BBI - Babcock & Brown Infrastructure

[banska bystrica]

If that's the case then why have BBI's directors become quasi administrators (as you describe it) in trying to sell essets to pay down debt and why have they ceased disrtribution of income/interest to security holders ?

Perhaps they see the risk of administration as being greater than 5%.

drsmith,
You refuse to back up your assertions with facts. Until you do that, I will not reply to any post you write from this point on.

 

[banska bystrica]

As far as I am concerned, I am looking for BEPPA to mature and then accept reset terms.

Unfortunately you will not get that opportunity in my opinion. A restructure is on the cards. Time will tell.

 

[persistentone]

BEPPA holders: What would you say to the following if it were offered to you some time in 2009/10 after DBCT and PD Ports are sold?

Convert every BEPPA held into 35c cash and 2 BBI securities.

Hypothetical of course but would be interested in the thoughts of BEPPA holders. Remember of course that if that proposal was passed, it would indeed help the price of BBI as well as any threat of massive dilution in 2012 disappears. This hypothetical proposal dilutes BBI by another 1.6Bn shares but also eliminates $800M worth of debt.

Personally I would vote YES.

To me this proposal is more persuasive if it come six months before BEPPA matures together with a warning that they don't have the money to pay it out.

I'm doubtful that it plays out this way, at least not if they are really good at the game. What they should do is pay out the interest on BEPPA and then start to make market purchases on small amounts of BEPPA each quarter. They should buy just enough (maybe $25M to $50M/quarter) to get a great price, and not so much as to significantly move BEPPA up. At $25M to $50M/quarter, they can buy over half the amounts due at maturity probably at very distressed prices. Buying a dollar of debt for 20-to-50 cents should be an important part of their strategy for getting out from the weight of it. If they buy too much too soon then they won't be maximizing peoples' fear of being paid back, which would work against them here.

 

[banska bystrica]

Also BB are you able to attach that spreadsheet with stress test figures, im really interested to see it, thanks

Paul,
Very happy to send it to you. Give me your email address via PM. I don't feel inclined posting my extensive research on here when people like Largesse and select would probably use it to their advantage whilst stabbing me in the back at the same time.

 

[awg]

someone likes them today

bbi up over 6.35%, on decent volume

beppa up 9.2%

i hold beppa

hope BB keeps posting

 

[nathanblack]

To me this proposal is more persuasive if it come six months before BEPPA matures together with a warning that they don't have the money to pay it out.

I'm doubtful that it plays out this way, at least not if they are really good at the game. What they should do is pay out the interest on BEPPA and then start to make market purchases on small amounts of BEPPA each quarter. They should buy just enough (maybe $25M to $50M/quarter) to get a great price, and not so much as to significantly move BEPPA up. At $25M to $50M/quarter, they can buy over half the amounts due at maturity probably at very distressed prices. Buying a dollar of debt for 20-to-50 cents should be an important part of their strategy for getting out from the weight of it. If they buy too much too soon then they won't be maximizing peoples' fear of being paid back, which would work against them here.

i guess thats the whole point in BB's hypothetical. we would need to know what BEPPA were trading at and BBI for that matter. obviously if BEPPA was trading at 35cent and BBI had the cash to pay that as a cash component, them logic says they should buy the BEPPA on market rather than throw in 2 BBI shares premium.

if at the time of offer, BBI arent offering a premium to convert, then nobody will convert. if they are offering a premium then its bad business if they can buyback on market for less. heck they could issue 2 BBI shares to existing holders or new investors to fund the buyback instead of gifting it to BEPPA.

 

[Mitsimonsta]

Unfortunately you will not get that opportunity in my opinion. A restructure is on the cards. Time will tell.

I just cannot see that being passed by a simple majority of BEPPA holders. If they are talking about 35c cash plus 2x BBI (approx 12c) does not even make 50% of face value. I think I would get approx 80c per BEPPA in the result of a liquidation.

There are deferred distributions outstanding that would need to be paid in full before I would even consider something like this. If they are serious about this, then they MUST put their money where their mouth is.

Truthfully, if this was proposed and looked like having a chance of getting up, BEPPA would be trading at 35c + whatever 2xBBI is worth at the time + unpaid distributions. I'd more than likely SELL all my BEPPA at that point and take the cash.

Even better, I would prefer an all-cash offer on the table. Tell your contacts that. All cash means even less dilution for BBI. I doubt that there would be any good result for me to be issued BBI and then selling them. Whatever price they issue BBI at as a result of conversion, it will not stay that price for long due to the dilution.

 

[Largesse]

why don't you all stop living in fantasy land and start living in the present.

this thread is a seriously weird read.

 

[Mitsimonsta]

why don't you all stop living in fantasy land and start living in the present.

I am living in the present. We are all shooting in the dark as we await BBI Full Year Results announcement in the last week of August.

