for numbers people publish before the event comes to pass.


----------



## banska bystrica (29 September 2009)

persistentone said:


> Yes, he lost on buying BEPPA at its bottom, but per my original post I didn't calculate a great risk/reward on that trade, and I wasn't clearly seeing others post real numbers to prove otherwise.




I bought BEPPA heavily on Christmas Eve at 8.5c and again in March at 5c (some as low as 4.8c) and kept swapping BBI for BEPPA at parity or within one cent of parity. So I did very well out of BEPPA.

I changed from super bull to super bear the day Corus reported in April (probable closure of Redcar steel plant) and then sold out completely the day they announced the asset sales program had failed (despite telling the market a few days prior that binding bids were expected on DBCT and PD Ports in one to two months).
The value in BBI/BEPPA to me was assets sales above book value to clear the corporate debt. Not a recap and massive dilution. The upside is now capped heavily which it wasn't before.

The price rise in BEPPA to 19.5c is a mystery and it is either arbs going long BEPPA and short BBI or it is insider trading (people who know what the deal is in detail).

I am with persistentone. If people want to claim they were geniuses that's fine but they only get a tick if they backed up the argument with factual evidence BEFORE the stock rose.

Remember a broken clock is correct twice a day.


----------



## persistentone (29 September 2009)

persistentone said:


> BB went from super-bull to super-bear literally the day it became clear the asset sale program had failed.   To his credit, he read the change in risk and reward correctly.
> 
> Yes, he lost on buying BEPPA at its bottom, but per my original post I didn't calculate a great risk/reward on that trade, and I wasn't clearly seeing others post real numbers to prove otherwise.




I should have said he lost on buying BEPPA at its most recent bottom.   Obviously BB did very well buying BEPPA at other lows in the last year.


----------



## drsmith (29 September 2009)

banska bystrica said:


> I bought BEPPA heavily on Christmas Eve at 8.5c and again in March at 5c (some as low as 4.8c) and kept swapping BBI for BEPPA at parity or within one cent of parity. So I did very well out of BEPPA.
> 
> I changed from super bull to super bear the day Corus reported in April (probable closure of Redcar steel plant) and then sold out completely the day they announced the asset sales program had failed (despite telling the market a few days prior that binding bids were expected on DBCT and PD Ports in one to two months).
> The value in BBI/BEPPA to me was assets sales above book value to clear the corporate debt. Not a recap and massive dilution. The upside is now capped heavily which it wasn't before.
> ...



Are you super bull or super bear or perhaps both ?

Below is another one of your now super bearish comments from July.



banska bystrica said:


> Administration is worst case scenario but in all honesty, it is not probable. In fact, why would they be put into administration? Look at BBP. A basket case really when compared to BBI and still the banks have elected to not go down the formal administration path.
> 
> BBI has never breached a debt covenant.
> BBI has never missed an interest payment to a bank.
> ...


----------



## banska bystrica (29 September 2009)

Well July comes before August good buddy...............................................................................................
Some people really have no idea.


----------



## drsmith (29 September 2009)

banska bystrica said:


> Well July comes before August good buddy...............................................................................................
> Some people really have no idea.



Yes, August was when you went super bearish and not April as you have suggested a few posts above.


----------



## Tysonboss1 (30 September 2009)

drsmith said:


> Yes, August was when you went super bearish and not April as you have suggested a few posts above.




I can remember BB posting some negative bearish comments when the corus news was announced. So don't try and pull apart his recent comments.


----------



## persistentone (30 September 2009)

I think today's announcement of a rejection of the RBS proposal is a brave and correct decision to make.   The RBS proposal was a debt for debt swap on extremely bad terms.    I think an outright public rejection was the correct negotiation step.   

Even though we have very little information about it, I suspect the cornerstone investor deal is selling our soul to a vampire that is going to drain us of assets.  I think people will be disappointed in the terms of that.   But we won't have certainty of that until we see the deal.  I'm guessing just based on my experience with other cornerstone investors, which suggests to me you can never be too pessimistic about such deals.   They are almost never structured to do anything nice for common shareholders.

I am disappointed that we still have no additional details on the cornerstone deal in today's release.   That's a bit outrageous to me.

In my heart I hope RBS comes back to the table with a better deal, which in my opinion must be an equity based deal not debt-based, and which must in some form positively deal with the conversion of hybrids to equity.

Without a permanent resolution to the hybrid issue, and without a permanent removal of corporate debt from the BBI balance sheet, we will never get this company fixed, nor will we see a *sustainable* advance in the BBI share price.


----------



## $$Punt$$ (1 October 2009)

Sydney Morning Herad today:
HITTING THE PHONES: BBI ACTIVATES BROOKFIELD SOLUTION


Babcock and Brown Infrastructure has activated what amounts to the largest of the market's recent recapitalisation deals. Its $1.5 billion plan will bring in Brookfield Asset Management of Canada as a cornerstone investor and allow it to repay its corporate debt.

Macquarie Capital and Credit Suisse hit the phones yesterday to tap institutions like QIC and Colonial First State for an underwritten placement of $600 million or so, which will be matched by Brookfield.

Because of the risks involved with BBI, the investment banks were also looking for sub-underwriters.

The idea is to have a complete solution to its financing problems ready to present to the market by Monday, with its banking syndicates also signing the deal, as occurred recently with Elders and AWB.

As part of the arrangement, Brookfield will also take direct stakes in some of BBI's assets, including the Dalrymple Bay coal terminal, at an overall 13 per cent discount to their current book value.

The institutions and Brookfield will pay the same price for the shares issued in the transaction, which will require shareholder approval. There were suggestions the issue price may be above the last closing price of 5.3c, based on a series of metrics other than current trading.

The reaction remains to be seen given that some fund managers have recently questioned the underlying quality of the assets.


----------



## drsmith (3 October 2009)

Tysonboss1 said:


> I can remember BB posting some negative bearish comments when the corus news was announced. So don't try and pull apart his recent comments.



To the best of my knowledge no one here has immunity from criticism when they are loose with the truth.


----------



## Tysonboss1 (3 October 2009)

drsmith said:


> To the best of my knowledge no one here has immunity from criticism when they are loose with the truth.




Thats right, even you.

You said that BB was lying when he said he was bearish back in april, But I can recall him making some very bearish statments in regards to the corus situation, So you were wrong to accuse him of lying.


----------



## drsmith (3 October 2009)

Tysonboss1 said:


> You said that BB was lying when he said he was bearish back in april, But I can recall him making some very bearish statments in regards to the corus situation, So you were wrong to accuse him of lying.



Re-read post 2364.

BB was defending BBI's corporate prospects as late as July.
BB claims he sold out completely the day after the Corus announcement when he infact maintained an interest in BEPPA till around the end of August (or so he says).


----------



## nathanblack (3 October 2009)

$$Punt$$ said:


> ...at an overall 13 per cent discount to their current book value.
> 
> ...the issue price may be above the last closing price of 5.3c, based on a series of metrics other than current trading.




seems like a very good outcome and not very vulture like. goodluck all. we will know more on Monday, but the ords should at the very least hold at current levels and the hybrids could do anything depending on exact details. Be interesting to see the biggest benefactors of recent Beppa buying.

Great to see BAM didnt want 90% control of BBI @1c a share.

Maybe the long term growth will be alot slower with so many shares on issue, but with less debt perhaps dividends will be reinstated in the future and capital growth will take a back seat.


----------



## banska bystrica (3 October 2009)

drsmith said:


> Re-read post 2364.
> 
> BB was defending BBI's corporate prospects as late as July.
> BB claims he sold out completely the day after the Corus announcement when he infact maintained an interest in BEPPA till around the end of August (or so he says).




I stated I sold out of BBI completely after Corus' bad news and I maintained my BEPPA position until very recently. Where is that loose with the truth?
You are just a compulsive stirrer who adds nothing to the forum.


----------



## drsmith (3 October 2009)

banska bystrica said:


> I stated I sold out of BBI completely after Corus' bad news and I maintained my BEPPA position until very recently.



Your own post (2362) which I have quoted in post 2364 reads quiet differently.

Also, your comment from July about PD Ports (which included Corus) which I have also quoted in post 2364 was not exactly super bearish in terms of BBI's overall corporate prospects.

With regard to the forum, what exactly does personal abuse add ?
I didn't get a chance to see it by the way.


----------



## nathanblack (3 October 2009)

drsmith said:


> Your own post (2362) which I have quoted in post 2364 reads quiet differently.






banska bystrica said:


> I changed from super bull to super bear the day Corus reported in April (probable closure of Redcar steel plant) and *then sold out completely the day they announced the asset sales program had failed* (despite telling the market a few days prior that binding bids were expected on DBCT and PD Ports in one to two months).




To be honest, if read in context BB sold BBI ords after Corus then *sold out completely(ie BEPPA too)* in August(when asset sales failed).

His post may not have been super bearish on BBI, but it was in the context that alot would need to go wrong for Beppa to be worthless. It did mention dilution being a concern to BBI ords.

But really who cares who bought what and when and if they held or sold, won or lost. Its a forum and meant to throw ideas around. You may trust/respect some views more than others, but in the end DYOR. If someone holds or not shouldnt detract from their opinions.

If Bill Gates came on here and talked up Computershare or MelbIT, i wouldnt care if he held or not because he knows what he is on about.

Anyway back to the topic...How do you think Beppa will be treated? i cant imagine them getting anywhere near $1cash or script because a return that substantial would be more significant than the cornerstone investor, and thats not on.

But how to cap it at less without violating the Beppa terms?


----------



## drsmith (4 October 2009)

nathanblack said:


> To be honest, if read in context BB sold BBI ords after Corus then *sold out completely(ie BEPPA too)* in August(when asset sales failed).



If in the highlighted part of BB's post you are referring to is from the debt refinancing announcement on September 4 then yes, I was wrong in my interpretation of that statement on when BB sold out completely.



nathanblack said:


> His post may not have been super bearish on BBI, but it was in the context that alot would need to go wrong for Beppa to be worthless. It did mention dilution being a concern to BBI ords.



In isolation there is a validity to what you are saying but there was also this the following day;



banska bystrica said:


> BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?
> 
> Convert every BEPPA held into 35c cash and 2 BBI securities.
> 
> ...



No reasonable person would dispute that BB has overall added much to the discussion and his comments on Corus, Euroports sale agreement and the calculated 6-month cashflow to June 30 have all been negative (as have mine on the last two) but on the two comments I have quoted alone he cannot reasonably claim a super bearish stance from April.


----------



## skc (5 October 2009)

drsmith said:


> No reasonable person would dispute that BB has overall added much to the discussion and his comments on Corus, Euroports sale agreement and the calculated 6-month cashflow to June 30 have all been negative (as have mine on the last two) but on the two comments I have quoted alone he cannot reasonably claim a super bearish stance from April.




Seriously Dr smith... you have spent the last few pages trying to pick apart BB's earlier posts? Why?

Do you simply have a passion for the truth (like Mulder in X-files)?

Are you seeking justice for those who did not DYOR and followed BB's less than 100% clear posting and lost money on BBI as a result? 

Or are you looking for a job as the writer for BB's memoire? 

I just feel this kind of discussion will inevitably lead to one or both parties being pi$$ed off and leave the forum for good - which many will hate to see.


----------



## nathanblack (5 October 2009)

drsmith said:


> ... but on the two comments I have quoted alone he cannot reasonably claim a super bearish stance from April.




I think alot of the confusion in this thread is due to people discussing BBI and BEPPA under one topic, and sometimes not identifying implicitly.

I guess the term 'super bearish' was too strong. but it was possible to see threats of dilution and further writedowns hurting BBI sp, so you are basically bearish on the sp at current levels. but BEPPA only needed BBI to survive to see a healthy payout in 2012, so still bullish on Beppa.

A "super bear' probably would have predicted this current mess earlier.

Some of the posts may have been overly optimistic in hindsight RE:Beppa, but in all honesty most holders including myself had higher hopes of a return. Nobody ever really gets the entry and exit 100% right. you map out in your head where you think things are going and a progress line to get their. But you constantly update that as news reveals itself.

I havent really seen anyone come on this thread and state that they lost vast amount of money due to anyones advice/opinion/analysis/etc, so its probably a non issue.

We still dont know what outcome will be instore for Beppa holders post cap raising. Is all lost? Was 20c a bargain? I doubt anyone other than BBI know the answers at this stage. maybe even they dont.


----------



## Albi (5 October 2009)

Is there any new news about BBI. I am holding it since a long time. I bought it at .170 and then again at 110. I bought it for long term. But If i have invested in some other stock I feel i wouldnot be in such a big loss.


----------



## w534220 (6 October 2009)

Given that BBI management/board were shown an alternative refinancing option that allowed them to roll over existing corporate level bank debt into a convertible bond(the RBS proposal), which would have allowed everyone junior (ie. hybrids and equity) to remain in place. And BBI mgmt/board refused this in favour of an absurdly value destructive re-floatation of the business(ie. Brookfield recap). i think all shareholders(including beppas) should reject the deal when given the chance to vote. 

in  fact , i don't know how they are going to get any beppa haircut agreed to when i believe it requires 75% vote to pass..


----------



## Jez (6 October 2009)

BBI is like the ugly daughter of Jeff Kendrew in a one night stand I woke up next to and was still snoring and on top of my left arm after my "Bucks night" party!

I have already cut my arm off without waking the slumbering giant and am getting on with life!

http://money.ninemsn.com.au/article.aspx?id=871200


----------



## skyQuake (6 October 2009)

banska bystrica said:


> The price rise in BEPPA to 19.5c is a mystery and it is either arbs going long BEPPA and short BBI or it is insider trading (people who know what the deal is in detail).




I would have thought a potential raising would be very positive for BEPPA, thus the recent run up. Any attempts to sell out BEPPA cheap would be hard fought imo


----------



## w534220 (6 October 2009)

Jez said:


> BBI is like the ugly daughter of Jeff Kendrew in a one night stand I woke up next to and was still snoring and on top of my left arm after my "Bucks night" party!
> 
> I have already cut my arm off without waking the slumbering giant and am getting on with life!




Hope the current management have been saving their $$'s because i doubt they will have a job much longer.    although i sense that is why the RBS proposal was rejected, because it proposed management changes. Brookfield will do the same thing though.     

Current management should be banned from having another job where they are responsible for other peoples money. the value destruction of this recap is absurd . and all the worse considering there was a credible alternative. 

you can tell the directors are scared, i see in the annual report that they took out extra directors insurance for criminal charges.

shareholders and beppas should reject the recap(there will have to be a vote) on principle(and for that matter on commercial grounds, they may still get more out of a wind-up of bbi)


----------



## Albi (6 October 2009)

Is there any chance that trading will open this week?  I am afraid it will not long like REU.  There is no hoping news in newspapers also. If any have please share it.


----------



## $$Punt$$ (6 October 2009)

Albi said:


> Is there any chance that trading will open this week?  I am afraid it will not long like REU.  There is no hoping news in newspapers also. If any have please share it.





Updated this arvo.....might open trading 2moro!!!

Oct. 6 (Bloomberg) -- Babcock & Brown Infrastructure Group plans to raise A$1.75 billion ($1.5 billion) selling stock and some assets to repay debt, said a person familiar with the plan. 

The owner of energy and transport assets in the U.S., the U.K. and Asia may announce details of the fundraising as early as Oct. 7, said the person, declining to be identified because the plans aren’t public. The company will sell A$850 million in stock, while an overseas investor will buy an equity stake and assets for an additional A$900 million, the person said. 

Babcock Infrastructure, which cut ties with asset manager Babcock & Brown Ltd. in August, said last month it probably won’t be able to repay some of its A$9.1 billion of debt through asset sales alone. The company halted its shares from trading Sept. 30 after a 52 percent slump this year, and said two days later it was in talks about a recapitalization. 

“You just don’t know what the company’s going to look like after this,” said Nathan Lead, an analyst at Wilson HTM Investment Group in Brisbane who has a “hold” rating on Babcock Infrastructure. “There is a place for this sort of fund -- I’m just not sure it’s in the listed markets. It’s too complex. Simplicity is what investors like.” 

Sydney-based Babcock Infrastructure will sell A$600 million of shares to institutional investors in a private placement, and offer A$250 million of stock to all shareholders, the person said. Credit Suisse Group AG and Macquarie Group Ltd. are underwriting the offering, the person said. 

Sale Process 

Babcock & Brown Ltd. said in February that it would sell all its assets to repay debt, wiping out shareholders after its strategy of buying ports and property on credit imploded. At its peak, Babcock had a market value of $7.8 billion. 

