BBI - Babcock & Brown Infrastructure

[banska bystrica]

I call it as I see it. That Corus announcement was very negative in my opinion. It has the potential to affect future revenues substantially and BBI indeed stated that if Corus do pull out, BBI will probably be making a write down of PD Ports in the year end accounts. This would be the first impairment of BBI assets.
Not good when trying to sell it. It has got to be a negative on the potential price a buyer would pay. Combined with the Euroports announcement a week or so ago, it is two lots of bad news from the Transport Division in the Northern Hemisphere.
I view the big volume buying as positive. One would think there is a significant "event" going on in the background that is over-powering the two negatives that have been announced. That event could only be the DBCT sale process given the fact it has the potential to eliminate virtually all of BBI's corporate debt if 100% sold.

 

[investorpaul]

I view the big volume buying as positive. One would think there is a significant "event" going on in the background that is over-powering the two negatives that have been announced. That event could only be the DBCT sale process given the fact it has the potential to eliminate virtually all of BBI's corporate debt if 100% sold.

I dont really understand the share price at the moment, a huge run over the last couple of weeks, negative news and a speeding ticket today yet it basically maintains its price.

I do hope the Mac Bank have leaked and the price is being sustained because of positive news that is yet to be released.

I guess the question is are long term holders who believe the company is undervalued going to jump ship? I personally wont, however I am now hoping positive news gets releases sooner rather than later because my fear is people could dump this like a ton of bricks if no positive news eventuates.

 

[banska bystrica]

I dont really understand the share price at the moment, a huge run over the last couple of weeks, negative news and a speeding ticket today yet it basically maintains its price.

I do hope the Mac Bank have leaked and the price is being sustained because of positive news that is yet to be released.

I guess the question is are long term holders who believe the company is undervalued going to jump ship? I personally wont, however I am now hoping positive news gets releases sooner rather than later because my fear is people could dump this like a ton of bricks if no positive news eventuates.

If the buying we have seen is DBCT related, then fine. However, if it is just the bullish market and there is no real substance to the buying, it will indeed deflate like a pricked balloon.
I'm holding because the volume says some very positive news is imminent. If it all falls in a heap to below 10c again, I'll cop it on the chin.

 

[investorpaul]

If the buying we have seen is DBCT related, then fine. However, if it is just the bullish market and there is no real substance to the buying, it will indeed deflate like a pricked balloon.
I'm holding because the volume says some very positive news is imminent. If it all falls in a heap to below 10c again, I'll cop it on the chin.

Without the huge volume and given the bad news would you have looked to reduce your holding?

Hopefully imminent is less than 2 weeks, todays announcement is a bit unnerving for me

 

[fuzzie]

I think BEPPA is still the long term play with the risk reward stacked in its favour. Short term trading opportunities are all around at the moment, but that's not what most of this thread has been about. You have to decide what camp you are in or you'll have a nervous breakdown. There are no guarantees the bear market is over.

 

[random]

The sp has headed north since my last input on this site some time ago, which of course is great news for all of us happy with our lot but todays news by Corus is of great concern to me also.

Whilst realising volumes of trade through the ports will be down overall do the gec it still comes as a bigger than expected "probable hit" to us in the short term.

Don't get me wrong - I'm still happy with my holding and expect it to shine in a few years but what it does reinforce to me is that we are unlikely to hold onto the 51% in DBCT. A full sale of DBCT is almost inevitable IMHB. Survival is still our number one goal even though it hurts me so much to sell this jewel. The ports will come good in a few years and show what a great investment it is but timing as we all know is everything.

Thats the negative vibe.

The good vibe is that the sale will put a shine on all our dials because we will get money to extinguish that awfull corporate debt once and for all and I've got no doubt that many deep and meaningful conversations are going on to determin its value to individual and united purchasers. Its good that Mac Bank is involved to, and as BB said they leak like a sieve - but thats not such a bad thing for us is it?
I mean look at volumes and sp.

