BBI - Babcock & Brown Infrastructure

[investorpaul]

The bad news just keeps coming, :-(

I dont hold much hope for the share price tomorrow.

Does everyone on here still maintain their original holdings or have some of you reduced your holdings in light of the recent announcements?

 

[Gamblor]

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.

Ouch! I'm really glad i didn't get myself too far in with BBI - the next couple of months will be very interesting.

 

[hardyakka]

This is why it's a serious issue:

PRESS RELEASE: Fitch: THPA Finance Notes Watch Negative


could directly reduce THPA's EBITDA by up to 25%.[/B]

.

I consider this matter in light of the following:

a) This is material at the asset level only, not in the overall context of BBI.

b) This will be offset to a certain extent by revenue generated from the Tesco site.

c) If my memory serves me correctly weren't Aldi constructing a site on a smaller scale than the Tesco one? (BB do you recall?).

d) I added 150k BEPPA today, I see this as a buying opportunity.

e) Expect bad news at times with BBI, it is high risk high reward investment

BB if I make the survivors party the bottle of 2004 Grange is a certainty.

Cheers

 

[Mitsimonsta]

The rating action follows Corus' recent announcement that it might have to close its Redcar steel plant located at Teesport in northeast England.

Might people. Not WILL. Huge difference.

Two of the four companies offtake consortium for TCP have signed an MOU to buy the facility. Obviously the negotiations are not going well, and they are trying to screw down the price they will pay to Corus.

It's a case of 'make a deal, or we will walk away and you will lose everything'.

It is simply leverage in negotiations, nothing more. Unfortunately this affects other companies that supply services to Corus, and PD Ports is one. If PD Ports is smart, they should start bellowing about the Tesco facility and how it is going to make a 35% increase in profits which more than covers the possible loss of Corus.

In 6 weeks time we should have an announcement that will triple our SP and this will all seem like a bad memory. In the meantime, I hope you have all taken you heart tablets.

 

[Viva_Las_Vegas]

Might people. Not WILL. Huge difference.

Two of the four companies offtake consortium for TCP have signed an MOU to buy the facility. Obviously the negotiations are not going well, and they are trying to screw down the price they will pay to Corus.

It's a case of 'make a deal, or we will walk away and you will lose everything'.

It is simply leverage in negotiations, nothing more. Unfortunately this affects other companies that supply services to Corus, and PD Ports is one. If PD Ports is smart, they should start bellowing about the Tesco facility and how it is going to make a 35% increase in profits which more than covers the possible loss of Corus.

In 6 weeks time we should have an announcement that will triple our SP and this will all seem like a bad memory. In the meantime, I hope you have all taken you heart tablets.

Mits,

I haven't taken my heart tablets, but I would be lying if I said I hadn't lost my nerve.

Currently am thinking of moving my capital from bbi into either beppa or hfa.

I hope this turns out well for us all in the end.

 

[mcahn1]

Hi guys,
I am new to this forum and am beppa holder.
Just wanted to let people know that i've enjoyed reading the bbi forum and appreciate the wealth of info here.

I find it hard to find any research coverage on bbi however the recent one i've read from merills/bank of america has underperform on bbi with target price of 10 cents.

I guess uncertainty coupled with global retreat in equities is really taking a toll on bbi. Next couple of days will be interesting though.

 

[hardyakka]

Hi guys,
I am new to this forum and am beppa holder.
Just wanted to let people know that i've enjoyed reading the bbi forum and appreciate the wealth of info here.

I find it hard to find any research coverage on bbi however the recent one i've read from merills/bank of america has underperform on bbi with target price of 10 cents.

I guess uncertainty coupled with global retreat in equities is really taking a toll on bbi. Next couple of days will be interesting though.

Do you really have any confidence in these guys?

They had a buy recommendation on BBI when it was a $1 plus, were unable to recognise the inherent risk in the toxic assets they held/were writing, have had to be bailed out in $ billions because of their financial mismanagement and no doubt by virtue of the fact they have access to the same published information as you and I (in theory) are experts on the intricacies of a multi billion dollar diversified infrastructure business.

I dont put much credence in analysts.

Cheers

 

[banska bystrica]

If DBCT gets sold by June 30 all is well. BBI will survive.