Brookfield Asset Management Inc., the Toronto-based company that runs the World Financial Center in New York, will invest A$600 million in return for a stake in Babcock Infrastructure, according to the Australian Financial Review, which reported the fundraising plans today. 

David Akers, a spokesman for Babcock Infrastructure, declined to comment. Paula Hannaford, a Macquarie spokeswoman, didn’t immediately return a voicemail seeking comment, nor did Credit Suisse’s media office in Hong Kong. Spokespeople for Brookfield didn’t reply to voicemails left at their office. 

Brookfield will also purchase 50 percent of the Dalrymple Bay Coal terminal from Babcock Infrastructure, and all of the PD Ports business in the U.K. for a combined A$300 million, the newspaper said. 

Babcock Infrastructure said Sept. 30 that a revised refinancing proposal from Royal Bank of Scotland Plc received on Sept. 17 wasn’t superior to an offer from a so-called cornerstone investor. 

To contact the reporters on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net; Sarah McDonald in Sydney at smcdonald23@bloomberg.net. 

Last Updated: October 6, 2009 03:26 EDT


----------



## jono1887 (7 October 2009)

Looks like it still hasn't opened yet...

-------------------------------------------------------------------------
October 7, 2009
BABCOCK & BROWN Infrastructure plans to sell its ailing British port business for a nominal price of $1 to help reduce the debt burden that the group faces at both corporate and asset level.

Details of the token payment are contained in the documentation that has been prepared for BBI's $1.5 billion recapitalisation, in which the Canadian group Brookfield Asset Management will become its new cornerstone investor.

Brookfield is set to take over the ownership of PD Ports from BBI as part of a program of asset sales designed to reduce as much as $10.3 billion of debt spread across the Australian group's operations.

As part of the nominal fee Brookfield will assume responsibility for $205 million of borrowings held by the port operation, the third largest by volume in Britain and based on the north-east coast of England.

The debt is among the most pressing of BBI's liabilities. The PD Ports element needs either re-financing or repaying by the end of this month. An earlier deadline of July 31 was extended following agreement between BBI and its lenders.

BBI has previously admitted that the amount will be ''challenging to refinance'', the money having to be found from either operating cash flows, the proceeds from asset sales or through the raising of additional capital.

The first option was in effect ruled out by a significant fall in its operational earnings, caused by a drop-off in freight traffic resulting from the recession in Britain. BBI had been trying to sell part or all of the port that it acquired four years ago, without success.

The group has since written down some of its investment in the business. It was part of an overall $985 million impairment charge struck in its 2009 accounts.

It is understood BBI will take a further hit on PD Ports in an additional round of $900 million worth of write-downs once the recapitalisation is completed.

As well as acquiring PD Ports, Brookfield will also buy a significant stake in BBI's Dalrymple Bay coal exporting terminal for $300 million.

The Canadian group will also contribute about $600 million in new equity towards the total of $1.5 billion of funding that BBI is looking to raise in the short term. It is now placing the remaining new stock with a group of institutional investors.

However, an announcement to the stockmarket is now not expected to be made until tomorrow, given the amount of paperwork involved. Existing shareholders are likely to be asked to chip in $250 million through a share purchase plan.

The unveiling of the recapitalisation plan will coincide with BBI changing its name to Prime Infrastructure Group, cutting one of the last remaining ties with its former parent, Babcock & Brown


----------



## drsmith (7 October 2009)

The Australian presented an article on Monday suggesting difficulties with the equity component.

http://www.theaustralian.news.com.au/business/story/0,28124,26165082-36418,00.html


----------



## $$Punt$$ (8 October 2009)

Canadians eye infrastructure assetsINSIDER
October 8, 2009 
Babcock and Brown Infrastructure hopes to unveil a long-awaited $1.75 billion recapitalisation deal as early as today after receiving sufficient backing for an institutional placement.

It seems some of the delays associated with the deal stemmed from the fact that Australian institutions were relatively unwilling to assist with the recapitalisation - their US counterparts were more open-minded.

In the end, Credit Suisse and Macquarie Capital have underwritten a $600 million or so institutional placement and $250 million share purchase plan.

Brookfield Asset Management will chip in at least $900 million to emerge as the new cornerstone investor with a 50 per cent stake in the Dalrymple Bay coal port in Queensland and all of PD Ports of Britain, although it may not have a majority of the company at a corporate level.

There are also suggestions Brookfield could receive a very cheap option covering the Australian Energy & Transmission Distribution portfolio BBI had gained through the ill-fated takeover of Alinta.

Initially, BBI had warned that the recapitalisation deal could lead to the conversion of all of its hybrid securities, which would leave little left for existing shareholders. However, there are suggestions a full conversion might be averted as part of the extremely complicated deal.

Brookfield is not the only large Canadian investor sniffing around Australian infrastructure assets.

Alberta Investment Management has told Canadian media it could announce one or two private equity deals - each worth about $C200 million - by the end of the year. One of the options is an infrastructure deal in Australia.

Canadian investors interested in Australia are looking beyond infrastructure. Commonwealth Bank this week issued $C300 million of so-called ''maple bonds'' in the Canadian market, which had been relatively dormant of late.

Toronto's Globe and Mail said the five-year notes carry a 3.625 per cent interest rate and the raising was upsized from an initial $C150 million target in light of strong demand.


----------



## skyQuake (8 October 2009)

BBI screwed, BEPPA laughing all the way to the bank! Expected 43c for beppa is quite generous and will prob be passed by the beppa holders.


----------



## skc (8 October 2009)

skyQuake said:


> BBI screwed, BEPPA laughing all the way to the bank! Expected 43c for beppa is quite generous and will prob be passed by the beppa holders.




That was unexpected. 43c including payment of accrued dividends...so EPS holders get 5x the recent low. Damn those insiders.

Love the way "Existing security holders who don't participate in the insto placement or SPP will have no ongoing material interest in BBI". This recap plan might as well be a listed bankruptcy...

So most small retail guys will have to hope the SPP offer them something in return of complete wipe out on existing holding. The table showed existing holder will have 0.0% to 0.1% after recap... subjected to rounding error I suppose.

The BEPPA holders will vote yes and pop the champagne. I guess the instos BBI holders (are there any left?) will vote yes. But the small retail guy would only vote yes if he feels like doing some good towards the BEPPA holders out of his own misery. 

If one held equal BBI to BEPPA they probably come away with minimal damage.


----------



## skyQuake (8 October 2009)

skc said:


> That was unexpected. 43c including payment of accrued dividends...so EPS holders get 5x the recent low. Damn those insiders.
> 
> Love the way "Existing security holders who don't participate in the insto placement or SPP will have no ongoing material interest in BBI". This recap plan might as well be a listed bankruptcy...
> 
> ...




Well they'll get 4c per BBI which is better than nothing 
Who knows, they might do well out of the SPP! 
...I can only wish them GOOD LUCK and hope you've learnt your lesson.


----------



## persistentone (8 October 2009)

All-in-all, that is the most fair recapitalization of a near-bankrupt company I have ever seen.  Some things stand out for me as evidence that this agreement was more than fair:

1) The BBI are diluted to nothing (as I predicted they would be), but they were then generous enough to make a special one-time payment to shareholders of 4 cents to avoid the appearance of a total wipeout.   They didn't need to do that, and the fact they did this shows good faith behavior that frankly is exceptionally rare in these kinds of situations.    

And now we all understand why the BBI shares refused to fall under 5 cents.   There was apparently massive insider trading on this very unusual deal point.   No one could have reasonably predicted this one time payout.   And mathematically you had to come to the conclusion that BBI would be completely wiped out, as in fact they were.   The trading to hold BBI price artificially high had to come from someone trading on insider knowledge of the one time payout.

2) The BEPPA payout includes paying off back-interest.   That's remarkable by itself and also shows very good faith in dealing with the BEPPA.

3) The BEPPA conversion was exceedingly generous.

4) BAM showed considerable generosity in not taking control of the company.   It's ordinary in these kind of vulture deals for the acquirer to take 51%+, which would have greatly increased the dilution.

The fact that BAM doesn't take control also tends to indicate that BBI will not get stripped of assets.

I'm surprised at the outcome.  It certainly isn't the deal I would expect based on experience with these situations, and it certainly isn't the deal described in the early afr article (maybe that article was a deliberate leak by someone to push shares down low?).


----------



## suhm (8 October 2009)

hmmm, i guess I was wrong, extremely fair deal, nothing at all like what I was expecting given management's track record and the precarious nature of their situation. I guess they had to do it or shareholders wouldn't have voted for the plan. Well done to those who held BEPPA, I don't think I would have been able to sleep that well if I had held.

I guess it also explains why BBI held up so well and why BEPPA nearly doubled even after the DBCT sale fell through.


----------



## boronia (8 October 2009)

suhm said:


> hmmm, i guess I was wrong, extremely fair deal, nothing at all like what I was expecting given management's track record and the precarious nature of their situation. I guess they had to do it or shareholders wouldn't have voted for the plan. Well done to those who held BEPPA, I don't think I would have been able to sleep that well if I had held.
> 
> I guess it also explains why BBI held up so well and why BEPPA nearly doubled even after the DBCT sale fell through.




I'm in the same position and agreed with this suhm,

Given that BB, HardYakka and Persistant One are the significant interpreters of BBI's complicated sturture, I don't suppose that they are around to interpret this strategy????


----------



## skyQuake (8 October 2009)

boronia said:


> I'm in the same position and agreed with this suhm,
> 
> Given that BB, HardYakka and Persistant One are the significant interpreters of BBI's complicated sturture, I don't suppose that they are around to interpret this strategy????




They're transforming it into a whole new company, the restructure is of such a large magnitude. All existing holders dumped and new holders are invited onboard. 
Imo its quite positive for BBI as they are no longer living day by day with doom hanging over their heads.


----------



## nathanblack (8 October 2009)

persistentone said:


> 1) The BBI are diluted to nothing (as I predicted they would be), but they were then generous enough to make a special one-time payment to shareholders of 4 cents to avoid the appearance of a total wipeout.   They didn't need to do that, and the fact they did this shows good faith behavior that frankly is exceptionally rare in these kinds of situations.
> \




they did it for the YES vote. diluted to nothing nobody would vote yes and they need the vote.

apart from the twist of div, you werent so far off the mark in the extent of dilution. but csi is much lower holder and beppa much higher.


----------



## Albi (8 October 2009)

Is anyone holding BBI? What are you going to do now? I am in heavy loss. Please advice me. Your advice will be much appreciated. My mind is not working.


----------



## JackJackJack (8 October 2009)

I bought BBI at $1.265 - so i am looking at a very nice loss 

At least I have learnt a few lessons and hopefully its tax deductible.


----------



## Julia (8 October 2009)

Albi said:


> Is anyone holding BBI? What are you going to do now? I am in heavy loss. Please advice me. Your advice will be much appreciated. My mind is not working.






JackJackJack said:


> I bought BBI at $1.265 - so i am looking at a very nice loss
> 
> At least I have learnt a few lessons and hopefully its tax deductible.




Albi and Jack, suggest you buy "Secrets for Profiting in Bull and Bear Markets" by Stan Weinstein and learn the basics of following price action in charts.Then you will be able to understand the principle of exiting a losing stock before your losses are as heavy as they apparently are.

Best not to feel too bad about it.  I reckon most of us wore some losses in the early days.  Just get $35 worth of education via above book and it won't happen again.


----------



## Jez (9 October 2009)

Julia said:


> Just get $35 worth of education via above book and it won't happen again.




That's just about as SPAM as SPAM gets these days! Is there any affiliation here?

Loses are part of the "game". Basically, if you are not on the Corporate Thieves list, then you are providing an interest free loan of your your taxed income to these thieves and it is usually paid back at a lesser amount or not at all!

That lesson is after the fact and provided by me free of charge!


----------



## banska bystrica (9 October 2009)

To be honest, I would not want to be there long term. BAM are not in this for anyone else. I would be worried about the non-restrictions on how many assets they can end up owning and remember they will control the Board for sure.
They will own 39.9% of all equity. That is not 50.1% but it's enough to decide what happens, when it happens and to whom it happens if you get my drift.

BEPPA holders have done slightly better than I predicted. Well done. $1 was never going to happen but 30-40c is a very good result considering VA was a near certainty.

BBI holders have been completely shafted, as I predicted. Shares worthless after dilution and 4c capital repayment. Anyone who paid above 4c has done their dough.
This BAM proposal is a poison pill disguised as an aspirin. The Australian has reported that BAM first approached BBI in June. Why wasn't this disclosed? They were also approached by RBS in April. Not disclosed. They also had three firm offers for 100% sale of DBCT. They now say they only wanted to sell 50% yet a short time ago, they announced they had engaged Macquarie Capital to sell up to 100%. They have been stringing everyone along for quite some time, knowing that they were in bed with BAM.
ASIC need to raid every BBI directors' premises and confiscate all paperwork and computer hard drives. I smell a rat and there was also very fishy activity in BEPPA securities recently. From 7c to 20c in quick time and now BEPPA end up with circa 30c-40c depending on future trading prices of new BBI and how many SPARCS convert.


----------



## Tysonboss1 (9 October 2009)

So am I right in thinking that under this deal beppa holders will get $0.06 cash and 9 BBI shares / Beppa share held.


----------



## beaver1024 (9 October 2009)

Hi Guys,

I have a few questions about this new deal, if someone could provide some insight that would be greatly appreciated.

1) For an ordinary BBI security holder, when will the one off payment of 4c/share occur? The announcement seems to indicate before BEPPA and SPARCS conversion? When exactly will that be?

2) After the payment occurs, what happens to ordinary BBI shares? Do they cease to exist? Do they get converted into the new securities that BBI is rolling out? What is the conversion ratio?

3) As the shares are currently under suspension, when will we be able to trade them again?


----------



## vinniesn (9 October 2009)

beaver1024 said:


> Hi Guys,
> 
> I have a few questions about this new deal, if someone could provide some insight that would be greatly appreciated.
> 
> ...





I can't confirm, but in brief it seems like no more trade, and you will lose all the bbi shares for 4cents per share(no tax for capital return) and you get a chance to participate in SPP for 15k worth at 1.8cents/share. It doesn't matter you hold 1 shares or 10millions shares now, you can buy only 15k worth shares at 1.8cents. This company will be traded in ASX with new code PIS after  recapitalisation and possible restructure. There will be restructure in shares, probably at 100:1 or 1000:1 (someone mentioned 10000:1).


----------



## skyQuake (9 October 2009)

vinniesn said:


> I can't confirm, but in brief it seems like no more trade, and you will lose all the bbi shares for 4cents per share(no tax for capital return) and you get a chance to participate in SPP for 15k worth at 1.8cents/share. It doesn't matter you hold 1 shares or 10millions shares now, you can buy only 15k worth shares at 1.8cents. This company will be traded in ASX with new code PIS after  recapitalisation and possible restructure. There will be restructure in shares, probably at 100:1 or 1000:1 (someone mentioned 10000:1).




Yah, you lose all your BBI for 4c each.
Where did you get the 1.8c figure from? I thought that would be determined by bookbuild.


----------



## oilman (9 October 2009)

skyQuake said:


> Yah, you lose all your BBI for 4c each.
> Where did you get the 1.8c figure from? I thought that would be determined by bookbuild.




The prospectus quotes "Offer Price range will be $5.08 to $10.12 per parcel of 15,000 Securities". If this is the case then 0.03-0.07cent/share. So for current BBI holders, 4cent/share payment is essentially what they will get. Their shares will worth 0.03-0.07cent/share after that based on the capital raising.

To be able to get 4cent/share out of whatever you paid for the securities is miserably lucky in comparison to the alternative of going administratorship (which almost certainly of getting nothing and probably wait for long time to know the outcome). I believe BBI shareholders will have no better choice but voting yes to the restructure.

Looking forward, after this redone, I hope the new structure, new board with representatives from Brookfield and institutional investors would change this trust to a better phase. As a small miserable holder of BBI, I believe I should hang on with the SPP and look at it as a long term investment.


----------



## vinniesn (9 October 2009)

oilman said:


> The prospectus quotes "Offer Price range will be $5.08 to $10.12 per parcel of 15,000 Securities". If this is the case then 0.03-0.07cent/share. So for current BBI holders, 4cent/share payment is essentially what they will get. Their shares will worth 0.03-0.07cent/share after that based on the capital raising.




Are you suggesting current BBI share holders will keep all the shares in new PIG? I hope you are right. If it is true and trade start again on tuesday (as someone suggest on other site), BBI will make little gain (1 to 3 cents up from current SP) and will drop again after ex-div. Otherwise, people will sell at 4 or little less near 4.

First, someone please confirm what will happen to existing BBI shares after 4cents div paid? Will they keep all holding in new company PIG or it is going to be ceased.


