BBI - Babcock & Brown Infrastructure

[prawn_86]

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

People love to use Buffet to try and compare their investing too. IMO Buffet would not be buying a company is possibly teetering on the edge of bankcruptcy or with huge debt issues. He would be buying companies with solid earnings histor and stability that had been oversold due to fear or bad management.

All imo

 

[Tysonboss1]

People love to use Buffet to try and compare their investing too. IMO Buffet would not be buying a company is possibly teetering on the edge of bankcruptcy or with huge debt issues. He would be buying companies with solid earnings histor and stability that had been oversold due to fear or bad management.

All imo

BBI situation is not that different from Goldmen sashs before buffet invested $5B,...

and people say,.. 'oh, but buffet got 10% interest buy investing in a special prefrence share,... average investors can't do that'

Hello,.... BEPPA is a prefrence share and is earning 30% interest based on todays price.

 

[prawn_86]

Yes but the standard BBI investors cant assure the future of the company (ie $5bill) and also replace the management team and take a controlling stake etc etc

 

[investorpaul]

BEPPA is trading at a small discount to BBI at the moment, great for anyone who wants to swap over.

I hope todays losses are just a pull back after last weeks run, it would push my nerves if it was to reverse to 10 cents or thereabouts.

Given that the whole market is down, i guess it isnt too bad

 

[banska bystrica]

prawn_86,
You are spot on with your comments.

The market is finally waking up to the fact that the PD Ports news was terrible. I cannot put it any other way. I call it as I see it.
I am committed to holding BBI/BEPPA because it is still my view that DBCT will sell at a very good price.
If for any reason DBCT does not sell, have no doubt.... BBI are in big trouble.
It all hinges on asset sales. In that regard, nothing has changed since March when the stock was 3c. It rose over 500% in two months. Naturally some people will take some money off the table.

 

[Mitsimonsta]

Appears to be alot of money going off the table today. Anything under 12.5c is possibly worth buying with my current average and last buy price.

 

[investorpaul]

Appears to be alot of money going off the table today. Anything under 12.5c is possibly worth buying with my current average and last buy price.

Mitsimonsta the announcement yesterday isnt of concern to you? or you were always planning on increasing your stake and are hoping to get a cheaper entry because of the announcement?

 

[tracytop]

it seems there is some support at $0.14

By the way, just a silly question.
If BBI falls, Is Beppa going to be calculated based on its face value $1+interest or simply just the market price.

Because even it is some fraction of $1, it will still much better than its current market price.

thanks.

 

[Mitsimonsta]

Mitsimonsta the announcement yesterday isnt of concern to you? or you were always planning on increasing your stake and are hoping to get a cheaper entry because of the announcement?

Of course it is a concern, but it is not a confirmation that the Corus facility will shut. If you read the Corus release to their market, they state that they will be attempting to enforce the contract as it stands. If they can enforce the contract, then there is no change.

I am not saying we should be pinning our hopes on a Corus win in court. I am hoping that they will agree to hold on for possibly half the remaining contract, any extension that Corus is producing is beneficial for PD Ports and BBI.

As to the question of myself increasing my BEPPA stake, I cannot see any real value being added to my portfolio unless I can buy in less than my current average buy price plus 50% (8.36c*1.5=12.55c), hence my 12.5c or less remark. Any higher and I feel that I am merely increasing my average buy price without getting the value of the units I did before.

I think buying into other equities at the current time is also better for my portfolio from a management/mix perspective. If you read my large post in the last couple of pages you will possibly see my point and thought process.

 

[Mitsimonsta]

Also, probably related to the recent Corus announcement:

Corus signs MoU on Teesside sale with Marcegaglia and Dongkuk

29 Jan 2009

Further to the announcement issued by Corus earlier this week, Corus, Marcegaglia SpA and Dongkuk Steel Mill Co Ltd have today signed a Memorandum of Understanding with a view to Marcegaglia and Dongkuk jointly acquiring a majority stake in Corus’ Teesside Cast Products business (TCP).

Marcegaglia would have the largest equity interest, while Corus would retain a minority holding.

Both Marcegaglia and Dongkuk are part of the four-member Consortium that has a slab Offtake Agreement with Corus. The other Consortium members, Alvory SA (a subsidiary of Ternium SA) and Duferco Participations Holding Ltd (through Steel Invest Finance (Luxembourg) SA), have confirmed they will continue as Offtakers in a revised arrangement after the change in ownership.

Marcegaglia and Dongkuk will now undertake due diligence with a view to finalising the terms of an acquisition agreement as soon as possible.

Phil Dryden, Divisional Director Corus Long Products, said: “The proposed change of ownership fits the business plans of all participants and will significantly improve prospects for the further long-term development of steelmaking on Teesside.”

End

Possibly Marcegaglia and Dongkuk are forcing the issue as Corus wants to charge too high a price for TCP?

Who knows what is going on, but I do not see it as badly as TCP will close and PD Ports (and BBI as its parent) will see a hole in their revenues.

 

[hardyakka]

People love to use Buffet to try and compare their investing too. IMO Buffet would not be buying a company is possibly teetering on the edge of bankcruptcy or with huge debt issues. He would be buying companies with solid earnings histor and stability that had been oversold due to fear or bad management.

All imo

It seems that we have an opposite view of what Buffett may do, so all I can say is that we will have to agree to disagree. Yes I agree BBI has debt issues, that is why the securities are at such a discount. There are plenty of blue chips which offer a nice secure return if the level of risk in BBI is too high for an individual.

