BBI - Babcock & Brown Infrastructure

[Tysonboss1]

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]

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.

Remember they will be consolidated at 1:15,000 so your 55,000,000 BBI's will become 3,667 new BBI's.

 

[Tysonboss1]

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]

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]

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]

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]

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.

 

[$$Punt$$]

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]

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]

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.

BB or anyone else: Does BEPPA have asset-level claims on Alinta's gas networks? Wow, how did I ever miss that one?!

 

[JackJackJack]

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]

This is what I said about the directors in July.

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.

 

[$$Punt$$]

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]

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]

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]

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]

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]

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]

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]

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.