Would it be a different story if we were doing our own consultations and bargaining?? mmmm

I do reckon however that we will see another substantial drop before it heads north with any real momentum.
Cheers

 

[Viva_Las_Vegas]

Am I reading the latest SPARCS announcement correctly that no conversion requests were received?

If that is the case is that why the price went up just before market close as it eliminates the possibility of dilution?

OR.....


Is the meeting this friday the most important?

 

[awg]

I have attached a BEPPA chart showing last 2 months price and volume.

for yall to look at

biggest volume and range of any day so far.

I was watching the price today, and it was very volatile.

someone is still accumulating, day traders are well on this now as well IMO

not to bad for a red day,

looking at that volume chart, another interesting one ahead

 

[nathanblack]

no WITHDRAWLS of previous conversion requests were recieved. fridays meeting is still the relevant thing.

cheers

 

[BSDL]

no WITHDRAWLS of previous conversion requests were recieved. fridays meeting is still the relevant thing.

cheers

Hi Nathan

Can you expand on this please? As I see it there are 2 things that can happen,

1, The conversion goes ahead on 17th May 2009
2, It gets delayed for 1 year

How will either of those events impact on the share price?

cheers

 

[ricee007]

Hi Nathan

Can you expand on this please? As I see it there are 2 things that can happen,

1, The conversion goes ahead on 17th May 2009
2, It gets delayed for 1 year

How will either of those events impact on the share price?

cheers

If conversion goes ahead:
SPARCS gets converted to BBI, BBI gets diluted.
SPARCS doesn't get converted, BBI pays higher interest to SPARCS holders and delays the payment.

SPARCS gets converted to BBI, BEPPA moves up a step in priority (SPARCS disappears, in a winding up, BEPPA gets payments first)
SPARCS doesn't get converted to BBI, SPARCS remains in priority to BEPPA and pays a higher rate of interest.

As to effect on SP, IMHO, SPARCS conversion is moderatly negative for BBI and mildly positive for BEPPA

As to effect on SP, IMHO, SPARCS NOT converting is mildly positive for BBI (depending how much interest rate is / time to maturitiy), and mildly negative for BEPPA.

 

[nathanblack]

agree completely with ricee.

suspect the vote will result in rolling over SPARCS for new terms. the new terms obviously will be benefitial to holders. but at the same time an extra 1 or 2pct is cheap for BBI in the current environment and with there credit rating. a bit of a win-win.

once SPARCS has been pushed aside, management can concentrate on other matters. it creates some certainty and investors and bankers may be more willing to invest, knowing that SPARCS doesnt need any near term capital.

since most on here agree BBI will survive and only needs time to sort some stuff out, delaying SPARCS seems the logical response. we think they can handle BEPPA in 2012, so im sure they can handle SPARCS in a year or 2.

cheers

 

[investorpaul]

Not as wild an open as yesterday, a slight sell off of BBI and BEPPA but I think we can now conclude that the market has basically shrugged off the negative announcement yesterday, except for "minor" profit taking.

It will be interesting to see how it closes.

 

[wesleysnipesjr]

This is link is interesting. Although it doesn't tell us anything we don't already know.

BBI asset sales under pressure

 

[investorpaul]

Also of interest on BBI is two trades of 1,000,000 units.

One occurred at 10:01am and another at 10:24am both for 1m units at 15 cents and was a cross trade, it would be interesting to know who the buyer is. Ill keep an eye on the depth/trades to see if they pick up any more

 

[hardyakka]

I think that we need to put this all into perspective. there has been two lots of bad news out, one major (Corus) and we have still seen the share price move materially north over the last 4/5 weeks.

Rather than move on the 'slowly but surely" basis, it has jumped significantly in the last week or so yet is still holding onto the majority of those gains.

I do not see this as a problem in the least because IMO small movements with consolidation is much more preferable than spiky movements that may not be held. With small movements it established a new floor for the price. This goes back to the discussion mentioned many times of the short term versus long term holder.