If DBCT doesn't get sold, BBI may be in trouble because EBITDA may fall circa 25% at PD Ports to a level that will trigger a debt covenant breach. There is 75M GBP of corporate debt allocated to PD Ports. This puts them at the mercy of the banks. Do the banks give them breathing space or do they call in the debt? That's the worry. Asset impairment cannot trigger a debt covenant breach but EBITDA/DEBT ratio can.
However, on the positive side, the new Tesco facility will add significant EBITDA which may just save BBI's bacon at PD Ports.

They also have the problem that if Euroports deal doesn't satisfy conditions precedent by June 30, that sale may not go ahead. That will then require BBI Euroports to pay back the 35M Euro deposit (which BBI says BBI Euroports doesn't have). This is guaranteed by BBI. BBI cannot pay this because of the "sweep" facility being enforced by their corporate lenders. Once again, they would have to rely on the banks agreeing to a new deal and new terms (what will the new interest rate be?)

BBI also has to pay out the minority interests in Euroports that have exercised their put option. The quantum is unknown at this stage but could run into $200M+. BBI does not have this cash (once again due to the cash "sweep" forced on them by the corporate lenders).

I see the next two months as critical to BBI surviving. Quite simply, they must now sell 100% of DBCT at anything above $2.5Bn. They then have to negotiate with the corporate lenders who are owed approximately $1.3Bn on what happens to that free cash generated by the sale of DBCT in regard to the sweep, bearing in mind BBI might have legal commitments to the BBI Euroports minority interests AND a commitment to repay the $35M euro deposit to BNB European Infrastructure Fund (BBEIF).

One would hope that the corporate bankers allow BBI to honour those commitments if they are there.

 

[hardyakka]

If DBCT gets sold by June 30 all is well. BBI will survive.

If DBCT doesn't get sold, BBI may be in trouble because EBITDA may fall circa 25% at PD Ports to a level that will trigger a debt covenant breach. There is 75M GBP of corporate debt allocated to PD Ports. This puts them at the mercy of the banks. Do the banks give them breathing space or do they call in the debt? That's the worry. Asset impairment cannot trigger a debt covenant breach but EBITDA/DEBT ratio can.
However, on the positive side, the new Tesco facility will add significant EBITDA which may just save BBI's bacon at PD Ports.

They also have the problem that if Euroports deal doesn't satisfy conditions precedent by June 30, that sale may not go ahead. That will then require BBI Euroports to pay back the 35M Euro deposit (which BBI says BBI Euroports doesn't have). This is guaranteed by BBI. BBI cannot pay this because of the "sweep" facility being enforced by their corporate lenders. Once again, they would have to rely on the banks agreeing to a new deal and new terms (what will the new interest rate be?)

BBI also has to pay out the minority interests in Euroports that have exercised their put option. The quantum is unknown at this stage but could run into $200M+. BBI does not have this cash (once again due to the cash "sweep" forced on them by the corporate lenders).

I see the next two months as critical to BBI surviving. Quite simply, they must now sell 100% of DBCT at anything above $2.5Bn. They then have to negotiate with the corporate lenders who are owed approximately $1.3Bn on what happens to that free cash generated by the sale of DBCT in regard to the sweep, bearing in mind BBI might have legal commitments to the BBI Euroports minority interests AND a commitment to repay the $35M euro deposit to BNB European Infrastructure Fund (BBEIF).

One would hope that the corporate bankers allow BBI to honour those commitments if they are there.

BB,

Very well put BB, sums it up in a nutshell, now we can only wait and see and whether the risk or reward side of the equation starts to prevail.

Cheers

 

[mark_au]

The bad news just keeps coming, :-(

I dont hold much hope for the share price tomorrow.

Does everyone on here still maintain their original holdings or have some of you reduced your holdings in light of the recent announcements?

Gday

I also have what i consider a lot to lose, but also the potential for massive gains
im also feeling pretty nervous at this time, so i have put in stops on bbi, the only time ive used them ( I wish i had used them before the GFC hit and id be sitting in cash now) but i never got around to having to do comsec's silly test to get access to the facility , (I have now LOL)

 

[investorpaul]

Looks like it is going to be another tough day for BBI and BEPPA.

Traders have all but dropped this stock and the depth of buyers has drastically reduced.

We just have to write off this week and hope it finds some support at current levels before hoping for some positive announcements in the next couple of weeks.

 

[boff]

Although in fairness the market in general is very much taking profit at the moment. The Dow has been on a slide since the end of last week. Dropped heavily last night. I believe sentiment is such that even without the ports bad news the SP would have slid in line with the market.
The time to worry is when the market's on the up and we're on the down. Which isn't the case, so I for one am looking for 'top-up' opportunities at the moment.

