BBI - Babcock & Brown Infrastructure

[nathanblack]

The plant will require 2 -3 years for construction and will be operational by autumn 2012.

“We can now secure all the detailed financing plans, let the construction contracts, and start building. We remain very optimistic that we can be ready in three years time.”

This is great news for the new owner, and will hopefully push the sale price up. 3 years is still a long time for the new owner to wait for increase in revenues but should be factored in to sale price, if not then i suggest BBI walk away and wait 2 or 3years before putting this asset on the market. proviso that DBCT is sold in entirety.

 

[hardyakka]

This is great news for the new owner, and will hopefully push the sale price up. 3 years is still a long time for the new owner to wait for increase in revenues but should be factored in to sale price, if not then i suggest BBI walk away and wait 2 or 3years before putting this asset on the market. proviso that DBCT is sold in entirety.

Agreed Nathan, but dont forget the revenue stream will be taken account of in the EBITDA number and hence EV, which are big pluses for PD Ports.

What this transaction also demonstrates is that there is only upside for PD Ports, we are assuming nil contribution from Corus. The EV will include a contribution from this that should eventuate once economies recover from the GFC.

Cheers

 

[Mitsimonsta]

I notice that Bluescope is going to fire up the No.6 Furnace at Kembla as global demand for steel is going up in a big way. They postponed the restart just 6 weeks ago.

I am not so sure that Corus is down and out just yet. Demand is growing for Steel - even more so that China has played silly buggers and now are basically paying spot price for Iron Ore, so the price is going up.

I feel that the market over-reacted in a number of ways. I think it is merely re-adjusting as production dropped more than demand did - now they are just catching up.

If Corus has negotiated a good long term contract (probably with Vale) then it could well produce a very competitively priced product.

 

[Viva_Las_Vegas]

Hey Guys

I've been doing some research on the "pump & dump"

I think this you tube sums it up pretty well.

Please watch it to the END! in order to make full sense of it.

Having watched it, I am convinced it's legal to PUMP & DUMP.

You're all welcome in advance!!

http://www.youtube.com/watch?v=5zIDgPVg9HM&feature=related

VLV!!!

 

[persistentone]

Hey Guys

I've been doing some research on the "pump & dump"

I think this you tube sums it up pretty well.

Please watch it to the END! in order to make full sense of it.

Having watched it, I am convinced it's legal to PUMP & DUMP.

You're all welcome in advance!!

http://www.youtube.com/watch?v=5zIDgPVg9HM&feature=related

VLV!!!

Legality aside, you can only significantly affect the stock price if you have overwhelming firepower and a lot of patience and wear out early sellers. Even then you would also need a lot of luck, because the key element here is that you must create the illusion of a powerful rally that draws in *new buyers*. It's not at all obvious that someone who could bring BEPPA to 25 cents could sustain that price or start any kind of rally based on new buyers around it.

If you have $100M and feel like losing $1M to get some experience in pricing dynamics be my guess. If you don't have $100M and don't feel like losing $1M, you probably don't have enough firepower to be playing that game.

 

[Tysonboss1]

Hey Guys

I've been doing some research on the "pump & dump"

I think this you tube sums it up pretty well.

Please watch it to the END! in order to make full sense of it.

Having watched it, I am convinced it's legal to PUMP & DUMP.

You're all welcome in advance!!

http://www.youtube.com/watch?v=5zIDgPVg9HM&feature=related

VLV!!!

HAHAHAH HAHAHA,

every thing that happened in the second half of that video should be illeagal.

I never want to hear the words pump and dump again. c:

 

[banska bystrica]

This thread has really deteriorated. If anyone wants to discuss fundamentals about BBI/BEPPA, feel free to send me a PM.

 

[Viva_Las_Vegas]

Apologies for deteriorating the thread BB. Twas not my intention.

This thread seemed to be going round in circles with DBCT, PD etc covering old ground over and over again.

Talk of pump and dumping seemed to be the new flavour, I just wanted to contribute.

The way I see it is...... the guy (woody harolson) is BBI and the old lady land lord is BNB in the video clip. Woody is doing what he can to pay his rent and the land lady is his nemesis, not unlike the banks or the BNB namesake.

Anyway as a result I'm banning myself and my twisted view of the world from the thread for 24 hrs.

Self imposed ban... starting..... .NOW.