What we are seeing is volume start to build, possibly indicative of the start of instituitional buying, but as we all know the trigger for this will be the DBCT announcement.

Don't forget, wasnt it only a few months ago that there was widespread concern over the massive potential SPARCS dilution at about 5 cents. How many now consider this still a concern, after the DBCT announcement I feel that the same thoughts will apply to Corus. Yes it was an issue, but not significant in the overall scheme of things.

Cheers

 

[investorpaul]

Another trade of 1,000,000 units just went through at 14.5cents.

So far thats 3 trades for 1m units each, all cross trades, within the hour. The trades are going through with gaps of 20 to 30 mins so it will be interesting to see if it continues.

 

[Mitsimonsta]

The thing to remember is that Corus is not yet shutting down their plant, it is merely the start of the possibility of it shutting down.

If Corus can enforce the contract with the consortium to take 70-odd percent of the plant offtake, then everything keeps going for a while. Even if we get a 2-year extension, it might just be enough to stabilise the PD ports revenue, and hence price when it is sold. I believe that in 2 years time, the global steel market will have improved due to increased demand as things get moving again.

I would agree with yakka, ~15c is the new support level for BEPPA and that is not a bad thing. A couple of positive announcements - including SPARCS conversion later this week - should help the BEPPA price significantly..... I will throw out a +30% figure as a guess. I'd expect it to trade about 20c.

I'm still around +80% on my buys, so not worried at this stage. While I have basically decided I will not be buying any more BEPPA, if it falls to about 12.5c then I may just be tempted. I would be happy to buy at just under 50% gain over current average. Any higher and it will not add value to my current holding, just raise my buy average.

 

[banska bystrica]

The Corus news is terrible and has shocked BBI. It came out of left field. PD Ports will almost certainly suffer an impairment as a result. BBI has $170M worth of corporate debt due for rollover in July. This $170M is attached to PD Ports.

The Euroports issue is still a way off being resolved.

SPARCS meeting on Friday is a non-event in comparison.

The other concern is the mark to market losses of 250M on FX and interest rate hedges. Whilst this does not affect cash flow, it would be a concern if the counter parties to the transactions called in their profits. This would probably only happen if BBI went into administration. Then the losses would be realised and very real and knock off about 10c per BBI worth of equity.
Not a huge problem but certainly not nice.

A sale of DBCT by June 30 is vital. Simple as that. Without it, BBI are in trouble.

 

[hardyakka]

The Corus news is terrible and has shocked BBI. It came out of left field. PD Ports will almost certainly suffer an impairment as a result. BBI has $170M worth of corporate debt due for rollover in July. This $170M is attached to PD Ports.

The Euroports issue is still a way off being resolved.

SPARCS meeting on Friday is a non-event in comparison.

The other concern is the mark to market losses of 250M on FX and interest rate hedges. Whilst this does not affect cash flow, it would be a concern if the counter parties to the transactions called in their profits. This would probably only happen if BBI went into administration. Then the losses would be realised and very real and knock off about 10c per BBI worth of equity.
Not a huge problem but certainly not nice.

A sale of DBCT by June 30 is vital. Simple as that. Without it, BBI are in trouble.

BB,
I agree with you on DBCT, of course any price achieved above the book of $1.9B (100%) will also contribute to the NTA per BBI security. So the way I see it is that BBI holders may take a hit of 10 cents, yet at the same time will receive a boost from the sale of DBCT. I have not even tried to calculate this number but would estimate it would be about 25+ cents ($0.9B profit/2.4B securities).

From the viewpoint of a BEPPA holder the pluses and minuses attributable to the NTA of the ordinary securities should not in theory be a concern for BEPPA holders.

However you are spot on in that if the sale of DBCT does not go through then we are in trouble. To take a hit and have to write off my total holding of BEPPA because BBI failed would be a very unpleasant and costly experience.

But then what would Warren Buffet do in this climate? i would guess he would be buying!!

Cheers