 

[max421]

BEPPA is being hammered today big time. Is that something to do with sparcs voting tomorrow. I sold BBI holding today thinking of switching to BEPPA more.

 

[max421]

If sparcs voting goes bad tomorrow BBI will be around 8 cents. BBP bad news could also help in smashing the sp. would like to pickup some BEPPA under 10 cents tomorrow

 

[hardyakka]

I wonder what the affect of the DBCT announcement will be on the BBI and BEPPA prices when and if it is released? IMO the "if" is very likely, if it does not happen prior to 30 June then of course there will be major problems.

My instinct is that the buying action has pulled back and will possibly kick off again late today or early tomorrow as sellers start to panic about the SPARCS outcome. Then there may be some price movement, but then I am always wrong.

Geesh, I am falling into the mentality of a trader and watching day by day price movements.

Cheers

 

[Mitsimonsta]

Found this: http://www.thenorthernecho.co.uk/business/4366998.PM_joins_Corus_in_fight_for_contract/

PM joins Corus in fight for contract

5:00am Thursday 14th May 2009

By Owen McAteer »

PRIME Minister Gordon Brown last night joined Corus in calling on two members of the consortium who pulled out of a contract from a North-East steel plant last week, to clarify whether they will buy the factory.

Corus cannot open discussions with other potential purchasers until Marcegaglia, of Italy and Dongkuk Steel, of Korea, decide whether they intend to continue with plans to take a majority stake in the Corus Teesside Cast Products (TCP) plant in Redcar.

Last week, a four-strong international consortium, including the two firms, tore up a ten-year contract signed in 2004 to take nearly 78 per cent of the plant’s output, putting 3,000 jobs at risk.

But Marcegaglia and Dongkuk, who signed a memorandum of understanding to buy TCP in January, have still not outlined their intentions following last week’s development.

A Corus spokesman said: “We still have that memorandum of understanding on the table and the thing we urgently need is clarification from Marcegaglia and Dongkuk as to whether they are still interested in buying that majority stake.

“If they don’t clarify that, we can’t get into discussions with any other potential buyer. If they are not interested anymore they need to let us know. All of that has got to happen very soon.”

The Corus crisis, which has put 2,000 staff and 1,000 contractor jobs at risk, was raised during Prime Minister’s questions in the Commons, yesterday.

Answering a question from Stockton South MP Dari Taylor, the Prime Minister said: “We are trying urgently to talk to the companies concerned across four different countries to make the case that it is important to keep the Teesside plant open, to make the case that it is counter-productive to close and to see whether a buyer, as part of that consortium, was available.”

Mr Brown said the threat of job losses on such a scale was “an issue the whole House should be concerned about”.

He added: “This was a contract entered into by Corus with four other steel and other manufacturing operators.

“It was a contract that was supposed to last to 2015. If that contract is broken, there is going to be a high level of compensation paid.”

Corus Tubes, in Hartlepool, is balloting employees at two mills on whether they would accept the suspension of a bonus scheme in order to avoid potential redundancies.

There is a “significant gap” in the order book of both mills from August until the end of the year, which could affect more than over 100 jobs.

I think what I mentioned yesterday is true, there is more to the story than what has come out in the media so far.

 

[investorpaul]

So just to clarify, If this mob by the factory, PD ports still has a customer which is good news. If this mob dont buy the factory, CORUS pull the plug and close it down which is bad news.

So at this point in time it is all if, buts and maybes

 

[Mitsimonsta]

Yes, that is exactly it. There is no actual decision as yet to the actual decision yet.

Basically it looks like the two companies that signed the MOU basically wanted Corus for cheap steel, now the **** has fallen out of the market and having them around is a competitive disadvantage. So, sign an MOU, then break the contract, and let the factory slide into the ground.

Also found this.... gives a bit more background: http://www.dailymail.co.uk/money/article-1179763/How-Signora-Steel-slashed-10-000-jobs-Corus.html

How Signora Steel slashed 10,000 jobs at Corus

By Tom Mcghie
Last updated at 9:00 PM on 09th May 2009

The date had been in the calendar for months: April 7 - Kirby Adams's first day as chief executive of the UK's steel giant, Corus.

But as the 53-year-old Atlanta-born steel tycoon was being given the low-down by his new colleagues at the modest Mumbai offices of Corus's Indian parent company Tata, Adams was interrupted by the arrival of an unexpected letter.

It was from the chief executives of four foreign steel producers that were responsible for buying nearly 80 per cent of steel from his Redcar plant in Teesside.

