BBI - Babcock & Brown Infrastructure

[Tysonboss1]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

http://www.reuters.com/article/hotStocksNews/idUSSYU00903920091112

BBI voters aren't your problem Mr Sellar. BEPPA voters are!

 

[beaver1024]

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]

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]

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]

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.