----------



## skyQuake (9 October 2009)

vinniesn said:


> Are you suggesting current BBI share holders will keep all the shares in new PIG? I hope you are right. If it is true and trade start again on tuesday (as someone suggest on other site), BBI will make little gain (1 to 3 cents up from current SP) and will drop again after ex-div. Otherwise, people will sell at 4 or little less near 4.
> 
> First, someone please confirm what will happen to existing BBI shares after 4cents div paid? Will they keep all holding in new company PIG or it is going to be ceased.




It will simple cease.

In the offer doc is stated that those who do not participate in the SPP have no further economic interest in BBI.
So you get your 4c and thats it.


----------



## Albi (9 October 2009)

Can any one explain to me please please.  Things are not coming in my mind.
Can I sell my shares as the trading open as well as take devidend also?
or Can i take only one option?
If I want to take SPP that I am thinking do my shares automatically convert in new?
Or I need to sell first my old BBI shares and then can apply?

I am  thinking to take spp with optimistic hope that in future  it will cover my loss.  I have been holding it for long term.

Please advice me. 
Thanks in advance


----------



## JackJackJack (9 October 2009)

Ok so good old BBI give me 4c a share and then say goodbye - so nice of them 

Can anyone tell me if this is a capital loss that will offset capital gains this financial year?


----------



## skyQuake (9 October 2009)

Albi said:


> Can any one explain to me please please.  Things are not coming in my mind.



Can I sell my shares as the trading open as well as take devidend also?
or Can i take only one option?
There is no selling option, You will get your 4c/share
If I want to take SPP that I am thinking do my shares automatically convert in new?
The SPP is of the new shares. Its effectively an IPO for the new BBI. 
Or I need to sell first my old BBI shares and then can apply?

I am  thinking to take spp with optimistic hope that in future  it will cover my loss.  I have been holding it for long term.
Doubtful but one can always hope. But don't let your hope cloud your trading decisions.
Please advice me. 

Good luck


----------



## drsmith (9 October 2009)

This is what I've worked out from the following statement,

http://www.asx.com.au/asxpdf/20091008/pdf/31l6zg6lq6hvr4.pdf

BBI holders get $0.04 capital return per security and then for all effective purposes the boot. They can however subscribe for new units in the recapitalised entity.

BEPPA holders get about $0.06 in deferred dividends per security plus an economic interest in total representing about 16% of the recapitalised entity.

All in all it strikes me as awfuly complex and will be interesting to see what the recapitalised securities trade at assuming a successful conclusion.



skyQuake said:


> Good luck



+1


----------



## beaver1024 (9 October 2009)

I'm still a bit confused. It says that EPS and SPARCS can convert to ordinary BBI but if they do they won't get any money from the capital payout. Does this imply that ordinary BBI will still be tradable after capital payout?

If not why would anyone want to convert to ordinary BBI? Additionally it says that EPS (BEPPA) will get direct cash dstributions of 0.042c/share. Where does the rest of the 43c/BEPPA come from? Value of converted shares?? Or do EPS get shares in the new entity?


----------



## Tysonboss1 (9 October 2009)

skyQuake said:


> Yah, you lose all your BBI for 4c each.
> Where did you get the 1.8c figure from? I thought that would be determined by bookbuild.




thats not true,

existing BBI shares will still exist after they have been paid 4c, They will however be diluted so that the total current BBI shares on issue will only represent an ownership in the new entity of about 0.1%,


----------



## drsmith (9 October 2009)

beaver1024 said:


> I'm still a bit confused. It says that EPS and SPARCS can convert to ordinary BBI but if they do they won't get any money from the capital payout. Does this imply that ordinary BBI will still be tradable after capital payout?
> 
> If not why would anyone want to convert to ordinary BBI? Additionally it says that EPS (BEPPA) will get direct cash dstributions of 0.042c/share. Where does the rest of the 43c/BEPPA come from? Value of converted shares?? Or do EPS get shares in the new entity?



BEPPA holders will not get the capital distribution of $0.04 per unit that BBI holders get. They will however get ~$0.06 per unit in deferred dividends. Value over and above this will be the equity value of their 16% stake in the recapitalised company.

The $0.041/$0.042 is only in relation to the price at which BEPPA will convert to BBI. Note however that the $0.04 capital distribution payable to BBI holders will be deducted resulting in a BEPPA conversion price of between $0.001 and $0.002.


----------



## skyQuake (9 October 2009)

Tysonboss1 said:


> thats not true,
> 
> existing BBI shares will still exist after they have been paid 4c, They will however be diluted so that the total current BBI shares on issue will only represent an onwership in the new entity of about 0.1%,




Yeh, but it'll be worth $0.0004 to $0.0008/share.
Existing holders will get about 0~0.1% = $1~2Mil in total.


----------



## oilman (9 October 2009)

The prospectus should answer many of your questions here. I guess you should spend some time reading it as it concerns your investment wherether small or large.

From what I could understand, the total existing BBI shares (currently worth $157million) will be worth 1-2 million after the payment of 4cents/share. So if you have 100,000 shares which is currently worth $5,300 as per last closing price, you will get $4,000 in the cheque and those 100,000 shares will be then worth $30-70 base on the price of the SPP. So for many with small amount of shares say 100,000 or less, if you don't take SPP, holding shares worth less than $100 is in fact a cost to the company. For example, they have to send you several mails a year in important events. Many company would want to purge small investor like that. 

There is no clear indication what they will do with those small investors who decide not to go for SPP but purging them out would sound like a normal thing many company would do. Wherether you will get a small cheque or just simply forget about it is what I am not sure about. This particular SPP is effectively an IPO for the new trust but giving prefered chance to all existing BBI holders to participate. Brookfield indicated that they will have $87.5 million ready to buy the SPP that existing BBI holders don't want (any short fall). Brookfield and institutional investors are obviously interested in the new chapter of BBI.


----------



## Tysonboss1 (9 October 2009)

drsmith said:


> The $0.041/$0.042 is only in relation to the price at which BEPPA will convert to BBI. Note however that the $0.04 capital distribution payable to BBI holders will be deducted resulting in a BEPPA conversion price of between $0.001 and $0.002.




So they have said beppa will get approx $0.43 off value, 6 cents in the form of a cash payment.

This means that there is still 37cents of value to be converted.

Are you saying that beppa holders will receive 37cents of shares at $0.002 cents each?


----------



## drsmith (9 October 2009)

Tysonboss1 said:


> So they have said beppa will get approx $0.43 off value, 6 cents in the form of a cash payment.
> 
> This means that there is still 37cents of value to be converted.
> 
> Are you saying that beppa holders will receive 37cents of shares at $0.002 cents each?



I'm not sure how they have arrived at $0.43 per BEPPA ($333m in total value).

One simplistic possibility is that they have valued the 84% of the recapitalised entity at $1.5b (equity raising) which would then give a valuation of $286m on the remaining 16% that BEPPA holders get. Add $48m for the deferred dividends and you get $334m in total.

This would imply a a valuation on the recapitalised entity of ~$1.8b but it remains to be seen as to what the market values it at. At that level you would get ~37 cents worth of shares for each BEPPA.

I've calculated the cash payment to be 6.2 cents by multiplying $0.43 by 48/333.


----------



## Tysonboss1 (9 October 2009)

Tysonboss1 said:


> So am I right in thinking that under this deal beppa holders will get $0.06 cash and 9 BBI shares / Beppa share held.




If Beppa are being converted at $0.001 it's going to mean Beppa holders end up with Millions of shares even from small holdings.

If this new company does well, the Beppa holders should see some really good growth. By my rough calculations ( and they are very rough ) This deal could work out far better for Beppa Holders than $1 in 2012.

I would love to see some thoughts on the deal from hardyakka or BB.

at the moment I have 150,000 beppa, If they are converted at $0.001 it would mean I would have over 55,000,000 shares in the new Prime Infrastructure, every 0.001 upward movement means I would be earning $55,000. surly I am missing somthing here.


----------



## banska bystrica (9 October 2009)

Tysonboss1 said:


> If Beppa are being converted at $0.001 it's going to mean Beppa holders end up with Millions of shares even from small holdings.
> 
> If this new company does well, the Beppa holders should see some really good growth. By my rough calculations ( and they are very rough ) This deal could work out far better for Beppa Holders than $1 in 2012.
> 
> ...




Remember they will be consolidated at 1:15,000 so your 55,000,000 BBI's will become 3,667 new BBI's.


----------



## Tysonboss1 (9 October 2009)

banska bystrica said:


> Remember they will be consolidated at 1:15,000 so your 55,000,000 BBI's will become 3,667 new BBI's.




Any idea what the value of the consolidated shares would be?, I am just after a ball park figure.

I am going to read all the docs over the week end, I tried last night, but my eyes got too heavy.


----------



## nathanblack (9 October 2009)

Tysonboss1 said:


> Any idea what the value of the consolidated shares would be?, I am just after a ball park figure.
> 
> I am going to read all the docs over the week end, I tried last night, but my eyes got too heavy.




the SPP(and insto/csi) are paying $5-$10 for 15,000 shares. so once consolidated on a 15,000:1 basis they will trade in that range. about $5/share

the chances of doubling your $55k is unlikely. i understand if they went from 0.1c to 0.2c thats what would haapen and its only 1 tick on bidding, but look at AUZ they virtually never trade. nobody wants to sell under .2c and nobody will buy more than .1c. its about liquidity.

after consolidation, liquidity will be less concerning, but you no longer have 1tick of movement for 100% gain.

cheers.


----------



## oilman (9 October 2009)

I am reading the prospectus again to understand how EPS holders are going to benefit from post restructure. If EPS holders make a big wind fall, they definitely take profit right after the shares open to trade. If that happens, one rather buys in the new BBI shares at market price which potentially lower than "IPO" price.


----------



## nathanblack (9 October 2009)

oilman said:


> I am reading the prospectus again to understand how EPS holders are going to benefit from post restructure. If EPS holders make a big wind fall, they definitely take profit right after the shares open to trade. If that happens, one rather buys in the new BBI shares at market price which potentially lower than "IPO" price.




Are you saying if Beppa started trading again tomorow and you could get say 35c (with an implied value of 43c), you could sell, then wait for the SPP, and consolidation, then hopefully sp falls and you buy in with proceeds?


----------



## oilman (9 October 2009)

nathanblack said:


> Are you saying if Beppa started trading again tomorow and you could get say 35c (with an implied value of 43c), you could sell, then wait for the SPP, and consolidation, then hopefully sp falls and you buy in with proceeds?




No, I don't know if BBI or Beppa will be traded again before all these sorted out. I, however, assume no trading happen and if that's true then Beppa worth 43 cents while last trading is only 19.5 cents. Many of these holders would sell their shares post restructure to take profit. I assume price will drop below the SPP price. If that happens, you would rather wait till then to buy than pay the monies for the SPP. Taking SPP could potentially be a second mistake for those who bought BBI above 4 cents/share.


----------



## $$Punt$$ (10 October 2009)

Is this report true??? Trading recommence on Monday,see last para.

Bid for bigger payout endangers BBI futureINFRASTRUCTURE DANNY JOHN AND JAMIE FREED
October 10, 2009 
THE $1.8 billion move to secure the future of Babcock & Brown Infrastructure faces a threat from its hybrid security holders who believe they might receive a greater payout if the group goes into liquidation than through their entitlements under the recapitalisation plan.

With BBI's board saying that the group could be placed into administration if the refinancing proposal is voted down, the Australian noteholders are considering whether a rejection could produce a 27c-a-security better return than currently proposed.

An initial investigation of the plan by investors has indicated that while BBI will pay the noteholders a total of 43c a security, the liquidation of the old Alinta energy assets, over which the noteholders would have access, could produce 70c a security.

The assets - which include interests in the Victorian energy distributor Multinet, WAGas Networks, the Dampier to Bunbury gas pipeline and the Tasmanian gas pipeline - were said by investors to be worth $2.6 billion.

BBI has $2.1 billion of debt tied to the assets, which would need to be extinguished by paying back the banks in full.

According to one unnamed institutional investor, once the assets were sold, that would leave $544 million of value in BBI EPS Limited, the group company through which the noteholders' interests are contained.

That is equivalent to a 70c-a-security payout compared to the 37c-a-security capital return plus an additional 6c interest payment, making a total of $333 million that BBI has suggested.

However, holders of the securities still have to work out whether BBI as a group would have any rights over such a sum through cross guarantees, or if a third party has some security once the banks are paid out but before the noteholders get entitlements.

There is also some doubt as to whether the value of the assets will hold up in the current market.

BBI paid $1.59 billion for the Australian Energy Distribution & Transmission assets as part of the complex Alinta takeover in 2007. In the recapitalisation prospectus it took a $680 million impairment on the assets, on top of $232 million of write-downs in August. It said the assets were worth less than the debt against them.

BBI's new cornerstone investor, Brookfield Asset Management, has been given an option to acquire the Alinta assets for $1 and will receive $5 million a year in fees in return for assuming management control of the assets under the recapitalisation deal.

If approved, that will give Brookfield - which could end up with as much as 40 per cent of BBI - control over a substantial amount of its assets. For a total investment of just over $1.2 billion, it will get 49.9 per cent of the giant Dalrymple Bay Coal Terminal and 100 per cent control of its British ports business, PD Ports, for effectively nothing.

Analysts said that by knocking back the deal, the noteholders and shareholders would risk losing what they had been guaranteed by BBI.

''This is likely to be as good as can be expected given BBI's admission that it would likely default under its [$300 million] debt maturities in early 2010,'' Deutsche Bank's Cameron McDonald said in a note to clients yesterday.

In the meantime, BBI said its shares - currently suspended at 5.3c - would resume trading on Monday.


----------



## roland (10 October 2009)

I'll be voting no to the recap, $0.04 is close to nothing. I would rather see BBI and the Management disappear, than to see them run off with my $$'s and start up again.


----------



## persistentone (10 October 2009)

$$Punt$$ said:


> Is this report true??? Trading recommence on Monday,see last para.
> 
> Bid for bigger payout endangers BBI futureINFRASTRUCTURE DANNY JOHN AND JAMIE FREED
> October 10, 2009
> ...




BB or anyone else:  Does BEPPA have asset-level claims on Alinta's gas networks?   Wow, how did I ever miss that one?!


----------



## JackJackJack (10 October 2009)

roland said:


> I'll be voting no to the recap, $0.04 is close to nothing. I would rather see BBI and the Management disappear, than to see them run off with my $$'s and start up again.




Here Here! 
Bunch of swindlers should be locked up - not allowed to get away with blatant robbery and prosper.


----------



## drsmith (10 October 2009)

This is what I said about the directors in July.



drsmith said:


> With regard to the directors objectives let's not forget that this was born in the Babcock and Brown stable of irrational exuberance. The directors will first of all look after their own pay packets and will hop into bed with the lenders at unitholder expense if necessary to keep their jobs.
> 
> One need look no further than Centro as an example of this. It's still alive but the banks are hoovering up all the cash flow and shareholders have been very heavily diluted. Babcock and Brown's directors also managed to keep their jobs as part of their formal administration IIRC.



It wasn't with the banks in the end but the net results for unitholders is about the same.


----------



## $$Punt$$ (10 October 2009)

Any opinion about the BBI share price should it re-opens on trading on monday as mentioned in the newspaper? Do you reckon it will open between 3.5 - 4.5 cents given that purchaser are still entitled to the 4 cents capital distribution but not the SPP for Prime Infrastructure? Who in the right frame of mind would want to purchase the SP above 4 cents given the massive dilution after recapitalisation?


----------



## nathanblack (10 October 2009)

3.2c-4.2c

a dicount for risk of deal falling through.
a premium of counter offer, very unlikely.

what volumes will we see? nobody willing to sell below 4c and nobody wanting to pay 4c or above.


----------



## drsmith (10 October 2009)

If BBI do resume trading on Monday it will be without the SPP rights as the record date for these was October 8.

The Key Dates on page 6 of the PDS mentions no ex entitlement trading date for the BBI capital distribution/BEPPA dividend however there is a record date for both (Nov 16). There is also no mention of a final trading date for either BBI or BEPPA in their present form. The new securities trading date is Nov 24 which is after the security consolidation.

Unless it has been clearly stated otherwise elsewhere I would take this to mean that BBI and BEPPA will not commence trading on Monday and that there will be no trading prior to listing of the new securities on Nov 24. To do otherwise would require clarification of the above points perhaps through a supplimentary PDS.

With regard to the equity that BEPPA holders get I note that this is dependant on the level of SPARCS conversion. In coming up with $284m-$285m the directors have taken the most optimistic scenario (no SPARCS conversion).