It was short and brutal. The steel bosses were tearing up their ten-year contract there and then. As far as the consortium of Italians, Koreans,

Swiss and Argentinians were concerned, the market had changed and they were out. 'I could not believe it,' said Adams.

'I was expecting a welcome card or maybe a cake, but not this. It was simply outrageous.'

At one stroke the consortium led by Marcegaglia, the Italian steel specialist company led by one of the country's toughest chief executives, 43-year-old Emma Marcegaglia, dubbed Signora Steel, had consigned one of the UK's largest steel plants to the scrapheap.

Not only did the consortium's decision spell the end for an estimated 3,000 steel workers in the area, but a further 7,000 jobs in the supply train are also threatened.

Cancellation is expected to spark mammoth litigation. On hearing the news, Gordon Brown predicted it would result in an international dispute-and he pledged to help Corus to win back the order.

For owner Tata, it is a savage blow in what is turning out to be a desperately difficult year. The recession has also played havoc with its other major acquisition - Jaguar Land Rover (JLR). So bad are its problems that its UK conquests could ultimately lead to its own destruction.

For it has emerged that Tata has pledged shares worth at least £1.4 billion to secure loans and it has used large portions of its UK acquisitions to secure debts. It risks losing control of them should it default.

Trouble started about a year ago. When Tata spent £6.2 billion in 2007 to buy Corus, it thought it was on to a good thing - even though it had perhaps overpaid in what was a tough bidding war. The steel industry had been booming since 2004 and was enjoying its most profitable time for decades.

But that all changed in 2008. Since then the global recession has slashed demand by 50 per cent. Plants that had been booming on sky-high prices discovered - like Redcar - that life in a recession is tough.

It was the same grim story for JLR. Up for grabs last June, Tata, perhaps mesmerised by the glamorous marques, paid £1.15 billion. For the first few months all went well, but then the recession arrived and demand for expensive four-wheel-drive cars vanished. Even a further £900 million in investment did not do the trick.

The company is involved in lengthy and tricky negotiations with the Government and is hinting that without help the business could close.

But while Tata ponders its future in the UK, Adams is still coming to terms with what he regards as 'the immorality' of the consortium's behaviour. 'They signed a ten-year, legally binding contract,' he said. 'For years they made vast profits out of the deal.

'Now that the steel prices have changed and demand has slumped, they have just dropped it. In doing this they have thrown 3,000 workers who have done their best for the company to the wolves.

'They did not use some of the profits to pay back in the bad times. They just broke the agreement. We would never do something like that. It is totally immoral.'

Sources at Corus believe the consortium made a £520 million profit in the first four years of the deal.

What is even more galling for Adams is that in January the Italians came over with the Koreans and signed a memorandum to buy the whole Redcar plant.

One union official who was present when the Italians arrived said: 'They were laughing and Antonio [Emma's brother] was saying what a great place this was and how they looked forward to coming here. That's a joke now.' Calls to Marcegaglia were not answered, which comes as no surprise to Adams. 'We have tried very hard to find out what they are thinking, but without much success,' he said.

Those who know Emma are not surprised. She has earned a formidable reputation for her hard-headed business dealings. While heading Italy's equivalent of the CBI, Confindustria, she was given the nickname Black & Decker for her 'tenacity and determination'.

Its unlikely that the iron-willed woman who runs the family company's steel manufacturing business at Mantua near Verona, will buckle under the threats from the UK, even if they are backed by the Prime Minister. She knows that the steel business is in the grip of recession and with a glut of plants her company could make better deals elsewhere.

Legal action will take months, if not years, but in the meantime thousands of workers in Redcar are facing a bleak future.

The company reckons it has 90 days to sort out the mess. However, it is pessimistic that it can find new customers in that time and does not believe it will be able to transfer enough work to keep Redcar operating economically. The plant will have to be mothballed and workers, who can earn up to £40,000, will be out of work.

Adams said: 'The consortium wanted a divorce no matter what. And the victims are this loyal workforce. It's a terrible day.'

 

[fuzzie]

Looks like the SPARCS resolutions didn't get passed. The nominated conversions are all going through. There will be a few more BBI on the market today I would guess.

 

[investorpaul]

Looks like the SPARCS resolutions didn't get passed. The nominated conversions are all going through. There will be a few more BBI on the market today I would guess.

But only 25m off get converted to BBI, another 120m remain as SPACS, have I read that correctly ???

If that is the case, it isnt that bad