BBI - Babcock & Brown Infrastructure

[persistentone]

...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]

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]

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]

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.

Are you super bull or super bear or perhaps both ?

Below is another one of your now super bearish comments from July.

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.

 

[banska bystrica]

Well July comes before August good buddy...............................................................................................
Some people really have no idea.

 

[drsmith]

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]

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]

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.

 

[$$Punt$$]

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]

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]

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]

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]

...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]

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]

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]

Your own post (2362) which I have quoted in post 2364 reads quiet differently.

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]

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.

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;

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.

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]

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]

... 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]

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.