Page 25 of the PDS notes that there are $NZ119m in outstanding SPARCS on issue (~$97m) so if all were converted the equity left for BEPPA holders would be $187m or about 10% of the recapitalised entity. The extent to which this is realisable will depend on the market price of the recapitalised BBI from Nov 24.


----------



## banska bystrica (10 October 2009)

drsmith said:


> With regard to the equity that BEPPA holders get I note that this is dependent on the level of SPARCS conversion. In coming up with $284m-$285m the directors have taken the most optimistic scenario (no SPARCS conversion).
> 
> Page 25 of the PDS notes that there are $NZ119m in outstanding SPARCS on issue (~$97m) so if all were converted the equity left for BEPPA holders would be $187m or about 10% of the recapitalised entity. The extent to which this is realisable will depend on the market price of the recapitalised BBI from Nov 24.




Correct. 43c value quoted by BBI directors is assuming NO SPARCS conversion. If SPARCS convert (and I think most will) then the implied value of BEPPA reduces to circa 25c and that also assumes that the market buys this BAM murder and is prepared to value the entire entity at 8.7X 2010 EBITDA. Lots of ifs and maybes before BEPPA actually see 43c in cash.
It is very dependant on final market prices.


----------



## boronia (11 October 2009)

banska bystrica said:


> Correct. 43c value quoted by BBI directors is assuming NO SPARCS conversion. If SPARCS convert (and I think most will) then the implied value of BEPPA reduces to circa 25c and that also assumes that the market buys this BAM murder and is prepared to value the entire entity at 8.7X 2010 EBITDA. Lots of ifs and maybes before BEPPA actually see 43c in cash.
> It is very dependant on final market prices.




BB, given that SPARCS has an oustanding $97 million and BEPPA has a face value of about $779 million how come there is such a massive reduction in BEPPA value (42c - 25c) if all SPARCS convert on 17 November 09??


----------



## nathanblack (11 October 2009)

boronia said:


> BB, given that SPARCS has an oustanding $97 million and BEPPA has a face value of about $779 million how come there is such a massive reduction in BEPPA value (42c - 25c) if all SPARCS convert on 17 November 09??




$100mil @0.1c = 100bil new shares

Beppa and SPARCS will own 16% of final company. Thats set in concrete. BAM,insto and SPP will need to be issued with more shares to keep BEPPA/SPARCS=16%

16% of $1.8bil is= $288mil.

$288mil/779=37c + 6c dividend = 43c

From the $288mil if all sparcs convert it would be split 97/(97+779)=11% to sparcs and 89% for beppa.

ie sparcs get 31.7mil (0.11*288) and Beppa 256.3mil(0.89*288). On a per share basis i would say Beppa got 256.3/779=33c + 6c div

Maybe im missing something. Do SPARCS convert at a different ratio perhaps?


----------



## drsmith (11 October 2009)

nathanblack said:


> From the $288mil if all sparcs convert it would be split 97/(97+779)=11% to sparcs and 89% for beppa.
> 
> ie sparcs get 31.7mil (0.11*288) and Beppa 256.3mil(0.89*288). On a per share basis i would say Beppa got 256.3/779=33c + 6c div



The above calculations would only be right if SPARCS holders are being asked to take a haircut on their face value to the same extent as BEPPA.

I'm not absolutely sure but I don't think thats the case. At face value and full conversion it would be 97 for SPARCS and ~187 for BEPPA.


----------



## banska bystrica (12 October 2009)

http://www.asx.com.au/products/pdf/ASX_Complaint_Form.rtf

Download the above form and send it the address show at ASX. They have to act on it and if they deem necessary, refer it to ASIC. As you say, nothing will happen, but I know at least 12 complaints have been lodged.

I lodged one with accompanying letter about insider trading and also a seperate one about non-disclosure by the BBI board.


----------



## investorpaul (12 October 2009)

banska bystrica said:


> http://www.asx.com.au/products/pdf/ASX_Complaint_Form.rtf
> 
> Download the above form and send it the address show at ASX. They have to act on it and if they deem necessary, refer it to ASIC. As you say, nothing will happen, but I know at least 12 complaints have been lodged.
> 
> I lodged one with accompanying letter about insider trading and also a seperate one about non-disclosure by the BBI board.




Im going to do it over the weekend, Ill dig up there past announcements, media articles and anything that has come from the company since i purchased and look for every mistake and contradiction possible.

There is a MASSIVE case of non disclosure in my opinion and someone needs to lose their job at a minimum


----------



## persistentone (12 October 2009)

Guys, does BEPPA have asset-level claims on any BBI asset or not?   The rumored objection from Lowry suggests they do.

The release today from the Grant Samuel's "independent" third party examiner says nothing on this very key issue, and in fact the review does make the claim that "...if the Recapitalisation...did not proceed and BBI consequently entered some form of insolvency administration, it appears likely that holders of EPS would receive no value...."

This suggests to me at very least that the issue of asset-level claims might need to be waged in court (a dicey proposition if the EPS charter doesn't have clear words on this issue).


----------



## Tysonboss1 (12 October 2009)

I just sold 50% of my holding for 37c, this deal is just to complex for me to understand so I thought it better to take some money of the table at 37c cash rather than the 6c + stock deal.

All in all it's a good profit up from 8.9c, But this deal had a chance of giving me sleepless nights, and I need my sleep.


----------



## persistentone (12 October 2009)

I always wondered why SPARCS was trading so much higher than 20 cents on the dollar while EPS languished near 10 cents.   The recap proposal review by Grant Samuel is stating that SPARCS have a good chance of realizing *par face value*!  

Around September 1st, SPARCS jumped in value from around 30 cents on the dollar to near 55 cents on the dollar.   How could this not be insider trading on these key facts of the recap?

And how did the market know that SPARCS would realize more value than BEPPA in the first place?

At very least it looks like the information around these deals is leaking out to the market weeks and months before retail buyers have access to it.


----------



## persistentone (12 October 2009)

Tysonboss1 said:


> I just sold 50% of my holding for 37c, this deal is just to complex for me to understand so I thought it better to take some money of the table at 37c cash rather than the 6c + stock deal.
> 
> All in all it's a good profit up from 8.9c, But this deal had a chance of giving me sleepless nights, and I need my sleep.




No one can blame you for taking 95% of your gain with so much uncertainty ahead.   I'm actually quite confused why it is trading so close to the actual value EPS would realize after SPARCs converts.   The market seems to be giving a zero risk premium, which seems very wrong.

BEPPA actually opened at 41 cents!!!  That is absolutely crazy nonsense.   The securities cannot realize 41 cents if SPARCS converts, which they certainly would.


----------



## persistentone (12 October 2009)

I'm reading the detail of the recap proposal, and two of the lines in this are outrageous:

* We are selling 49.9% of DBCT for $295M AUD.   Say again?   How is this a fair outcome for BBI shareholders?    They could have accepted any of the three DBCT asset purchase offers they received and probably have gotten a better result than this?!

* Brookfield will provide "management services" (comment: read that as a free dividend for showing up to occasional board meetings) and will "...have the right to acquire BBI's interest in these assets for nominal proceeds."  They don't even tell us what the amounts of money involved are.    So we are giving away a natural gas pipeline network for pennies on the dollar?

Finally, I found a hidden gem in the Samuel fairness review that acknowledges that the recap proposal would remove BEPPA claims on the Alinta asset.   So hidden there in the details of the review is an indirect admission that BEPPA has asset level claims on Alinta, a scenario they conveniently fail to analyze in their fairness review!   How can any BEPPA holder view that as anything less than theft in broad daylight.

No one should be happy with this deal.    The above is totally unacceptable.   I would certainly understand why some shareholders would vote for administration, even if it made the result less certain.


----------



## w534220 (12 October 2009)

they must have taken Grant Samuel for some serious exotic entertainment for that report!

no wonder the directors recently  took out insurance for criminal charges.  ha but they can't tell us how much the premium was!?


----------



## persistentone (12 October 2009)

persistentone said:


> I'm reading the detail of the recap proposal, and two of the lines in this are outrageous:
> 
> * We are selling 49.9% of DBCT for $295M AUD.   Say again?   How is this a fair outcome for BBI shareholders?    They could have accepted any of the three DBCT asset purchase offers they received and probably have gotten a better result than this?!




Okay, thought about this some more.   Is this a net asset sale, and they are assuming 49.9% of the debt?


----------



## w534220 (12 October 2009)

persistentone said:


> Okay, thought about this some more.   Is this a net asset sale, and they are assuming 49.9% of the debt?




no they are selling 49.9% of the equity . but really they are giving it all away because Brookfield are buying a convertible , that is convertible into the other half of DBCT. so Prime does not get to benefit from upside in value of DBCT.   ie. Brookfield gets all the upside in DBCT. 

this recap deal would be almost acceptable if 100% assets were kept in BBI/Prime. but because some are being partly offloaded to Brookfield on very generous terms. there is just so much value transfer out at the bottom of the market...


----------



## jono1887 (12 October 2009)

why has the price of BBI reached 0.056 on opening this morning and why is the price still floating above 0.045 when they are essentially only worth 4c each after the recapitalization..


----------



## banska bystrica (12 October 2009)

Probably BAM or instos in on the placement buying voting rights so as to secure the deal. 

Broker trading activity reports show that the big buyer of BEPPA from 7c to 19c was CS First Boston, a large institutional broker.


----------



## persistentone (12 October 2009)

banska bystrica said:


> Probably BAM or instos in on the placement buying voting rights so as to secure the deal.
> 
> Broker trading activity reports show that the big buyer of BEPPA from 7c to 19c was CS First Boston, a large institutional broker.




Where are you able to examine the BEPPA trading reports?

Does CS First Boston have a direct brokerage presence in Australia?  Wouldn't they normally hide their activity by purchasing through a large custodian like Citibank?

That has to be insider trading.


----------



## persistentone (12 October 2009)

w534220 said:


> no they are selling 49.9% of the equity . but really they are giving it all away because Brookfield are buying a convertible , that is convertible into the other half of DBCT. so Prime does not get to benefit from upside in value of DBCT.   ie. Brookfield gets all the upside in DBCT.
> 
> this recap deal would be almost acceptable if 100% assets were kept in BBI/Prime. but because some are being partly offloaded to Brookfield on very generous terms. there is just so much value transfer out at the bottom of the market...




What page of the press release is the convertible on?   What are the terms of that convertible?  

Pretty outrageous.


----------



## w534220 (12 October 2009)

persistentone said:


> What page of the press release is the convertible on?   What are the terms of that convertible?
> 
> Pretty outrageous.




page 133 of the prospectus

The Cornerstone Investor will subscribe for convertible notes to be issued by BBIT (Convertible Notes). The Convertible
Notes are convertible into 49.9% (as may be adjusted under the Convertible Note terms and Voting Agreement (as defined
below)) (Applicable Percentage) of shares, units and related intercompany loans in and with respect to certain entities
which conduct the Dalrymple Bay Coal Terminal business (DBCT Entities). BBIT and the Cornerstone Investor will also enter
into a swap agreement which entitles the Cornerstone Investor to 49.9% of the cash flows (other than certain excluded
amounts) generated by DBCT in return for fixed payments in an amount equal to the interest chargeable on the Convertible
Note (Swap Agreement).
....


----------



## w534220 (12 October 2009)

w534220 said:


> page 133 of the prospectus
> 
> The Cornerstone Investor will subscribe for convertible notes to be issued by BBIT (Convertible Notes). The Convertible
> Notes are convertible into 49.9% (as may be adjusted under the Convertible Note terms and Voting Agreement (as defined
> ...




actually that is the 49.9% interest they get in DBCT . maybe  Prime does retain the other half. but there is a lot more detail to the DBCT convertible and swap transaction...


----------



## persistentone (12 October 2009)

w534220 said:


> page 133 of the prospectus
> 
> The Cornerstone Investor will subscribe for convertible notes to be issued by BBIT (Convertible Notes). The Convertible
> Notes are convertible into 49.9% (as may be adjusted under the Convertible Note terms and Voting Agreement (as defined
> ...




That's just the asset sale for the first half.   

I'm not clear on the details about the swap agreement.   They give BBI $295M up front in exchange for a convertible instead of ownership of 49.9% of the asset?   And BBI gives them 49.9% of the cash flows if they pay BBI the interest on the convertible?

Note that this isn't even an asset sale.   It's just a convertible bond that BBI must pay interest on, that the investor will convert to an asset sale later at a time of their choosing.   We didn't need more interest payments and debt!!


----------



## w534220 (12 October 2009)

i think everyone should read the BBI EPS Ltd financial report very carefully. 

http://www.bbinfrastructure.com.au/media/419874/bbi eps limited annual financial report.pdf

The BEPPA hybrids are accounted for as debt in an entity that owns the ex-Alinta assets.   i can't see why beppa holders should be exposed to the downside in the value of BBI's other assets(or refinancing problems for that matter)


On 31 August 2007, BBI EPS as part of a consortium with Singapore
Power and Babcock & Brown Power, acquired Alinta Limited
through a Scheme of Arrangement. From this transaction, BBI EPS
acquired a portfolio of energy transmission and distribution assets
and operations and maintenance businesses including:
• 74.1% interest in WA Gas Networks (formerly known as Alinta
Gas Networks);
• 100% ownership of Tasmania Gas Pipeline;
• 100% ownership of Alinta Asset Management – West;
• Up to 20% interest in Dampier to Bunbury Natural Gas Pipeline;
and
• 20.1% interest in Multinet Gas.


----------



## persistentone (12 October 2009)

w534220 said:


> i think everyone should read the BBI EPS Ltd financial report very carefully.
> 
> http://www.bbinfrastructure.com.au/media/419874/bbi eps limited annual financial report.pdf
> 
> ...




Are they forcing conversion of BEPPA to the 16% of new Securities, or is BEPPA being allowed to vote on that?

At this point the only real chance of blocking the deal would be if the existing BBI common are so pissed off that they deliberately sabotage the deal?

It looks like BEPPA may be getting taken here.


----------



## w534220 (12 October 2009)

what is worse Brookfield are being given free option over the assets belonging to BBI EPS Ltd

from the prospectus:
Restructure of AET&D The Cornerstone Investor will be granted a call option • exercisable at any time over
12 months (with an option for a further two periods of 12 months each) to acquire all of
BBI’s interests for nominal proceeds.
• Will provide asset management services to AET&D, subject to supervision of the
boards7 of the AET&D entities, and receive an annual base management fee of $5 million
and transaction fees equal to 1% of the enterprise value of assets or businesses sold.


this is the worst deal ever. it must be rejected.


----------



## w534220 (12 October 2009)

persistentone said:


> Are they forcing conversion of BEPPA to the 16% of new Securities, or is BEPPA being allowed to vote on that?
> 
> At this point the only real chance of blocking the deal would be if the existing BBI common are so pissed off that they deliberately sabotage the deal?
> 
> It looks like BEPPA may be getting taken here.




according to UBS. 20 investors control 50% of the beppa register. hopefully they are smart and can work out the right value. 

ideal scenario would be for a sweetened deal. ie. same deal but pay beppas 60c


----------



## persistentone (12 October 2009)

w534220 said:


> i think everyone should read the BBI EPS Ltd financial report very carefully.
> 
> http://www.bbinfrastructure.com.au/media/419874/bbi eps limited annual financial report.pdf
> 
> ...




I can't believe that in all these months we have all been discussing BEPPA that no one focused on the fact that it had asset level claims on Alinta.   I'm frustrated with myself for missing that.


----------



## drsmith (12 October 2009)

persistentone said:


> That's just the asset sale for the first half.
> 
> I'm not clear on the details about the swap agreement.   They give BBI $295M up front in exchange for a convertible instead of ownership of 49.9% of the asset?   And BBI gives them 49.9% of the cash flows if they pay BBI the interest on the convertible?



To me the swap agreement reads as if BBI is paying 49.9% of the cash flow instead of interest for the $295m. 



persistentone said:


> Note that this isn't even an asset sale.   It's just a convertible bond that BBI must pay interest on, that the investor will convert to an asset sale later at a time of their choosing.   We didn't need more interest payments and debt!!



Exactly what 49.9% of the cash flows (other than certain excluded amounts) generated by DBCT is I could not find. If it's anything like the forecast EBITDA for half the business to June 2010 then it's a very expensive loan.

In conjunction with the option to convert that offers Brookfield all the upside of half the business from now but limits the downside to a maximum of $295m.


