BBI - Babcock & Brown Infrastructure

[Tysonboss1]

honestly I would be gutted if I lost what I had invested in it.

It's not that bad, The most you can lose is 100%, unlike some other investments, and you stand to gain well in excess of 1000%.

From your posts I can see that your emotions seem to swing with news and daily market results, you need to try and stop this happening.

before you make an investment, decide what it is you want the investment to achieve, conduct as much research as possible to try and find out how likly it is the investment will achieve this outcome. if it is a longterm out come you want, then detach yourself from short term volitilty, and monitor only things that will affect the investment achieveing the goals you set out to achieve.

 

[prawn_86]

I take it that you don't support BBI as a security and /or comany/business model? This is actualy a serious question.

For me personally (cant speak for ROE) its that I dont fully understand the business model. There are alot of complex 'banking' issues involved and I would rather stick with co's that are clear cut and i know what they are doing financially

 

[banska bystrica]

"You are dreaming if you think the NTA is 88 cents.

What about the $700M of pref share dilution? How do you propose they deal with this? Where is the $700M going to come from to repay these?

Pure fantasy."

I suggest dargie reads pages 28 and 29 of the 2009 Interim Results released on March 27, 2009. The NTA and NAV figures take into account full repayment of debt, SPARCS, NZ bonds and BEPPA. FULL repayment.
Some posters who give the impression of understanding financial statements are really showing a very basic lack of understanding.

 

[hardyakka]

"You are dreaming if you think the NTA is 88 cents.

What about the $700M of pref share dilution? How do you propose they deal with this? Where is the $700M going to come from to repay these?

Pure fantasy."

I suggest dargie reads pages 28 and 29 of the 2009 Interim Results released on March 27, 2009. The NTA and NAV figures take into account full repayment of debt, SPARCS, NZ bonds and BEPPA. FULL repayment.
Some posters who give the impression of understanding financial statements are really showing a very basic lack of understanding.

BB,

I am speechless, the impression given by the death spiral king aka dargie is the complete opposite.

Cheers

 

[bellenuit]

Interest Bearing Liabilities and Deferred Tax Liabilities

I have just commenced reading the investor pack, so excuse me if this has been answered later in the pack.

The calculation of Net Assets on page 12, shows that Net Assets have fallen from $3.09B at 12/07 to $2.36B at 12/08, a decline of $0.73B.

Total Assets have increased by $2.78B in the same period, but Total Liabilities have increased more, by $3.50B.

The two components that have contributed most to the increase in Total Liabilities are Interest Bearing Liabilities, which have increased by $2.26B and Deferred Tax Liabilities, which have increased by $0.67B.

I assume that the Interest Bearing Liabilities refers to the debt that was taken on to purchase the assets that caused the Total Assets to increase, but what are Deferred Tax Liabilities all about.

The decrease in Net Assets of $0.73B is comparable to the increase in Deferred Tax Liabilities of $0.67. Are Deferred Tax Liabilities something that will continue to rise, eroding the value of Net Assets over time?

 

[Viva_Las_Vegas]

It's not that bad, The most you can lose is 100%, unlike some other investments, and you stand to gain well in excess of 1000%.

From your posts I can see that your emotions seem to swing with news and daily market results, you need to try and stop this happening.

before you make an investment, decide what it is you want the investment to achieve, conduct as much research as possible to try and find out how likly it is the investment will achieve this outcome. if it is a longterm out come you want, then detach yourself from short term volitilty, and monitor only things that will affect the investment achieveing the goals you set out to achieve.

Tysonboss you've hit the nail on the head with me pal. I do swing too much with daily market results etc. It does nothing but cause me frustration, and it shows how new I am to the markets. I hope to reign in my emotions and treat this as a long term investment and maybe top up if it gets cheaper.

There is one thing though relative to daily markets which I would like to get all of your opinions on, particularly Banksa. Say hypothetically BBI drops to 1 cent. Would this panic anyone or would you buy more?

What I saw last week with the sharp spike in SP....FOLLOWED by an announcement also led me to think there was some insider trading going on. So my point is IF BBI hit 1 cent, could it be for good reason and not just the overall market trend?

Like I said in another post sometimes it is difficult for us to see the negatives in something we have invested sizeable amounts of money in, so perhaps we do not discuss the negatives. That is a trap I wish not to fall into.

Good luck out there today all you battlers.

PS I have added myself to the loser thread!

 

[banska bystrica]

bellenuit,
Good post and I'll deal with those questions later.