I do not want my BEPPA to convert to BBI at all with the current SP. It is not in my best interests. The issue of more BBI will hugely dilute current BBI holders and will also lower the share price. Do you think it strange that I am looking after my best interests as an investor?

Of course, if DBCT sells in the next ~3 months and the cash sweep is consigned to history (we hope), then BBI can buy BEPPA on market at a massive discount.

Until SPARCS is settled/paid out/converted, I doubt that anything can be done with BEPPA anyway.

 

[Largesse]

There is absolutely nothing to suggest your BEPPA are going to be converted into anything, at any price, ever.

This is an idea pulled out of thin air by Banksa. FANTASY.

Read back, one suggestion of this 'conversion', and you get a dozen follow up posts with in a couple of hours.

The only thing this stock moved on two months ago was a positive feedback cycle. No substantial changes. No ground breaking news.

Just people buying because other people were buying because prices were moving up because other people were buying.

 

[fuzzie]

this thread is a seriously weird read.

Agreed it has definitely gone off on an obscure tangent. If I'm going to fantasize that much, it more likely involves a 5'6" blonde and I don't mean beer. Perhaps BB had too much of one or the other in Prague?

 

[Largesse]

I am living in the present. We are all shooting in the dark as we await BBI Full Year Results announcement in the last week of August.

I do not want my BEPPA to convert to BBI at all with the current SP. It is not in my best interests. The issue of more BBI will hugely dilute current BBI holders and will also lower the share price. Do you think it strange that I am looking after my best interests as an investor?

Of course, if DBCT sells in the next ~3 months and the cash sweep is consigned to history (we hope), then BBI can buy BEPPA on market at a massive discount. (oh yeh? BBI management told you this personally?)

Until SPARCS is settled/paid out/converted, I doubt that anything can be done with BEPPA anyway.

And mate, you aren't an investor. With BBI, you are a merely punter hoping for a positive asset sale.

Don't kid yourself.

 

[investorpaul]

And mate, you aren't an investor. With BBI, you are a merely punter hoping for a positive asset sale.

Don't kid yourself.

Sorry Largesse but there are different kinds of investors.

Some buy and hold long term blue chip shares (some of those people have been smashed in this market both in Aust and O/S)

Other Investors buy on fundamentals and hold the company until they see a change in those circumstances (eg a drop in profits or divs and they sell out).

Other investors look for undervalued companies and invest, the expectation being that eventually the rest of the market will catch up. In this instance there is obviously risks that the potential is very realised or that the company deteriorates instead of improving.

In each instance above investors can and do lose money. Nothing is a sure thing no matter what your strategy.

Each individual classes themselves differently and has different objectives, evaluation techniques and projected price targets (each person is entitled to their position).

Just because you dont see potential in BBI/BEPPA and others do doesnt mean that they are not "investors". I consider myself an investor in BBI/BEPPA as I am holding in the expectation that the potential will be realised by the rest of the market, fundamentals will involve and so will the share price.

P.S. I also know there are people who hold BBI/BEPPA who would consider themselves traders (and as above each person, based on their own circumstances can class themselves as they wish). But to generalise and say we are "punters" is wrong and an uninformed comment.

 

[Largesse]

Sorry Largesse but there are different kinds of investors.

Some buy and hold long term blue chip shares (some of those people have been smashed in this market both in Aust and O/S)

Other Investors buy on fundamentals and hold the company until they see a change in those circumstances (eg a drop in profits or divs and they sell out).

Other investors look for undervalued companies and invest, the expectation being that eventually the rest of the market will catch up. In this instance there is obviously risks that the potential is very realised or that the company deteriorates instead of improving.

In each instance above investors can and do lose money. Nothing is a sure thing no matter what your strategy.

Each individual classes themselves differently and has different objectives, evaluation techniques and projected price targets (each person is entitled to their position).

Just because you dont see potential in BBI/BEPPA and others do doesnt mean that they are not "investors". I consider myself an investor in BBI/BEPPA as I am holding in the expectation that the potential will be realised by the rest of the market, fundamentals will involve and so will the share price.

P.S. I also know there are people who hold BBI/BEPPA who would consider themselves traders (and as above each person, based on their own circumstances can class themselves as they wish). But to generalise and say we are "punters" is wrong and an uninformed comment.

Thanks for the lesson, but I was already aware that there are a range of 'investor' classes.

However, PUNTING ON A HIGHLY UNCERTAIN OUTCOME, does not, and will not ever, fall into a class of investor.

That, is just called gambling.

And all this ridiculous talk of "oh when this asset sells for that much above book value and management decide to convert my BEPPA into $0.xx dollars and XX BBI shares I will do this/that" is no better than a bloke at the TAB hypothesizing which flavour of beer he's going to buy after dog 4 in race 8 comes good at Cranbourne. Actually it's probably worse, because at least the punter is certain what his odds were when he took his bet.

And just because you move in and out of a stock more than once, doesn't make you a trader either.

Delusional.