----------



## Paragon1 (12 October 2009)

I was always under the impression that BEPPA was structurally subordinated but looks like they have direct ownership of AET&D assets (see image)

The assets are:

• 74.1% interest in WA Gas Networks (formerly known as Alinta
Gas Networks);
• 100% ownership of Tasmania Gas Pipeline;
• 100% ownership of Alinta Asset Management – West;
• Up to 20% interest in Dampier to Bunbury Natural Gas Pipeline;
and
• 20.1% interest in Multinet Gas.

The question is though: what are these worth?


----------



## w534220 (13 October 2009)

Paragon1 said:


> I was always under the impression that BEPPA was structurally subordinated but looks like they have direct ownership of AET&D assets (see image)
> 
> The assets are:
> 
> ...




well according to the BBI EPS Ltd annual financial report BBI EPS Ltd has total assets of 2.591billion and total liabilities of 2.725bn of which (see note 19) 677million are the beppas. so assuming the beppas are the most junior obligation there is 543million of asset cover for the 778million face value of beppas or approx 70c in the dollar. this is how the media has reported that some think beppas should get 70c. 

more importantly is if bbi eps ltd has the current liability problem ie. debts that need to be refinanced.  i think it does not have the near term debt problems of the broader bbi ltd. ..


----------



## banska bystrica (14 October 2009)

BEPPA holders may vote this deal down....and so may BBI holders.

http://www.businessspectator.com.au...rastructure-BBI-pd20091013-WS7SU?OpenDocument

The 4c offer to BBI holders is nothing more than a bribe to get the vote through. They are holding a gun at BBI holders heads saying _"Take the 4c now or you will get nothing in administration!"_

Enough holders may just say we don't want your 4c. We would rather tip the company into administration and see all of management out of a job.


----------



## banska bystrica (14 October 2009)

The fine print tells us there is no upside in BBI after Brookfield gain control.


http://www.smh.com.au/business/a-stunning-jewel-in-babcocks-portfolio-20091012-gu0c.html

Brookfield have an option to purchase the remaining 50% of DBCT in latter years at a price specified by Brookfield.
Brookfield are virtually stealing this company and the assets will all end up in Brookfield's portfolio.


----------



## w534220 (14 October 2009)

banska bystrica said:


> The fine print tells us there is no upside in BBI after Brookfield gain control.
> 
> 
> http://www.smh.com.au/business/a-stunning-jewel-in-babcocks-portfolio-20091012-gu0c.html
> ...




indeed. worse still is that under the proposal bbi is granting brookfield a free option over the AETD assets. Meanwhile BBI will attempt to account for these assets as 'held for sale' an accounting trick used to report a lower gearing ratio of 63%. If the accounting trick is not allowed they will be forced to consolidate the debt and report gearing of 73%. 

in other words. brookfield get all the upside of the AETD assets , Prime will be left with all the downside and the gearing...


----------



## persistentone (14 October 2009)

banska bystrica said:


> The fine print tells us there is no upside in BBI after Brookfield gain control.
> 
> 
> http://www.smh.com.au/business/a-stunning-jewel-in-babcocks-portfolio-20091012-gu0c.html
> ...




That's pretty much as I predicted it would be isn't it?   I always felt the Brookfield proposal would end up being a vulture investor looking to pick out assets.


----------



## WinnieBlues (14 October 2009)

Long time lurker, first time poster after being booted off across the road.

The behaviour of the directors of this company defies belief....at their FY09 results, in August, they assured the market that they were actively seeking to sell DBCT and PD ports...infact, offers had been received for these assets. 

Nothing could be further from the truth....they had been approached by Brookfield, one of the former bidders for pd ports months ago YET HAD NOT INFORMED THE MARKET that they had been approached.

They are now keeping their jobs, by the looks of things, after seeing the absolute destruction of BBI ords wealth....

Remember, they could have tried to have a cap raising early last year, to completely wipe out corporate debt, but they struggled along groaning under 9 billion of debt.

I sold out of BEPPA 2 weeks ago during spike to 19 cents...where the hell was the asx and asic...no speeding ticket???? questions to the company as to why it has risen so much (now we know)??? the whole bloody thing stinks

I would be prepared to pay for a class action against this company....to holders of ords, torpedo the proposal.....you get a measely 4c while BBI directors get to keep their jobs...

this whole thing stinks, BBI directors should be gripping the docks for this and getting sent to the big house for their dealings


----------



## WinnieBlues (14 October 2009)

Further, i would be prepared to be part of a class action against the company and directors for failure to disclose market sensitive information and for providing misleading info to the market......if the directors think they are going to end up with their feet up at the expense of ords holders (or prev holders), they can think again...i am furious over this!!!!!!


----------



## w534220 (14 October 2009)

interesting that the big buyers of beppas in last few days have been hedge funds.   question is: are they just looking to make 6c from the deal going ahead or are these the hedge funds behind the RBS proposal and thefore looking to torpedo the deal as it currently stands so they can resurrect their RBS proposal or something similar...?


----------



## persistentone (14 October 2009)

WinnieBlues said:


> Long time lurker, first time poster after being booted off across the road.
> 
> The behaviour of the directors of this company defies belief....at their FY09 results, in August, they assured the market that they were actively seeking to sell DBCT and PD ports...infact, offers had been received for these assets.
> 
> ...




Selling at 19 cents was actually pretty rational for anyone who didn't have insider information.   You shouldn't feel too bad about that.

BEPPA could still unravel if the market starts to feel the proposal will be rejected in favor of Administration.   Then you have to decide if you would want to hold it at 25 cents or under through an Administration, hoping to get  50 cents or higher from disposal of Alinta by an Administrator.   For me as a US holder who invests through a US broker and doesn't have registration directly on CHESS, it's dicey.

If the buyers at auction for Alinta are going to be the likes of Brookfield, I guess we shouldn't hold our breath hoping for even 50% of book value.


----------



## persistentone (14 October 2009)

w534220 said:


> interesting that the big buyers of beppas in last few days have been hedge funds.   question is: are they just looking to make 6c from the deal going ahead or are these the hedge funds behind the RBS proposal and thefore looking to torpedo the deal as it currently stands so they can resurrect their RBS proposal or something similar...?




How do you detect the buyers are hedge funds?

And they won't make 6 cents under Brookfield deal.   They would break even since SPARCs would convert and dilute the 43 cents to BEPPA.   They would be investing to get something additional from administration, but that hardly seems like good risk and reward entering at the current price.  Unlikely any hedge would approve of that math.

As you suggest, they might be trying to buy votes.

I still can't believe BEPPA opened at 41 cents.   Does anyone do math?!


----------



## Paragon1 (14 October 2009)

banska bystrica said:


> The fine print tells us there is no upside in BBI after Brookfield gain control.
> 
> 
> http://www.smh.com.au/business/a-stunning-jewel-in-babcocks-portfolio-20091012-gu0c.html
> ...




BB correct me if I'm wrong but the article suggests Brookfield can ask for the sale of DBCT at the price they want and Prime would have to either buy them out in shares or cash or let the sale go ahead. But sale would have to go to a third party at 'no less than the price specified by Brookfield'. If seems to me unlikely that they would shoot themselves in the foot by setting a low price and so Prime would likely still get reasonable value for its interest. The loss of the DBCT wouldn't be too bad if it was at fair value.


----------



## Paragon1 (14 October 2009)

w534220 said:


> well according to the BBI EPS Ltd annual financial report BBI EPS Ltd has total assets of 2.591billion and total liabilities of 2.725bn of which (see note 19) 677million are the beppas. so assuming the beppas are the most junior obligation there is 543million of asset cover for the 778million face value of beppas or approx 70c in the dollar. this is how the media has reported that some think beppas should get 70c.
> 
> more importantly is if bbi eps ltd has the current liability problem ie. debts that need to be refinanced.  i think it does not have the near term debt problems of the broader bbi ltd. ..




The Indendant Expert's report has a valuation of the AETD assets of between 48.4m to 148m which gives a recovery of BEPPA of between $0.06 and $0.20 which is a lot less than the $0.70 suggested unless i've missed something. The report does not mention then Alinta asset mangement asset but this may be included somewhere or not worth mentioning.


----------



## Paragon1 (14 October 2009)

persistentone said:


> Selling at 19 cents was actually pretty rational for anyone who didn't have insider information.   You shouldn't feel too bad about that.
> 
> BEPPA could still unravel if the market starts to feel the proposal will be rejected in favor of Administration.   Then you have to decide if you would want to hold it at 25 cents or under through an Administration, hoping to get  50 cents or higher from disposal of Alinta by an Administrator.   For me as a US holder who invests through a US broker and doesn't have registration directly on CHESS, it's dicey.
> 
> If the buyers at auction for Alinta are going to be the likes of Brookfield, I guess we shouldn't hold our breath hoping for even 50% of book value.




I sold down my BEPPA from 19000 (bought at avg price of $0.08) to about 4500 at $0.13. I would probably have held all for the recap announcement had I more confidence in my valuation. If BEPPA could get between 6c and 20c from AETD and then any upside from the rest of BBI assets then buying around 10c or so would give a pretty decent margin of safety. Combine that with the fact any recap would require 75% of BEPPA holders to go along would mean any deal would have to be sweet enough to pass. Add that to possible RBS backup plan would mean downside was manageable and upside was pretty high. Talk about 20/20 hindsight!

Its history I know but i'm just trying to improve my decision making process. What do you guys think?


----------



## banska bystrica (15 October 2009)

http://www.theage.com.au/business/bbi-plan-could-be-as-good-as-it-gets-20091014-gxhw.html

As good as it gets they reckon. BBI never mentioned the extra level of holdco debt on the AETD assets in any previous presentations. Another example of non-disclosure.


----------



## persistentone (15 October 2009)

w534220 said:


> well according to the BBI EPS Ltd annual financial report BBI EPS Ltd has total assets of 2.591billion and total liabilities of 2.725bn of which (see note 19) 677million are the beppas. so assuming the beppas are the most junior obligation there is 543million of asset cover for the 778million face value of beppas or approx 70c in the dollar. this is how the media has reported that some think beppas should get 70c.
> 
> more importantly is if bbi eps ltd has the current liability problem ie. debts that need to be refinanced.  i think it does not have the near term debt problems of the broader bbi ltd. ..




Can you post a link to the document that claims total liabilities of $2.73B?

I looked briefly, and I don't see how we could get much recovery in Administration here.   First, for 2009 EBITDA across the Alinta, Tasmanian Gas, and Westnet Energy assets looks just under $100M.   I have a spreadsheet from Banska that I enhanced that shows 2011 EBITA projected to $188M.   Does anyone want to justify that number?

Even at $188M, if I apply a conservative 8 multiple to it, the business value is only around $1.5B.   If the asset were floated as a separate company on the public market, you might get an 11 multiple which still only gets us to $2B.

In the spreadsheet I have from Banska the net debt is shown as $1.7B.   I added up each individual loan from the annual report, and I came up with $1.2B.  Add to this the hybrid debt and you are a little higher than $1.7B, but in the same ballpark.   It looks like we are just missing key data here.   

Here is the component debt for Alinta that I was able to get from annual report for BBI parent:

WA Gas Unsecured 175M Term Facilities 9/2011			145M
WA Gas Unsecured 20M Term Facility 9/2009			   9.5M
AET&D 2 Secured $518M Term Facility 7/2011			518M
WA NW Subordinate 79.8M Debt 7/2018				 79.8M
Alinta Guaranteed Notes Unsecured 446.7M Debt 9/2010	446.7M

Can someone do the approximate math to get us to $2.7B in liabilities?

Obviously if the actual liabilities are around $1.7B then recovery on Administration for BEPPA might be quite significant *if* you buy into the 2011 EBITDA of $188M.   At $2.7B I think BEPPA has no hope of any recovery.  At $1.7B in liability and with only $100M in EBITDA, again no chance of BEPPA getting any recovery.


----------



## persistentone (15 October 2009)

banska bystrica said:


> http://www.theage.com.au/business/bbi-plan-could-be-as-good-as-it-gets-20091014-gxhw.html
> 
> As good as it gets they reckon. BBI never mentioned the extra level of holdco debt on the AETD assets in any previous presentations. Another example of non-disclosure.




From this article:

"One especially nasty aspect of the structure is a particular thorn in the Australian Energy Transmission & Distribution (AET&D) business - on top of the $1.2 billion or so of asset-level debt in that division there is a layer of $518 million of holding company debt."

The $518M is the piece I was missing.  Add that to my component asset level loans and you have just about $1.7B.  The hybrid BEPPA debt is now on top of this, which gets us closer to the book value liability number.

The article also states that other corporate debt unrelated to Alinta could try to insert itself above BEPPA and make claims on the proceeds from the asset sale. 

You have to be foolishly optimistic to see any real recovery for BEPPA here.  You need a perfect storm:

1) We need to get a $2B valuation, using 2011 EBITDA numbers that look like dreaming.   In reality, I won't be surprised to see someone bid EBITDA multiple of 5 against 2009 EBITDA of $100M for the entire thing.

2) You need to hope that the $300M ($2B - $1.7B) doesn't get any claims from corporate debt (yeah, right)

In theory Brookfield might sweeten the BEPPA offer - not because they have to but because there are powerful people who own them they need to buy off.  Aside from that, unless RBS jumps in with a counterbid, I think this game is officially over.   BBI is dead.  The vultures have won.

Those who hung onto their BEPPA hoping for a miracle have been rewarded with one.


----------



## boronia (15 October 2009)

FYI


*Future Fund to invest $1.1bn in Brookfield vulture fund*
The Future Fund has joined the growing list of sovereign wealth funds taking the plunge into the property sector, committing $US1 billion ($A1.1 billion) into Canadian institutional investor Brookfield Asset Management’s $US5 billion real estate vulture fund, reports The Australian newspaper.....


----------



## persistentone (15 October 2009)

boronia said:


> FYI
> 
> 
> *Future Fund to invest $1.1bn in Brookfield vulture fund*
> The Future Fund has joined the growing list of sovereign wealth funds taking the plunge into the property sector, committing $US1 billion ($A1.1 billion) into Canadian institutional investor Brookfield Asset Management’s $US5 billion real estate vulture fund, reports The Australian newspaper.....




One thing that I get out of this fiasco is tomorrow I'm going to go buy Brookfield bonds for my aunt's fixed income account.   Those guys are survivors.


----------



## banska bystrica (15 October 2009)

Perhaps RBS are accumulating BEPPA and there will be another twist? Time will tell. The big crossing at 40c was either BAM friendly buying or RBS building a blocking stake for the vote.
Persisentone, you have a PM.
If anyone is over the road, please ask "towie" to email me asap.
peterinsk at yahoo dot com dot au


----------



## Paragon1 (15 October 2009)

From todays announcemet looks like if any SPARCs convert it will be before EPS and the placements. The prospecus suggests conversion will result in recovery of 2c from $1 face value. Any SPARCs not converted will be paid a distribution rate of 10%. Based on that it seems unlikely that most will convert and even if they do it shouldn't be too bad for BEPPA


----------



## nathanblack (15 October 2009)

i bought Beppa and decided to let my SPP right lapse.

too many conspiring as one for this bid to fail now.


----------



## drsmith (15 October 2009)

Paragon1 said:


> From todays announcemet looks like if any SPARCs convert it will be before EPS and the placements. The prospecus suggests conversion will result in recovery of 2c from $1 face value.



The directors have been very creative indeed here in trying to limit the impact of SPARCS conversions on that 16% of the recapitalised entity allocated to BEPPA/SPARCS.

Dot point 3 on pages 12 of the SPARCS conversion update makes for interesting reading in relation to this.

Essentially what they are saying is that the VWAP for conversion of SPARCS will be pre-capital distribution (~$0.04) but as these newly converted shares will not get the capital distribution itself they will be worth next to nothing relative to the face value of the bond.

Is this allowed under corporate law ?


----------



## banska bystrica (16 October 2009)

http://www.theage.com.au/business/bbi-lobs-fuel-on-the-fire-20091016-gzeb.html

_"BBI lobs fuel on the fireSCOTT ROCHFORT
October 16, 2009 - 12:23AM 
Babcock & Brown Infrastructure has added fuel to what may be a fiery annual meetings by proposing a 50per cent lift in non-executive directors' remuneration.

The company, which is urging security holders to back a $1.5 billion recapitalisation that will dilute their stake to less than 0.1 per cent, has proposed lifting the remuneration pool of directors from $1million to $1.5 million a year.

In the meeting notice lodged yesterday, BBI argued that the fee pool had not been lifted since 2002. It said a review of data from other companies with a similar market capitalisation in its sector found the fee plan limits to be consistent.

The proposal is likely to inflame security holders whose holdings in the fund will rendered almost worthless by the recapitalisation, under which Canada's Brookfield Infrastructure will emerge a cornerstone investor in BBI. The increase in remuneration is half the $1million stake BBI shareholders would be left with after the recapitalisation.