Some people are suggesting that the threat of massive dilution from BEPPA in 2012 is the reason for the price of BBI being trashed to 6c.

Personally, I think the threat of BEPPA dilution in 2012 has very little to do with the BBI price in 2009. I speak with four brokers, a hedge fund manager and two insto dealers. When I have mentioned the BEPPA issue in 2012, the response has been the same from all parties. It's not an issue right now. The market is flat out looking three weeks ahead let alone three years.
Unanonymously, they all say the share price being in the bathroom is due to the GFC and it's effect on all stocks but primarily those stocks with excessive debt, the complex nature of BNB, its satellites and the structures, the management agreement between BNB and BBI and a flight to cash globally.
It has very very little to do with BEPPA. In fact, BEPPA's effect on BBI doesn't rate on the radar of the market participants I speak to.
This "death spiral" talk we constantly hear of from certain posters is just nonsense. Sure, BBI has to deal with BEPPA in three years time but to be honest, if assets sales eventuate in the manner I envisage, BBI will be a very different company and its share price in 2012 will be a big multiple of what it is today.
Therefore, I expect the BEPPA issue to be handled with ease as a conversion of BEPPA to BBI at parity is at worst "neutral" to BBI. If a company can swap a debt (BEPPA) for equity at an equivalent price, then that's not dilutionary to existing BBI holders because whilst you may see 800M new BBI shares issued, BBI will have also extinguished an $800M liability from the balance sheet.
BEPPA will be taken care of in 2012.

 

[banska bystrica]

What's BNB going under got to do with BBI. BBI own quality monopolistic infrastructure assets, do not have any debt relationship with BNB, and are not under a forced selling program. They have decided to sell assets only at book value or above to reduce corporate debt.
I cannot see what the panic is all about. Stepped in and bought 800,000 at 2.5c today. Put in the drawer and wait for the credit markets to thaw.

Viva,
That's how I approached the situation last November when the stock hit a low of 2.4c. Maybe that will give you an idea of how I would approach matters if BBI weakened to 1c?
Of course if it weakened to 1c for justifiable reasons I would have to re-evaluate but if nothing fundamentally has changed from when the price was 6c to 1c, of course I would buy as many as I could afford. I actually sold some blue chip shares to buy BBI under 4c and it has been a very wise decision, even at today's pitiful price of 6c.

 

[Mitsimonsta]

Of course if it weakened to 1c for justifiable reasons I would have to re-evaluate but if nothing fundamentally has changed from when the price was 6c to 1c, of course I would buy as many as I could afford. I actually sold some blue chip shares to buy BBI under 4c and it has been a very wise decision, even at today's pitiful price of 6c.

BB;

This of course is the wisest action in a bear market. Bring your cost average down, as long as the fundamentals are still sound. I have done it with FXJ which was issued to me at $5.09 after the RUP merger. I now have it a $3.16 and will come down to $1.80-ish depending on how many shares I am given in the rights issue.

I realise that FXJ is not the soundest of stocks, but I desperately need to bring the average down to something I believe it can hit in the medium term.... say 2 years once we have a recovery.

If I am not granted all the FXJ I applied for, the refunded cash is going into BEPPA, along with my Happy-Rudd-payment. I see BEPPA as a excellent capital growth potential for my portfolio, where I have mainly bluechips for dividend purposes.

I would be well pleased to see the BEPPA price come down to under 5c again.

 

[Viva_Las_Vegas]

BB,

Further to your compelling arguements re BBI's asset worth members should have a read of this article

http://steelguru.com/news/index/200...nts_Macquarie_for_sale_of_flagship_asset.html

In particular one qoute "The company's situation has been worsened by the slump in its share price, which now values BBI at only USD 154 million. That is far below the value of its individual assets such as Dalrymple Bay and has ruled out any prospect of BBI raising new capital to pay back its USD 10 billion debt."

AND

"Analysts have estimated that Dalrymple Bay could be worth USD 1 billion if its own debt of USD 1.7 billion is excluded. But potential buyers will have to take on those borrowings as part of any sale of the whole facility."

My only question being, what has happened to companies in the past where their worth has been less than the total value of their assets?

 

[deano9801]

I'm going to invest around $1000 in either BBI or BEPPA. I am new to trading and I'm confused as to which to buy? Do you think the Complexities of BEPPA would just confuse me and I'm better to stick to buying BBI? Any advice appreciated. Thanks.

 

[Mitsimonsta]

I'm going to invest around $1000 in either BBI or BEPPA. I am new to trading and I'm confused as to which to buy?