 

[investorpaul]

Thanks for the lesson, but I was already aware that there are a range of 'investor' classes.

However, PUNTING ON A HIGHLY UNCERTAIN OUTCOME, does not, and will not ever, fall into a class of investor.

That, is just called gambling.

And all this ridiculous talk of "oh when this asset sells for that much above book value and management decide to convert my BEPPA into $0.xx dollars and XX BBI shares I will do this/that" is no better than a bloke at the TAB hypothesizing which flavour of beer he's going to buy after dog 4 in race 8 comes good at Cranbourne. Actually it's probably worse, because at least the punter is certain what his odds were when he took his bet.

And just because you move in and out of a stock more than once, doesn't make you a trader either.

Delusional.

What is wrong with discussing potential asset sale prices and the likely outcome?

This is similar to discussing the potential impact of a rise in revenue/net profit for a retailer or the impact of a potential merge between RIO and BHP operations

 

[Largesse]

What is wrong with discussing potential asset sale prices and the likely outcome?

This is similar to discussing the potential impact of a rise in revenue/net profit for a retailer or the impact of a potential merge between RIO and BHP operations

Because those discussions are very rarely kept realistic, often contain large amounts of baseless 'non-facts' and nearly always produce unlikely/unrealistic (upside biased) outcomes that all the punters salivate over.

Pretty much exactly what happened when it was suggested that BEPPA could get converted to cash + BBI scrip.

Further, the vast majority of punters offering 'potential sale prices' are either guessing or using a very basic form of a multiples (P/E) approach, with inaccurate inputs, which can produce a reasonably accurate range of values if correct inputs used, but more often then not when used by amateurs, produces inaccurate valuations.

 

[Viva_Las_Vegas]

Largese,

What exactly is your position with BBI or BEPPA? DO you hold either?

If not then why do you even both posting on the BBI thread?

Labelling posters as non traders, non investors and fantasy merchant up rampers isn't very productive.

I see this thread as an exchange medium for ideas and putting thought to LCD screen. What else do you expect this thread to look like?

Let me give you an example

POST: Hey guys BBI went up 9% today
REPLY: OH COOL
POST: I sold today
REPLY: Me too.

Without members posting their views and thinking outside the square this thread would be pointless. As far as fantasies I have plenty, some involve BBI, others BEPPA and a whole lot more involving a 15 hooker g@ngb@ng on a luxury yacht in the riviera.

As abstract as members posts and ideas may be, I think I can safely speak for 99% of BBI posters that we are aware of the risks. And most of us don't see this as a gamble. As I had posted before I remember recieving buy recommendations for BBI between AUG and NOV 2008, not too much has changed yet.

I say let the free flow of ideas be forthcoming, it sure beats the lack of info in form of announcements coming from BBI management at present.

 

[drsmith]

drsmith,
You refuse to back up your assertions with facts. Until you do that, I will not reply to any post you write from this point on.

Whether or not you reply to my posts is up to you. It's no skin off my nose one way or the other.

What I have offered is an opinion on BBI's survival prospects based on the balance sheet debt and the current credit environment. If you are not emotionally attached to your investment then perhaps you could explain why you take such exception to this opinion. You have yourself aknowledged there is a risk it could fall into the hands of the administrators.

 

[ricee007]

Would I accept 2 shares and 35c in 6 months time if BEPPA is at 30c...?

If BEPPA hit 30c, I would imagine DBCT and the GPFRs went well, and the company is "guaranteed" to survive... and that the world economy would improve enough for BBI to get a $300M loan for June 2012....

Which means, given that hypothetical situation... I would expect $1.20 in June 2012...

If I was offered 60c in 6 months time...
Or VERY LIKELY of getting $1.20 in 2.5 years time..... surely I would pick wait 2.5 years ->since I would finish Uni and need money in 2.6 years......

In other words... if someone offered you a (IMHO) low-risk opportunity to double your money in 2.5 years... would you take it? I think I would.... For me its the difference between $25,800 and $12,900. Surely I would pick $25,800... and let my profits run... right? (Am I convincing me or you, hmmm)

 

[Largesse]

Would I accept 2 shares and 35c in 6 months time if BEPPA is at 30c...?

If BEPPA hit 30c, I would imagine DBCT and the GPFRs went well, and the company is "guaranteed" to survive... and that the world economy would improve enough for BBI to get a $300M loan for June 2012....

Which means, given that hypothetical situation... I would expect $1.20 in June 2012...

If I was offered 60c in 6 months time...
Or VERY LIKELY of getting $1.20 in 2.5 years time..... surely I would pick wait 2.5 years ->since I would finish Uni and need money in 2.6 years......

In other words... if someone offered you a (IMHO) low-risk opportunity to double your money in 2.5 years... would you take it? I think I would.... For me its the difference between $25,800 and $12,900. Surely I would pick $25,800... and let my profits run... right? (Am I convincing me or you, hmmm)

In reference to what I said earlier:

Exhibit A

...............................................................................