"It's poor timing and I think it would be considered a slap in the face to existing security holders," said the Australian Shareholders Association's chief executive, Stuart Wilson."_


----------



## bandicoot76 (18 October 2009)

is it possible to put a motion of no confidence in the directors of BBI at the next shareholders meeting? its pretty obvious now that they are nothing but a corrupt pack of corporate parasites who are not interested in the interests of us shareholders but rather they are just feathering their own nests while hanging us out to dry! surely if they arent looking after our interests we should be able to kick their mangy a*r*s*e*s out the door? how is it we as shareholders dont get a say on the RBS proposal? maintain the rage, take back OUR company and boot these leeches out!


----------



## nulla nulla (18 October 2009)

bandicoot76 said:


> is it possible to put a motion of no confidence in the directors of BBI at the next shareholders meeting? its pretty obvious now that they are nothing but a corrupt pack of corporate parasites who are not interested in the interests of us shareholders but rather they are just feathering their own nests while hanging us out to dry! surely if they arent looking after our interests we should be able to kick their mangy a*r*s*e*s out the door? how is it we as shareholders dont get a say on the RBS proposal? maintain the rage, take back OUR company and boot these leeches out!




Your options are to enlist enough people to vote against the proposal and see the appointment of an Administrator/Liquidator. Then talk to a litigation funder in respect of the viability of sue-ing the directors for any percieved incompetence, conflict of interest, conduct causing the failure of the business, misleading reports to the market inducing people to invest etc etc etc.


----------



## bandicoot76 (18 October 2009)

we tried that when similar parasites destroyed copperco, the only winners were the lawyers... CUO shareholders got diddly-squat! funny that mac bank was involved in both shareholder bloodbaths (cuo + bbi) yet walked away smelling of roses? my advice... steer clear of anything they have their grubby hands mixed up in!...


----------



## drsmith (19 October 2009)

I'm still curious as to how the directors can price any new BBI shares from SPARCS conversion cum the $0.04 capital distribution and then not pay it.


----------



## banska bystrica (19 October 2009)

drsmith said:


> I'm still curious as to how the directors can price any new BBI shares from SPARCS conversion cum the $0.04 capital distribution and then not pay it.




Prima facie it does seem illegal but I would imagine no-one will question it. SPARCS are being blackmailed into rolling over for another 12 months. If they elect to convert in November they receive circa 2c in the $1 so BBI are giving them no choice. Take 2c in the dollar next month or wait another 12 months and hopefully we can pay you full face value.


----------



## bonzo (21 October 2009)

If any of the current directors or board members are going to be involved in the recapitilised BBI, I would rather see BBI fold and loose my 4cents per share


----------



## Fang42 (21 October 2009)

I Got stuck with BBI shares @$1.95 a share .I cannot see any value in the restructuring and will not put any more dollars into the company whilst those directors remain in control.If there is any hope of getting rid of them i would be all ears


----------



## WinnieBlues (21 October 2009)

this company is up there with centro....

talk about lack of disclosure....in august at their full year results they said that they had received offers for dbct and pd ports and were evaluating them...and THEN said a few weeks back that they had been approached by Brookfield a few months back...

where the hell was the continuous disclosure?

iI bought Beppa, had 600k of them and dumped most at 18-19c...more fool me, after they doubled in price...

this cost me well over 120 grand........

I would be prepared to take legal opinion over this...with a view to suing the company for negligence....

I am banned from over the road....are they making similar noises?????

This is a disgrace of a company, the directors couldn't give a stuff about the shareholders....bring on carnage at the agm for the directors, they deserve all they get


----------



## YELNATS (23 October 2009)

bonzo said:


> If any of the current directors or board members are going to be involved in the recapitilised BBI, I would rather see BBI fold and loose my 4cents per share




BBI currently selling at .036. Isn't that strange, considering you will receive a .04 capital return? Is this an opportunity to cash in and make 10% with little or no risk? 

Or is everything not cut and dried yet?


----------



## skyQuake (23 October 2009)

YELNATS said:


> BBI currently selling at .036. Isn't that strange, considering you will receive a .04 capital return? Is this an opportunity to cash in and make 10% with little or no risk?
> 
> Or is everything not cut and dried yet?




Because there is a risk that BBI holders would vote against the proposal.

consider this: You've bought at >$1. a ~4% loss on top of a ~96% loss OR seeing the board suffer.


----------



## drsmith (23 October 2009)

skyQuake said:


> consider this: You've bought at >$1. a ~4% loss on top of a ~96% loss OR seeing the board suffer.



I don't know what percentage of shares would currently be represented by holders in that situation but the market is clearly pricing in a risk of failure.


----------



## $$Punt$$ (24 October 2009)

drsmith said:


> I don't know what percentage of shares would currently be represented by holders in that situation but the market is clearly pricing in a risk of failure.




Bronte Capital's chief operating officer, Simon Maher, said yesterday that the present deal was ''highly unattractive'' for EPS shareholders.

EPS shareholders must vote 75 per cent in favour and ordinary shareholders must vote 50 per cent in favour of a $1.8 billion recapitalisation of the debt-laden BBI for it to go ahead. The proposal includes a $625 million injection by Brookfield Asset Management and its $295 million purchase of BBI's prize asset, the Dalrymple Bay Coal Terminal. It also includes a $104 million dividend, or 4c a share, paid to ordinary shareholders.


----------



## drsmith (24 October 2009)

$$Punt$$ said:


> EPS shareholders must vote 75 per cent in favour and ordinary shareholders must vote 50 per cent in favour of a $1.8 billion recapitalisation of the debt-laden BBI for it to go ahead.



No doubt the directors have been keeping a close eye on the registry for both and pressing the numbers on the phone key pad as necessary to try and achieve the above.


----------



## $$Punt$$ (24 October 2009)

drsmith said:


> No doubt the directors have been keeping a close eye on the registry for both and pressing the numbers on the phone key pad as necessary to try and achieve the above.




Personally I don't have much confident in the current BBI board of directors. I have sold all BBI shares but still entitled for the recap SPP. I am still not sure whether I should subscribe to the new SPP knowing the exisitng shareholders will getting nothing other than the miserable 4 cents capital return. It would be interesting to see what happens to the BBI share price as we get closer to the closing date.........


----------



## Blues 234 (25 October 2009)

My first time on the forum and have enjoyed reading your comments.

I feel awful for BBI holders but I'm sitting here with a bunch of EPS not sure if they are worth more than the 43c eg I saw ~ 60 to 70c somewhere? Does this higher value have any potential to be achieved if the capital raising was voted down?

Noting that >30% of BEPPAs have changed hands over the past week or so I would have thought if the vote was going to get up that the EPS price would increase closer to the trading halt in November from the current 38.5c to closer to 43 - correct?


----------



## hardyakka (25 October 2009)

WinnieBlues said:


> this company is up there with centro....
> 
> talk about lack of disclosure....in august at their full year results they said that they had received offers for dbct and pd ports and were evaluating them...and THEN said a few weeks back that they had been approached by Brookfield a few months back...
> 
> ...




Hi folks,

Just catching up with things. 

I have been catching up on the dirt that went on behind the scenes that is being discussed across the road. Considering I liquidated about 2M BEPPA not long after the announcement in early September I am somewhat a little irritated at PIG. I thought I had missed out on about $200k at current prices it is more like $800k.

One comment I made several months ago when the announcement turnaround was made was that you can bet your bottom dollar they have solid legal advice, that still stands. I have read that BB is initiating an action and all I can do is wish you the best.

BB, read your messages

Cheers


----------



## WinnieBlues (25 October 2009)

hardyakka said:


> Hi folks,
> 
> Just catching up with things.
> 
> ...




Hardyakka, BB/melua/Peter....i am banned from across the road...the lack of disclosure cost me 120k at current prices....i would be interested in taking legal advice as well.....can you please message to to see what action is proposed...

to all ords holders.....liquidate the company....management don't deserve to keep their jobs......

this is one of the asx's worst companies for disclosure and destruction of holder value....they should be all wearing prison jumpsuits imo


----------



## $$Punt$$ (26 October 2009)

WinnieBlues said:


> Hardyakka, BB/melua/Peter....i am banned from across the road...the lack of disclosure cost me 120k at current prices....i would be interested in taking legal advice as well.....can you please message to to see what action is proposed...
> 
> to all ords holders.....liquidate the company....management don't deserve to keep their jobs......
> 
> this is one of the asx's worst companies for disclosure and destruction of holder value....they should be all wearing prison jumpsuits imo




BABCOCK & Brown Infrastructure has threatened legal action against dissident exchangeable preference shareholders for damages if incorrect information causes a $1.8 billion recapitalisation to be voted down.

The legal threat was issued after businessday reported Bronte Capital Management's argument that the current offer for exchangeable preference shares of 43 ¢ was well under BBI's June 30 valuation of 70 ¢ for assets attributable to EPS shareholders.

For the complex recapitalisation to succeed, more than 75 per cent of EPS holders and more than 50 per cent of ordinary shareholders must vote in favour of the deal at a meeting on November 16.

The legal threat was made by BBI's lawyers Freehills, warning ''false or misleading statements'' could lead to ''substantial damage for BBI'', and liability for Bronte Capital and its supporters.

BBI's chief financial officer, Jonathan Sellar, said valuations of BBI's Australian Energy Transmission and Distribution (AET&D) business provided by Bronte Capital had contained inaccurate information. ''We're happy to engage in a debate around valuations; we want to make sure the information that is being published is not false or misleading,'' he said.

''I would point out the first legal letter came from them.''

Earlier this week, Bronte Capital sent a legal letter attempting to establish the ranking of BBI EPS debt holders over the AET&D assets.


----------



## banska bystrica (27 October 2009)

"The legal threat was made by BBI's lawyers Freehills, warning ''false or misleading statements'' could lead to ''substantial damage for BBI'', and liability for Bronte Capital and its supporters."

How's that for the pot calling the kettle black?
"misleading statements"! BBI themselves are very good at that. Read their announcement on Sept 4 and you could drive a truck through the "misleading" statements.

_"1041H Misleading or deceptive conduct (civil liability only)

(1) A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or *is likely to mislead or deceive*."_

BBI wrote:

_"It is likely that there will be a requirement for full conversion of EPS and SPARCS in advance of, and in order to facilitate, any equity recapitalisation and that the
ownership interests of BBI ordinary securityholders, and EPS holders and SPARCs holders post-conversion will be significantly diluted by the recapitalisation. The transaction mechanics, including any conversion of hybrid securities and the basis on which it would occur, have not been determined. The value outcomes of the transaction for BBI ordinary security holders, EPS holders and SPARCS holders are not certain and may attribute a value to those securities that is less than face value or recent trading prices"_


----------



## jono1887 (28 October 2009)

is any of this gonna affect the 4c payout to BBI holders?? What are the chances of this getting voted down? There really is no benefit for voting against it is there?


----------



## Vic (28 October 2009)

Im new to this forum and I have been ready about BBI, I also have shares in it should I vote Yes  ? and If I don't whats next ?

Thx Vic


----------



## Viva_Las_Vegas (28 October 2009)

Banksa
I cant imagine how you must feel. You had a large holding in beppa and i believe you vacated it like the rest of us based on that announcement regarind beppa being payed out at bbi sp. (Well thats the way i read it)

A lot of unhappy campers.

I am now banned for 14 days from HC by some nazi called nymph, apparently typing WTF as a thread title is a concealed swear word punishable by 14 days in the sin bin. 

Good luck to all of you with BBI, and I well and trully out of it all.


----------



## skc (28 October 2009)

banska bystrica said:


> BBI wrote:
> 
> _"It is likely that there will be a requirement for full conversion of EPS and SPARCS in advance of, and in order to facilitate, any equity recapitalisation and that the
> ownership interests of BBI ordinary securityholders, and EPS holders and SPARCs holders post-conversion will be significantly diluted by the recapitalisation. The transaction mechanics, including any conversion of hybrid securities and the basis on which it would occur, have not been determined. The value outcomes of the transaction for BBI ordinary security holders, EPS holders and SPARCS holders are not certain and may attribute a value to those securities that is less than face value or recent trading prices"_




Specifically which part of this announcement is misleading? 

The part about less than face value or recent trading price? Most takeover announcements will contain similar wording, like no guarantee that a transaction would occur or that it will come in at a price above recent trading price. It is more a$$ covering than mis-leading. 

Or is it something else?


----------



## banska bystrica (29 October 2009)

"1041H Misleading or deceptive conduct (civil liability only)

(1) A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive *or is likely to mislead or deceive*."

It is my view that BBI knew full well that under the BAM proposal BEPPA was NEVER going to trade at less than recent trading prices. Therefore, they should have made a distinction between BBI and BEPPA in the Sept 4 announcement. They did not and that conduct was very misleading. The market was comfortable selling BEPPA from 14c down to 6c on that news yet lo and behold, a certain broker started buying heavily from 7c all the way to 19c. A few days later, the BAM proposal is revealed and surprise surprise, the announcement values BEPPA at 43c.


----------



## drsmith (29 October 2009)

skc said:


> Specifically which part of this announcement is misleading?
> 
> The part about less than face value or recent trading price? Most takeover announcements will contain similar wording, like no guarantee that a transaction would occur or that it will come in at a price above recent trading price. It is more a$$ covering than mis-leading.
> 
> Or is it something else?



There's no full conversion of SPARCS. They are infact going to extrordinary lengths to discourage conversion of SPARCS prior to the recap.

Richer pickings however might be found comparing asset valuations in the annual report to commentary in subsequent announcements not too long afterwoods.


----------



## mark_au (29 October 2009)

Viva_Las_Vegas said:


> Banksa
> I cant imagine how you must feel. You had a large holding in beppa and i believe you vacated it like the rest of us based on that announcement regarind beppa being payed out at bbi sp. (Well thats the way i read it)
> 
> A lot of unhappy campers.
> ...





LOL thats sooo lame, I recently bought some WTF, i still chuckle at the asx code, but hey you should be banned as its a legit code.. those guys over there are morons


----------



## WinnieBlues (29 October 2009)

banska bystrica said:


> "The legal threat was made by BBI's lawyers Freehills, warning ''false or misleading statements'' could lead to ''substantial damage for BBI'', and liability for Bronte Capital and its supporters."
> 
> How's that for the pot calling the kettle black?
> "misleading statements"! BBI themselves are very good at that. Read their announcement on Sept 4 and you could drive a truck through the "misleading" statements.
> ...




BB/Melua, u must be furious mate....i am down about 120 thousand on this

From what i recall, u owned 4 million beppa's???

I owned 600k beppa, aver price 7 odd cents, sold out at 19c.....

I am FURIOUS with beppa management.......no disclosure, they are only in it to save their jobs...

I am permanently banned across the rd....damn monkey

Are others talking about taking civil action against the directors???

this company is a joke


----------



## Paragon1 (30 October 2009)

EPS holders will now get the proceeds of sale of AETD assets (if any) plus the 300m+ under the original deal. Sounds like a sweet deal to me!


----------



## w534220 (2 November 2009)

The reality is that if this deal is voted down , the banks will roll over their loans to BBI.  The banks obviously threatened BBI that they wouldn't renew the loans in order to scare BBI to go and raise equity. and BBI have said that they couldn't apply for a debt moratorium until and unless this recap deal is voted down.   There is no good reason for the banks to pull the plug on a business that is not breaching any covenants and is paying its interest.   

all shareholders and EPS holders are better off maintaining their exposure to the upside for this business by voting against this ridiculous recap deal.


----------



## w534220 (2 November 2009)

it is highly irresponsible of the directors to suggest that if the deal is rejected that everyone will get zero.   if it were true then why would Brookfield do this deal?   they could instead allow BBI to collapse and buy the pieces more cheaply in the fire-sale...


----------



## roland (2 November 2009)

I for one voted against the recap and against re-election of directors, I felt it was worth my 0.04 versus zero to voice my disgust.


----------



## Paragon1 (2 November 2009)

w534220 said:


> The reality is that if this deal is voted down , the banks will roll over their loans to BBI.  The banks obviously threatened BBI that they wouldn't renew the loans in order to scare BBI to go and raise equity. and BBI have said that they couldn't apply for a debt moratorium until and unless this recap deal is voted down.   There is no good reason for the banks to pull the plug on a business that is not breaching any covenants and is paying its interest.
> 
> all shareholders and EPS holders are better off maintaining their exposure to the upside for this business by voting against this ridiculous recap deal.




