BBI - Babcock & Brown Infrastructure

[investorpaul]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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).
....

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]

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).
....

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]

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]

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.

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]

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]

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