I would go for BEPPA, only because they are higher up the creditor ladder than standard BBI as they are a preference share.

 

[fuzzie]

I've been watching the BBI trades today and a number of times I have seen buy orders go through with a very low number of shares - as little as 1 share.

Who or why would place an order for one share at 5.6c? These trades do not seem to be the left over scraps of some other larger order and they don't seem to be 'hidden' trades that are moving larger undisclosed size parcels.

 

[fuzzie]

After reading the press release about IEG selling GASGEN for an 'accounting' loss of €13 million, I went looking through the investor packs to see what they had valued it at, but can't find any mention of asset value. So what price did they sell for?

 

[fuzzie]

And now there has been a whole trailer load of after market trades during the 'adjust' period at the lowest price of the day. I understand these are probably accounting for the off market trades reported during the day, but it seems a big coincidence they would all be at the same price. I wish I understood more of the mechanics going on here!

 

[random]

Fuzzie this is something that has bothered me many times over.
Altogether there were 3,180,000 odd shares traded after close at .055.
17% of todays trades in total. Not an insignificant number.

I also would love to know how this works!!!???

 

[select]

I'm going to invest around $1000 in either BBI or BEPPA. I am new to trading and I'm confused as to which to buy? Do you think the Complexities of BEPPA would just confuse me and I'm better to stick to buying BBI? Any advice appreciated. Thanks.

Deano,

If a gun is at your head and you must buy into BBI here are my thoughts.

It may be best for you to wait until the SPARCS vote.

If the vote is YES i would buy BEPPA.

If the vote is NO i would buy nothing.

Reason being that if the vote is YES then BEPPA stand a better chance of getting more than they currently would in the event admin occurs.

If the vote is NO then BEPPA holders are in the same boat they are currently in because they will have the same number of SPARCS that rank ahead of them and security (bbi) holders will more than likely get nothing.

Maybe BBI in all forms is a case of transfering stock from the smart to the wishful.

But if it's the punt you want it is important to be as far up the food chain as possible.

Or of you don't care, just throw some money at BBI and keep your fingers crossed that that "once in a lifetime" opportunity occurs.

 

[banska bystrica]

select/macrae12,
Still waiting for some factual evidence that BBI is a dog of a stock with no future. Waiting with baited breath......still waiting.

 

[hardyakka]

I'm going to invest around $1000 in either BBI or BEPPA. I am new to trading and I'm confused as to which to buy? Do you think the Complexities of BEPPA would just confuse me and I'm better to stick to buying BBI? Any advice appreciated. Thanks.

Deano,
BBI has world class quality infrastructure assets and a small investment has the potential to earn 5 to 10 time sthe amount invested.

In summary BBI has NTA of $2.4B, or about a $ per unit. If assets are realised at book or above and debt paid down then BBI has the potential to increase to 50 cents or more over the next few years. BBI is the code for the equity of BBI, it retains all the risks and rewards of equity ownership.

BEPPA is a preference share and is basically a liability in the BBI balance sheet. The BBI NTA of $2.4B is AFTER deducting the amount payable for the BEPPA, about 0.8B. In addition BEPPA is earning interest, which in 2012 will amount to about 20 cents per BEPPA. So if BEPPA are repaid in 2012 you will receive $1.20 for each BEPPA ($1 for the BEPPA and 20 cents accrued interest).

The beauty of the BEPPA is that the BBI NTA is like a safety cushion. Any further charges to the BBI accounts get deducted first from the BBI NTA of $2.4B before anything affects BEPPA. So you could write $2B off of the assets and BBI total NTA would be 0.4B (2.4-2) and the value of BEPPA is unchanged. BBI will not receive a cent until BEPPA is paid in full. Personally I expect BBI NTA to increase, not reduce.

I have invested solely in BEPPA, it safer than BBI because of its priority in payment, but still is high risk but very high possible reward. They will come good so long as BBI can manage its way out of its current position which in my opinion and by their actions to date they will be able to do so.

You must form your own view and opinion, however let facts influence you. Anyone can make statements like "its trash", "BBI will go bust/into admin/will enter a death spiral" and other such comments.

Cheers

 

[Viva_Las_Vegas]

Hi fellow death spiral investors!

What is everyone's opinion regarding BBI's announcement relating to the 100% sale of GASCAN? Does this write off some of their debt? Or does it write off the debt of its subsidiary?

Note: There is a thread on this site called best and worst stocks of 2008, BBI rates an honourable mention as the worst.

Good for all those who wish to buy cheap!