This deal is incredibly an generous one for EPS holders. There is/was a real risk of annihilation without the recap. The value locked in the business will only be available if BBI is a going concern. I still believe there is upside for EPS holders as it is not unimaginable for us to recieve up to 50c/55c in cash and shares plus a free option on the AETD assets which the indepandant expert has valued at between 6c and 20c in his report. It would be rediculous to vote this down

There may be a reason for BBI holders to vote this down out of sheer disgust with management who I agree should be rebuked for the destruction in value and not seen as 'saviours'. However as an investor I am more interested in money than taking a stand and would take the 4c and run. Then maybe there's some money to be made later as EPS holders sell out after receiving their shares and cash and free option in the bag?


----------



## Blues 234 (3 November 2009)

Paragon1....why do you believe it is not unimaginable for EPS to recieve up to 50c/55c in cash and shares plus a free option on the AETD assets?

holder BEPPA


----------



## nulla nulla (3 November 2009)

They rang us, seeking a "yes" vote for the proposal. Given what we have lost from the original entry price, I laughed at them. 
Why would I vote for a proposal that totally wipes out any prospect of the slightest chance of recouping even the smallest percentage of my losses? Why would I vote for a proposal that effectively transfers all the non toxic assets to the cornerstone investor at an incredible discount to fair market value? Why would I vote for a proposal that includes a pay rise for the incompetent directors that dragged the company down? And if by some chance they deluded enough people to vote the proposal through, why would I invest in the spp and give the same incompetent directors/managers the chance to stuff it up again while drawing their ridiculous sallaries? 
I can't type the expletive I used to tell them where to go.


----------



## Tysonboss1 (3 November 2009)

w534220 said:


> all shareholders and EPS holders are better off maintaining their exposure to the upside for this business by voting against this ridiculous recap deal.




I totally aggree, I think that investors are better chancing the admin route,

Saying that I have completely cashed out of my beppa holding for a tidy profit, If the recap is voted down and the beppa price drops again. I may buy back in.


----------



## Paragon1 (3 November 2009)

Blues 234 said:


> Paragon1....why do you believe it is not unimaginable for EPS to recieve up to 50c/55c in cash and shares plus a free option on the AETD assets?
> 
> holder BEPPA




The AETD assets will likely be sold off and proceeds kept for EPS and are worth somewhere between 0 and 20c to EPS holders given the debt level in the business. So the best way to look at this is like a free option. Holders are already getting 6c cash and 36c in shares. The 36c is based on a enteprise value of Prime of 1.8bn. Given the new co. is more conservatively geared, earnings will gradually recover post recession and applying non distressed EBITDA multiples to BBI's remaining business' this could be worth well over 2bn resulting in the shares you recieve being rerated (over time) to more then 36c


----------



## banska bystrica (3 November 2009)

I see very little upside now for BEPPA. It might go up a tad more but the big gains are finished.
BTW, I have been suspended for another 10 days across the road. The person who flamed and baited me got nothing. Free to keep bagging me.


----------



## drsmith (3 November 2009)

banska bystrica said:


> BTW, I have been suspended for another 10 days across the road. The person who flamed and baited me got nothing. Free to keep bagging me.



I've never been across the road so as to speak but if you feel your knowledge is your strength then why not just stick to that in any response.


----------



## w534220 (4 November 2009)

banska bystrica said:


> I see very little upside now for BEPPA. It might go up a tad more but the big gains are finished.
> BTW, I have been suspended for another 10 days across the road. The person who flamed and baited me got nothing. Free to keep bagging me.




i can't see why anyone would buy them for 41c or 42c , unless they saw the potential for sizeable gains(ie. more than 1 or 2c) given the potential downside risk if bbi shareholders or beppa holders rejected the deal.   ie. the big buyers at these levels have done their homework and have a game plan for extracting more value. but i am surprised nothing has been announced yet. rumour was that we would learn more yesterday..


----------



## perdo (5 November 2009)

I'm still lost at what to,I can't work out if there will be any value in the new PIG if i take up the SPP. Will there be value or won't there be any value, will the new stock rise or will it fall, mmmmm i'm lost at what to do. I need some help deciding so whats your opinon guys. (my past history, if i buy into a stock it's guaranteed to drop,i've lost on BBI an i'm hoping there might be some value in it if i take up the SPP) 
thanks in advance


----------



## Paragon1 (5 November 2009)

perdo said:


> I'm still lost at what to,I can't work out if there will be any value in the new PIG if i take up the SPP. Will there be value or won't there be any value, will the new stock rise or will it fall, mmmmm i'm lost at what to do. I need some help deciding so whats your opinon guys. (my past history, if i buy into a stock it's guaranteed to drop,i've lost on BBI an i'm hoping there might be some value in it if i take up the SPP)
> thanks in advance




I believe there is upside in stock of PIF once the recap is complete. There is likely to be a rerating once investors are able to understand what the new company looks like and the bad impression left by BBI fades. And don't worry about the recap not getting through because your money will be returned to you and you'd be no worse off.


----------



## Paragon1 (5 November 2009)

w534220 said:


> i can't see why anyone would buy them for 41c or 42c , unless they saw the potential for sizeable gains(ie. more than 1 or 2c) given the potential downside risk if bbi shareholders or beppa holders rejected the deal.   ie. the big buyers at these levels have done their homework and have a game plan for extracting more value. but i am surprised nothing has been announced yet. rumour was that we would learn more yesterday..




This is a 'risk arb' trade where investors are going for the 6c div which is around a 14% retun on current price as long as the new stock and AETD proceeds add up to 40 odd cents which I believe will be the case. The risk in the deal has now dissipated with the sweetener being offered to EPS holders which were the major hurdle. There is still some risk in the security holders voting this down though but as much.


----------



## beaver1024 (6 November 2009)

When will we know if the recap will go ahead? I haven't read my new prospectus, kinda dreading it actually. 

So close to just selling out now even at 0.036c and take the marginal loss.


----------



## Blues 234 (7 November 2009)

The move to provide AET&D asset sales profits to BEPPA is a step in the right direction but I have a concern re discovery and governance and the lack of any process to ensure that maximum is achieved for BEPPA holders.

It has been argued BAM have an incentive as in addition to $5mill p.a. (for 3 years) fees, BAM receives 1% of asset value sold  . 

I do not consider this incentive and demonstrate my concern via an example:

If an asset (eg AETD) was sold for $2.2 bill when it may have been sold for $2.5 bill then BAM would receive $22 mill in lieu of $25 mill. A $3 mill difference (small change) for BAM but for BEPPA holders it wipes off $300mill or ~ 40c/EPS.

Would prefer an arrangement where in lieu of the $15 mill  fees and 1% that BAM was instead paid say 15%/20% (or whatever) of the actual $ value realised for BEPPA holders.  

Eg $300 mill of value realised by BAM for BEPPA on assets of $2.5 bill then at 20% BAM get $60 mill versus $40M in the current arrangement ie 3 x $5M + 1% x $2.5bill.

Seems to me everyone wins in this arrangement and BAM has incentive to maximise EPS value.


----------



## banska bystrica (12 November 2009)

BEPPA holders have a very nervous wait now. It's reported this morning in the AFR that RBS will make a counter bid to the recap plan in an attempt to de-rail the BAM proposal before it crosses the finishing line. Any scuttling of the re-cap plan will see the BEPPA price smashed upon re-listing. It was a brave strategy to hold BEPPA at around 38c with little upside from there but heaps of downside if/when the vote is NO. Good luck to all BEPPA holders. You will need it.
Perhaps RBS have been buying the large crossed lines of BEPPA recently that will ensure a less than 75% YES vote?


----------



## banska bystrica (12 November 2009)

A BEPPA holder who lives in Sydney went down and viewed the BEPPA register. From what he can gather, this vote will be a resounding NO. He said it looks as though nominee companies with links to RBS now own over 135M BEPPA. This is 17% just in those holdings. It is going to be almost impossible one would think to get 75% voting YES. By the way, they need 75% of ALL votes, not just those at the meeting despite what others are saying.

PS. The BEPPA holder is a rather nervous BEPPA holder now. His comment: "I wish I had sold at 40c".

A twist to the saga. This has some way to run yet.


----------



## skyQuake (12 November 2009)

banska bystrica said:


> A BEPPA holder who lives in Sydney went down and viewed the BEPPA register. From what he can gather, this vote will be a resounding NO. He said it looks as though nominee companies with links to RBS now own over 135M BEPPA. This is 17% just in those holdings. It is going to be almost impossible one would think to get 75% voting YES. By the way, they need 75% of ALL votes, not just those at the meeting despite what others are saying.
> 
> PS. The BEPPA holder is a rather nervous BEPPA holder now. His comment: "I wish I had sold at 40c".
> 
> A twist to the saga. This has some way to run yet.




Lol cheers for the update. This is looking to be one drawn out tale.

RBS may not necessarily have an inferior revised proposal in the end, (BEPPAs might even get 50c) but the uncertainity will definitely kill a few holders.


----------



## banska bystrica (12 November 2009)

One would assume from recent trading prices that RBS have bought their assumed/alleged 17% stake in BEPPA for circa $50M. That's peanuts and if that is the cost, it's a cheap "control" mechanism. I suspect they would not care if the BEPPA price collapses back to 10c after a NO vote, as they effectively control the entire company. They may even mop up all the distressed BEPPA holders and BBI holders and then arrange the re-finance of all the debt themselves through their own bank.
Then wait a few years and re-float it or sell it at greater prices.
My understanding is that they will guarantee to refinance BBI's looming debt and thus, BBI holders will get a "second chance" given time for asset values to appreciate. BEPPA holders "may" get a better outcome long term but short term it will be painful. The market will not take kindly to BEPPA remaining listed and "waiting for 2012 reset". Never a dull moment with this mob.
People were pointing out BEPPA had limited upside from 40c and big downside if the vote was NO for BAM recap. I guess we will all find out sooner rather than later. Maybe now we are realising why BBI were desperately phoning holders trying to work out where the votes would end up.
I am not writing off BAM but I was always confident RBS would not walk away. The vote could still go either way in my opinion. I would favour a NO vote for BEPPA slightly in front of a YES vote for BAM. Probably rate it 60/40 in favour of NO. Sweaty palms time for BEPPA holders.

I think BBI have made a mistake in portraying imminent voluntary administration because the banks will not refinance. The outlook has improved and I am sure the banks would refinance at least for another 12 months rather than force the administration/liquidation of BBI. BBI have stated for 12 months that there are no problems and the net assets are solid numbers. Why did they change their tune so quickly? Answer: BAM and the continuation of their employment (in my opinion).

RBS would be a lifeline for BBI holders. It at least gives them a chance at decent upside. 4c is pitiful.


----------



## banska bystrica (12 November 2009)

Well well. BBI have just put out an announcement denying they have received a new proposal from RBS.
Big deal. Watch BBI run to meet with RBS if the vote for the BAM recap is NO.
RBS just sit back and watch now. Wait for the NO vote and then wait and see how long it takes BBI to come crawling on their hands and knees for a meeting to discuss a recap plan with RBS.

BBI are running scared. Why bother even responding to the media reports? The stock is in suspension so they have no reason to announce anything to do with press reports. Make no mistake, they are scared stiff of this looming vote.
A NO vote will surely mean their jobs are finito. That's why they are running scared....not because of the ramifications for securityholders and EPS holders.


----------



## banska bystrica (12 November 2009)

http://www.reuters.com/article/hotStocksNews/idUSSYU00903920091112

BBI voters aren't your problem Mr Sellar. BEPPA voters are!


----------



## beaver1024 (12 November 2009)

banska bystrica said:


> BBI voters aren't your problem Mr Sellar. BEPPA voters are!




Why are BBI staple holders voting yes to this scheme? If BBI goes into admin and force the sale of assets, won't we get more on the face of NAV? Or are their debts levels higher than what they seem?


----------



## w.m.buch@bigpond (12 November 2009)

banska bystrica said:


> http://www.reuters.com/article/hotStocksNews/idUSSYU00903920091112
> 
> BBI voters aren't your problem Mr Sellar. BEPPA voters are!




The article says  98% of both ordinary and preference shareholders  have voted yes.
I think the only questionable votes will be the RBS ones, which will probably be enough to bring the whole thing down if thats what RBS want.


Hold Beppa


----------



## skyQuake (12 November 2009)

w.m.buch@bigpond said:


> The article says  98% of both ordinary and preference shareholders  have voted yes.
> I think the only questionable votes will be the RBS ones, which will probably be enough to bring the whole thing down if thats what RBS want.
> 
> 
> Hold Beppa




Problem is thats 98% of 30% who have voted.

We don't know the breakdowns of the figures but it could as well be More BBI yes votes than BEPPA no votes.


----------



## nathanblack (12 November 2009)

if RBS gain momentum over the weekend, then one would suspect BAM to offer a sweetner. Not that you can still buy Beppa, but perhaps more upside to come.

Ofcourse could go the other way. But i guess most investors in BBI/Beppa have been risk adverse for sometime.

Goodluck all.


----------



## banska bystrica (12 November 2009)

Some people are cutting and pasting my posts here and posting them on another forum. That's a bit rich.


----------



## Blues 234 (13 November 2009)

The AFR today said George Batsakis of Hastings (7% of BEPPAs) suggested 10c to 15c per EPS as potential upside for EPS holders on the sale of AETD assets.

If Hastings have formed this view then suggest BBI should be able to demonstrate it too.

If the value is there for EPS holders and you want the YES vote then it is time for BBI to get the numbers out.

And if BBI believe the numbers then why not guarantee at least 10c and include it in the offer and pay it out with the dividend payment on 25 November.

The new offer would then become 53c + possibly 5c (based on Hastings 15c) + $? potential upside from the PIGs.

Or even better IMO lock in the 15c to offer 58c (and keep any balance from the AETD sale) which is cleaner all round. NOTE: As extra inducement could also add it any balance from AETD sale.

Both are far superior offers to the current 43c + $? from AETD sale + $? potential upside from the PIGs.

The new offers would get my YES vote and I expect would be very tempting to any others considering a NO vote. It would certainly make them relook at their strategy.

C'mon BBI - If you are serious then it is time to act.

holding BEPPs


----------



## banska bystrica (13 November 2009)

I spoke with a contact at Macquarie (not the corporate arm) this morning. He said it is difficult to know with certainty whether the vote will get up but from what he had heard around the traps, it is his opinion that the vote will be a YES for both BBI and BEPPA holders and BAM will win the day.


----------



## nathanblack (13 November 2009)

IF the vote is YES the reason will be the cross ownership of many of the larger holders. some majors own BBI, Beppa's and SPARC. you vote for your best overall outcome. it could be that getting the full $1 for sparcs and 4c for BBI is enough to compensate for the loss on Beppa.

the other overwhelming issue is the certainty that bam provides. sure rbs may have an alternative but they havent made it official and they havent proved to the market that it is superior or more importantly that they can implement it in a timely fashion to staive off VA.

further more what would rbs require us to vote on? if we vote bam down will the same people just block rbs too.


----------



## Blues 234 (15 November 2009)

Good summary Nathan.

Comes down to certainty versus uncertainty.

If there is a 'next vote' then IMO BBI will need to show a heap more care and concern towards those that hold BEPPA only.


----------



## gwerder (15 November 2009)

RBS circulated some alternative ideas but never came forward with a concrete proposal. The talk not only involves slightly less money than BAM, it is also unclear how RBS intents to raise the money. Talk is cheap!

Remember: RBS is a crippled bank controlled by the British government. There is no way this “bank” will finance the restructuring itself.

I wonder what BEPPA holders complain about. If BAM’s proposal is voted down, BBI ends up in liquidation because BAM gets indemnified nicely for its trouble – millions in cash and (some) ownership of DBCT which is BBI’s highest quality asset.

In liquidation, BEPPA holders might get around 10 cents from the sale of AET&D, but potentially nothing at all. They rank behind ordinary debt.

Why could BEPPA holders vote down BAM’s proposal? There is a high 75% hurdle and some holders might have sinister intentions: BBI’s assets in liquidation could be bought cheaply. (Do the math: It does not take that many millions to block the vote!)

Tomorrow’s vote will show!

Disclosure: I own some bbn020 (the bond quoted on nzx), but have no other association with BBI.


----------



## WinnieBlues (16 November 2009)

what a disgrace....management, who oversaw this massive destruction, get to keep their jobs and start anew....ords holders are screwed...


what a disgrace of a company....leaving everything to the last minute to raise capital

only ones to have done well are BAM and directors....freakin disgrace


----------



## JackJackJack (16 November 2009)

I am more than willing to contribute my 4c per share to a special fund that could be used to give the thieving directors - how you say - a special bonus


----------



## nulla nulla (16 November 2009)

To be effective, the votes were required to be lodged 48 hours before the meeting. This gives them time to count the votes and know in advance whether they are going to get away with the rort or not. 

