BBI - Babcock & Brown Infrastructure

[Mitsimonsta]

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]

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]

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]

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

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]

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]

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]

2 Hours later.... beppa down, equal # sells as buys

...Obviously don't trust my guesses..

... Still holding beppa long term

 

[fureien]

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]

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]

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]

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]

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]

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]

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]

Nice small rises in SP every day is a good thing. Today's BEPPA performance gives me a little more hope.

 

[investorpaul]

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]

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]

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]

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]

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.