PD Ports EBITDA for the 6 months to Dec 08 was $44.2M (pcp $50.2) on revenue of $143.6M (pcp $153.7M) and this is before the Tesco site becomes fully operative.

If Corus is material lets assume it accounts for 30% of revenue ie $42M (30% x $143.6M) and since EBITDA is about 1/3 of revenue, then $42M of revenue equates to $14M EBITDA.

Ignoring the fact that any loss from Corus is likely to be significantly offset by the added contribution from Tesco then I agree a loss of 30% as per above is material in the context of PD Ports in isolation.

In the overall context of BBI the loss in revenue from Corus, when offset against the contribution from Tesco is immaterial.

The real problem is the potential impact on the sale price of Price of PD Ports and the asset level debt financing. But to consider that it is material in the overall context of BBI is unrealistic.

Cheers

 

[banska bystrica]

The real problem is the potential impact on the sale price of Price of PD Ports and the asset level debt financing. But to consider that it is material in the overall context of BBI is unrealistic.

And possibly the re-financing of the 85M GBP of corporate debt attached to PD Ports and due in February 2010.
Whilst there are hurdles, they can be overcome. Of course there is still risk. That's why the stock is trading at a trashed price of 14c.
I agree with you hardyakka that if people want a very low risk investment, they better look elsewhere.

 

[fuzzie]

I'm still having problems with understanding why the market seems to be treating BEPPA as purely a proxy for BBI. Do you think it is because most debt instruments are actually owned indirectly through managed products and the managers are still very risk averse? The price movement in BEPPA is then being driven only by traders and not long term holders.

Many years ago when I first started buying shares I held Smorgon Steel SSX and SSXPB for a short time. While SSX was in the toilet SSXPB used to hold up.

 

[cbrendan]

You can't buy anything close to a decent holding in BEPPA without sending the price SOARING.

So serious buyers seem to be focusing on BBI.

That being said just check out the charts from 6 months ago and you'll see that BBI and BEPPA haven't always been joined at the hip.

 

[fureien]

market taking a beating today

i hope things take a rebound tommorow, as it stands im making a loss from bbi -_- but i plan to hold this for a longer term so hopefully things turn out right. i just dont want to see it hit 10 cents again either.

 

[investorpaul]

market taking a beating today

i hope things take a rebound tommorow, as it stands im making a loss from bbi -_- but i plan to hold this for a longer term so hopefully things turn out right. i just dont want to see it hit 10 cents again either.

It is concerning, but last fridays run was unsustainable with out any further positive news. Since then we have also had the negative CORUS announcement and today BBP went into a trading halt, the outcome of which could go either way. As BB mentions in the BBP thread any negative outcome will also affect sentiment towards BBI.

time to buckle up and ride this week out and hope for some positive news next week.

 

[investorpaul]

Wow someone just took out every buyer at 12.5 cents.

Not good and just before close as well, tomorrow will be interesting.

 

[random]

I think its more a case of some shareholders not "taking some out" but more importantantly dumping a few mill shares in the last few minutes and just wanting out.
Some can't take the heat it seems.

 

[investorpaul]

I think its more a case of some shareholders not "taking some out" but more importantantly dumping a few mill shares in the last few minutes and just wanting out.
Some can't take the heat it seems.

Hopefully this has been a hint of over reaction. Everyone who did their research would have bought knowing this is a high risk investment. Surely they would have expected some negativity along the way. Maybe a few people have got caught up in it and decided to jump ship.

I must admit the last few days have been hard to watch, even though I have no intention to sell yet it does make you worry a bit.

 

[banska bystrica]

This is why it's a serious issue:

PRESS RELEASE: Fitch: THPA Finance Notes Watch Negative



Fitch Ratings-London-12 May 2009: Fitch Ratings has today placed THPA Finance Limited's (THPA) notes on Rating Watch Negative (RWN) as follows:

GBP145m class A2 secured 7.127% fixed-rate notes due 2024: rated 'A'; placed on RWNGBP70m class B secured 8.241% fixed-rate notes due 2028: rated 'BBB'; placed on RWNGBP30m class C secured floating-rate notes due 2031: rated 'BB'; placed on RWN

THPA is a securitisation of the assets held, and earnings generated, by the PD Ports group which owns the port of Tees & Hartlepool on the northeast coast of England.

The rating action follows Corus' recent announcement that it might have to close its Redcar steel plant located at Teesport in northeast England. Corus has justified this potential move as a direct consequence of the apparent decision by the four off-takers to cancel their agreement to buy 78% of the Redcar plant's production until 2014. Corus said the consortium's withdrawal had made the plant's ongoing operations unviable. Fitch estimates that the loss of revenues generated by the imports of iron and ore and the handling of slab steel production for export through Teesport, could directly reduce THPA's EBITDA by up to 25%.

Fitch will aim to resolve the RWN on all notes once more certainty emerges about the plant's future or its impact on PD Ports' activities. If the potential closure of the plant is confirmed, and assuming all else remains equal, the most likely outcome for the class A2 notes would be an affirmation or a downgrade by one notch, whilst the class B and class C notes would most likely be downgraded by one or two notches respectively. Further developments, including the potential impact on the port's operations, will be closely monitored by Fitch going forward.

PD Ports is owned by Babcock & Brown Infrastructure Ltd, an Australia-based infrastructure investment vehicle.

Contacts: Radim Radkovsky, London, Tel: +44 (0) 20 7682 7260; Guillaume Langellier: +44 (0) 20 7682 7563.

Media Relations: Julian Dennison, London, Tel: +44 020 7682 7480, Email: julian.dennison@fitchratings.com.