It wouldn't surprise me if they canvassed anyone that had'nt voted, to get them in for inclusion before the meeting, if they need a few more votes.


----------



## ACE-03 (17 November 2009)

As a holder of BEPPA and BBI, I personally am happy with the results of yesterday...as an investor anyway...
Do i think RBS would have had a better deal on the table?...Probably...nothing was there in concrete as far as we saw it anyway. BBI are not going to allow an 'obstruction' in the road that increases the chances of director cutting...which by the way i am in favour of.


----------



## bandicoot76 (22 November 2009)

MESSAGE FROM BBI MANAGEMENT TO BBI SECURITYHOLDERS:

"goodbye, farewell and adeiu, you can all p*ss off now cos we done got all your money... suckers!!"

MESSAGE ENDS.


----------



## King EU (24 November 2009)

Sorry if this sounds stupid, but i thought BBI was meant to recommence trading today, but when i look them up on comsec they are invalid. any ideas?

OK, it seems that they are temp. under BBIDA, but this doesn't show in my portfolio. + how do i know how many BBI shares is worth 1 of these BBIDA ones?


----------



## ep20072008 (24 November 2009)

QUOTE=King EU;512998]Sorry if this sounds stupid, but i thought BBI was meant to recommence trading today, but when i look them up on comsec they are invalid. any ideas?

OK, it seems that they are temp. under BBIDA, but this doesn't show in my portfolio. + how do i know how many BBI shares is worth 1 of these BBIDA ones?[/QUOTE]


yes, same problem with comsec.


----------



## bandicoot76 (24 November 2009)

BBI, BEPPA & SPARKS have now been converted to prime infra shares, 
the conversion rate for BBI is 15000 BBI shares = 1 prime infra share... if you have less than 15000 BBI shares you get nothing.


----------



## acfnais (24 November 2009)

Prime Infrastructure has completed its A$1.5bn (US$1.4bn) recapitalisation. Cornerstone investor Brookfield Asset Management has subscribed for convertible notes worth A$295m and entered into other agreements which give it a 49.9% economic interest in Dalrymple Bay coal terminal. Brookfield now holds a 39.9% stake in Prime Infrastructure. Credit Suisse and Macquarie were joint lead managers and underwriters.


----------



## King EU (24 November 2009)

bandicoot76 said:


> BBI, BEPPA & SPARKS have now been converted to prime infra shares,
> the conversion rate for BBI is 15000 BBI shares = 1 prime infra share... if you have less than 15000 BBI shares you get nothing.




Well then, i hope prime share does not = BBIDA cos they're going for about $4.3 each right now...
----------------------------------------------------------------------


----------



## YELNATS (24 November 2009)

King EU said:


> Well then, i hope prime share does not = BBIDA cos they're going for about $4.3 each right now...
> ----------------------------------------------------------------------




If the conversion is 15000 to 1 and I held about 35000 BBI shares will I get 2 or 3 Prime shares? How can I sell my new Prime shares when brokerage will be higher than the sales value? Shouldn't Prime be selling at about $500 per share when you take into account BBI's last selling price at about .035?

Mysteries???


----------



## drsmith (24 November 2009)

YELNATS said:


> If the conversion is 15000 to 1 and I held about 35000 BBI shares will I get 2 or 3 Prime shares? How can I sell my new Prime shares when brokerage will be higher than the sales value? Shouldn't Prime be selling at about $500 per share when you take into account BBI's last selling price at about .035?
> 
> Mysteries???



BBI holders also get $0.04 per share capital return so for 35000 BBI shares one would get $1400 cash and 2 Prime shares. The intention was to dilute former BBI holders out of existence and the $0.04 per BBI unit was a token payment in relation to that.


----------



## TheAbyss (24 November 2009)

King EU said:


> Well then, i hope prime share does not = BBIDA cos they're going for about $4.3 each right now...
> ----------------------------------------------------------------------




You will get your 4 cents capital distribution also so in effect each BBI share has a value of $0.0403 cents per share (using current BBIDA price of $4.15. 
All subject to you holding at the distribution date of 16 November.

Not good if you have owned for any period of time.


----------



## YELNATS (24 November 2009)

drsmith said:


> BBI holders also get $0.04 per share capital return so for 35000 BBI shares one would get $1400 cash and 2 Prime shares. The intention was to dilute former BBI holders out of existence and the $0.04 per BBI unit was a token payment in relation to that.




Thanks for the info. 

But what use is 2 ridiculous Prime shares? Maybe they should have a buyback of the small unsaleable parcels of shares that they have created.

Otherwise I am forced to buy some more Prime shares to make up a worthwhile saleable quantity. And the minimum purchase value of a transaction is $500.

Surely this could have been handled a lot better.

Signed, Disgruntled BBI investor.


----------



## bandicoot76 (24 November 2009)

this whole fiasco has been a thinly veiled plot by BBI management to steal the companies assets from BBI shareholders and deliver them on a silver platter to brookfield in an effort to keep their own positions secure! 
when i purchased my (considerable) holding of BBI shares it has while i was working on the DBCT X7 coal loading wharf upgrade,  
the management there were promoting the fact that the value of BBI assets MINUS their debt was still about $1/share, at the time bbi shares were worth $.25 so after doing some research including talking to various financial advisors (as well as banska's posts on this very forum) i loaded up on them on the knowledge that even if all went bad there was $1 per share worth of assets after debt so surely if BBI was liquidated i would get something back,
this "restructure' is disgraceful at best and downright corrupt at worst!


----------



## beaver1024 (24 November 2009)

Thanks for the lively debate and analysis that has occurred in this thread. This has been a good lesson in analysing prospective value of a company. I leave BBI a little poorer but a lot wiser.


----------



## ACE-03 (24 November 2009)

The consolidation in Lamens terms...

BBI
1) Each BBI holder recieves a $0.04 + continues to hold their shares. (E.g 100,000 shares recieve $4,000 + continues to hold)
2) Each BBI share in consolidated on a 15,000:1 ratio (100,000 shares now become 6shares - rounded down!)
3) EAch share now have a 'value' of $5.08, these shares are currently trading as BBIDA until 7th of Dec, when they will change to PIH

BEPPA
1) Each BEPPA holder recieves $0.062 per share, (A holder of 100,000 Beppa recieves $6,200)
2) Each Beppa share transfers to BBI on a 1:1081.08 basis (100,000 Beppa become 108,108,000 shares)
3) Now you no longer hold Beppa, you hold BBI which is consolidated on a 15,000:1 (7,207 BBIDA)
4) BBIDA has a value of $5.08 per share, these shares are currently trading as BBIDA until 7th of Dec, when they will change to PIH

I was lucky enough to pick up BBI below $.04 and BEPPA at $0.075, so i am (personally) very happy with the outcome.
Todays trading is VERY interesting...starting to appear as a good buy....will see how tomorrow trades.


----------



## WinnieBlues (24 November 2009)

piece of crap company STILL managed by incompetent fools......the people who led this company down the drain get to keep their jobs, and its all rosy ehhh????

i sold out of beppa while they getting was good....look at the buyers to sellers ratio, more pain to come

when will people learn??????? 

brookfield has totally bent over the average holder while dr dave and jonathon are sipping a chardy and looking on with a grin on their faces........hell, they even supplied the lubricant to help


----------



## nulla nulla (24 November 2009)

Hmmmm...I must need more lubricant because I still feel the pain. Tomorrow i get $0.04c per original shareholding in bbi and must make the decission whether or not to buy enough shares to increased my reduced holding to a parcel of more than $500.00 value or wait and see what they offer to do about unmarketable parcels. Somehow I feel i am going to get shafted again.

The good thing is that the funds i receive will probably be sufficient to contribute to a fighting fund for any class action taken against the company and former directors.


----------



## bandicoot76 (24 November 2009)

nulla nulla said:


> Hmmmm...I must need more lubricant because I still feel the pain. Tomorrow i get $0.04c per original shareholding in bbi and must make the decission whether or not to buy enough shares to increased my reduced holding to a parcel of more than $500.00 value or wait and see what they offer to do about unmarketable parcels. Somehow I feel i am going to get shafted again.
> 
> The good thing is that the funds i receive will probably be sufficient to contribute to a fighting fund for any class action taken against the company and former directors.




be very careful throwing good money after bad my friend! i went down a similar path after CUO was destroyed by similar parasites and the only people who won were the lawyers, and the BBI bigwigs can afford bigger and better and more lawyers than we can... even if they lose they'll keep apealing the decision til you run out of cash and spirit to continue the fight. consider it a learning experience and move on, take your cash and invest it in something decent like WOR or CPB.... at least they have a good management team!


----------



## drsmith (24 November 2009)

YELNATS said:


> Thanks for the info.
> 
> But what use is 2 ridiculous Prime shares? Maybe they should have a buyback of the small unsaleable parcels of shares that they have created.



Not much.

If we were still in the days of paper share certificates you could have at least used that as bum fodder. A buyback may occur to formally exorcise BBI holders from the registry.

The rudest suprise of all awaits any SPARCS holders who converted. I'm still struggling to understand how the directors got away with that.


----------



## danros (25 November 2009)

ACE-03 said:


> The consolidation in Lamens terms...
> 
> BBI
> 1) Each BBI holder recieves a $0.04 + continues to hold their shares. (E.g 100,000 shares recieve $4,000 + continues to hold)
> ...




OK, so lets see if I have this straight...I had 20,000 BBI stapled securities.  Now, according to etrade, I have 1 BBI share worth $0.04.  If I understand correctly, I should actually have 1 BBIDA share which is currently worth about $4.17 and a payment of $800 coming my way.  The BBIDA share will become a PIH share in early December I think?? Will I get a cheque in the mail for the $800??


----------



## ACE-03 (25 November 2009)

danros said:


> OK, so lets see if I have this straight...I had 20,000 BBI stapled securities.  Now, according to etrade, I have 1 BBI share worth $0.04.  If I understand correctly, I should actually have 1 BBIDA share which is currently worth about $4.17 and a payment of $800 coming my way.  The BBIDA share will become a PIH share in early December I think?? Will I get a cheque in the mail for the $800??




Correct, you had 20,000 BBI which you will recieve $0.04 per share for, so you will recieve $800.00.
Those 20,000 shares are now consolidated on a 15,000:1 basis, so 20,000 / 15,000 = 1.34 shares, this gets rounded down to One, so now you have one share remaining in BBI(DA) with a currently trading at $4.17.  There are thousands of people in your shoes and i would expect a buyback offer for people with few shares.


----------



## WinnieBlues (25 November 2009)

no interest at all in this crap company...

still managed by the same people who had their heads in the sand, and left everything to the last minute

stilll have westnet rail and euroports in the coffers...westnet needs major upgrading through the network and euroports was a disaster purchase, for which bbi got screwed offloading some for bugger all

and bbi management get to keep their jobs.......they are the unflushables.....you can't get rid of them no matter how hard u try


----------



## nulla nulla (26 November 2009)

I just checked my bank account for the receipt of the bbi capital return promoted as being $0.04 per share prior to the General Meeting to approve the restructure and to my disgust I find that I have only received $0.037978591 cents per share. 
On ringing the Registry I am advised that there has been an amount withheld but they can't advise me why. This is a capital return not a distribution accordingly there shouldn't be any tax on it.
In my opinion these people have to take the award for the most corrupt, misleading and incompetent people that have ever been appointed directors of a company. I have held these shares for a very long term and it appears the people feathering their own nests at the expence of the directors have failed in their duty to disclose that the $0.04c capital distribution in the restructuring proposal would be subject to withholding amounts.  I also wonder how many people bought shares at $0.035 thinking they would get a return of $0.04 when the restructuring went through unaware of a non disclosed withholding?


----------



## beaver1024 (26 November 2009)

danros said:


> Will I get a cheque in the mail for the $800??




If you haven't already entered direct debit details to the linksharemarketservices site then they will send the distrubution to you in a cheque.

Hmm, what should I spend my meager amount on as comfort spending for having a lost so much value?


----------



## ACE-03 (26 November 2009)

nulla nulla said:


> I just checked my bank account for the receipt of the bbi capital return promoted as being $0.04 per share prior to the General Meeting to approve the restructure and to my disgust I find that I have only received $0.037978591 cents per share.
> On ringing the Registry I am advised that there has been an amount withheld but they can't advise me why. This is a capital return not a distribution accordingly there shouldn't be any tax on it.
> In my opinion these people have to take the award for the most corrupt, misleading and incompetent people that have ever been appointed directors of a company. I have held these shares for a very long term and it appears the people feathering their own nests at the expence of the directors have failed in their duty to disclose that the $0.04c capital distribution in the restructuring proposal would be subject to withholding amounts.  I also wonder how many people bought shares at $0.035 thinking they would get a return of $0.04 when the restructuring went through unaware of a non disclosed withholding?





Hmmmm...that is odd...very strange indeed.
I was a buyer at $0.036 and received my full $0.04 today. I would be nagging for a 'please explain' to the registry rather than taking 'can't explain why'


----------



## TheAbyss (26 November 2009)

Had you disclosed your Tax file number etc? For 100 characters, they may have withheld if you hadn't advised them.


----------



## Helmie10 (26 November 2009)

I don't get it i just looked at my account for the first time in a while and BBI was stripped from my portfolio and i was deposited all the money that i held left in the shares which unfortunately was a lot less then when i last looked.

But now i read that i should have only got paid a fraction of what i did?


----------



## ACE-03 (27 November 2009)

Helmie10 said:


> I don't get it i just looked at my account for the first time in a while and BBI was stripped from my portfolio and i was deposited all the money that i held left in the shares which unfortunately was a lot less then when i last looked.
> 
> But now i read that i should have only got paid a fraction of what i did?




The amount you should have received is $0.04 per share. If your shares have been stripped to nil, it means you you would have help less than 15,000 shares. (as the consolidation of 15,000:1 is rounded down)


----------



## etingsoon (27 November 2009)

ACE-03 said:


> The amount you should have received is $0.04 per share. If your shares have been stripped to nil, it means you you would have help less than 15,000 shares. (as the consolidation of 15,000:1 is rounded down)




Is that means, if I got less than 15,000 shares, then I will getting nothing. Even the $0.04 per share money.


----------



## ACE-03 (27 November 2009)

etingsoon said:


> Is that means, if I got less than 15,000 shares, then I will getting nothing. Even the $0.04 per share money.




No no, you will still get your $0.04 for every share you held. However you will no longer be a holder of BBI.
Example: If you held 10,000 shares you get $0.04 per share ($400)
THEN under the new consolidation of 1 new share per 15,000 you get .66 of one share which is rounded down to nil, 

If you held 50,000 shares you would receive $2,000 (50,000 x $0.04)  and still hold 3 shares 
(50,000 / 15,000 = 3.33 shares. rounded down to 3)


----------



## Albi (27 November 2009)

The whole things are so complicated. I have bought BBI on .170 and holding it since a long time with hope that oneday it will be back on its price. But unfortunately lost a huge amount  of my saving. Today I received 4000$ cheque and in my account it is showing 6 shares. I couldnot understand the process.


----------



## skyQuake (27 November 2009)

Albi said:


> The whole things are so complicated. I have bought BBI on .170 and holding it since a long time with hope that oneday it will be back on its price. But unfortunately lost a huge amount  of my saving. Today I received 4000$ cheque and in my account it is showing 6 shares. I couldnot understand the process.




You get 4c per share. So your 100,000 shares gets u $4,000.

And it consolidates 15,000 to 1, rounded down. Then u get ur 4 new shares of BBI (now called prime infrastructure)

I guess it will never come back to ur breakeven point. Hope you have learnt an important lessons about stop losses.


----------



## jono1887 (28 November 2009)

nulla nulla said:


> I just checked my bank account for the receipt of the bbi capital return promoted as being $0.04 per share prior to the General Meeting to approve the restructure and to my disgust I find that I have only received $0.037978591 cents per share.
> On ringing the Registry I am advised that there has been an amount withheld but they can't advise me why. This is a capital return not a distribution accordingly there shouldn't be any tax on it.
> In my opinion these people have to take the award for the most corrupt, misleading and incompetent people that have ever been appointed directors of a company. I have held these shares for a very long term and it appears the people feathering their own nests at the expence of the directors have failed in their duty to disclose that the $0.04c capital distribution in the restructuring proposal would be subject to withholding amounts.  I also wonder how many people bought shares at $0.035 thinking they would get a return of $0.04 when the restructuring went through unaware of a non disclosed withholding?




no withholding on my distribution. Just waiting for the cheque to clear.. hopefully it doesnt bounce :
now what to do with my 8 shares worth $33 which will cost me $20 in brokerage to sell off


----------