 

[hardyakka]

Now this is a really great summary of the prospects for PD Ports, what do you think will be the affect on the price of the asset!

http://www.nebusiness.co.uk/top-bus.../not-just-any-port-in-a-storm-51140-24142322/

Cheers

 

[nathanblack]

This thread seemed to be going round in circles with DBCT, PD etc covering old ground over and over again.

Talk of pump and dumping seemed to be the new flavour, I just wanted to contribute.

thats the thing about fundamentals Viva, they don't change that much. Rather than rehash fundamentals that have already been discussed, the discussion diverged onto talk of pump and dump. it was in the context of volumes and volatility and added a different scenario to discuss.

the fundamentals will only change when a big announcement happens regardibg dbct or such, then everything changes. we can recalulate NTA, debt, interest, interest cover, revenues , etc.

until then feel free to contribute any views you like, or your particular strategy with this stock and your expectations.

i begin my 1minute self imposed ban now.

 

[nathanblack]

Now this is a really great summary of the prospects for PD Ports, what do you think will be the affect on the price of the asset!

http://www.nebusiness.co.uk/top-bus.../not-just-any-port-in-a-storm-51140-24142322/

Cheers

great link. it really is a great asset with growth potential. with that set to be online and the power station both in a couple years, it doesnt help todays earnings but will be reflected in any sale price.

the price quoted of 450mil pound is acceptable, but as we paid more(600mil), i reaaly would be reluctant to accept any less. if corus went our way plus the power plant and tesco all added to revenue in 2012, im sure the port is worth the 600mil then and it would easily cover interest.

i re-iterate my earlier opinion that IF we sell 100% DBCT, then BBI need to seriously look at keeping this one.

 

[cpsharky]

PD ports is an interesting one. To me it looks like PD ports has had real value added to it by BBI. They saw the strategic potential when they purchased it and have made real advances with the Tesco and MGT deals. Buyers will be factoring in all of this potential IMHO. Corus was a hit, and the buyers will be expecting a good price in this climate, but I'll be shocked if PD sells for as little as 450m pounds. I'm predicting 550-600m.

 

[nathanblack]

I'm predicting 550-600m.

i agree, it does seem like vlue has been added, mainly die to its strategic location and available surrounding land.

assuming the offer was lower than your range, what would be the least you'd accept before walking away?

we need to keep some assets to remain an ongoing entity and make earnings and distributions. if DBCT must go, i would keep NGPL and PD. we might as well continue to sell down europrts now, and im not a huge fan of westnet rail.

 

[cpsharky]

assuming the offer was lower than your range, what would be the least you'd accept before walking away?

The following are my calculations based on the investor pack.

Asset level debt is 315m pounds, allocated corporate debt is 85m. Even 400m sale price would take out AUD of about 170m corporate debt. 450m would take out AUD 270m. 600m would take out AUD 570m. I would need to check how much the corporate ICR is affected by losing PD corporate cash flow - I wouldn't want the ICR to fall as a result of the sale.

Full year 2008 EBITDA was 59.5m pounds. FY 2009 EBITDA won't be pretty, but buyers will be taking a long term view. Also, long term, extra revenue coming on line from Tesco etc should make up for any (possible) Corus hit. 60m pound EBITDA x 9 = 540m pounds. Multiple of 9 and I think buyers should be falling over each other.

Can't wait for the PDP sale. I think it will be announced before DBCT. If my guess is correct, it will turn much better than the media would have us believe.

 

[cbrendan]

With ebitda hypothetically reduced to 50 mil x 8 = 400 mil, the chance IMO of a 300 mil sale seems very low.

Perhaps in a dream world there is a missunderstanding, eg. 300mil aud after debt sale etc.

Find out soon I guess.

The following are my calculations based on the investor pack.

Asset level debt is 315m pounds, allocated corporate debt is 85m. Even 400m sale price would take out AUD of about 170m corporate debt. 450m would take out AUD 270m. 600m would take out AUD 570m. I would need to check how much the corporate ICR is affected by losing PD corporate cash flow - I wouldn't want the ICR to fall as a result of the sale.

Full year 2008 EBITDA was 59.5m pounds. FY 2009 EBITDA won't be pretty, but buyers will be taking a long term view. Also, long term, extra revenue coming on line from Tesco etc should make up for any (possible) Corus hit. 60m pound EBITDA x 9 = 540m pounds. Multiple of 9 and I think buyers should be falling over each other.

Can't wait for the PDP sale. I think it will be announced before DBCT. If my guess is correct, it will turn much better than the media would have us believe.

 

[hardyakka]

Re: PD Ports

I had a chat with Helen at Investor Relations today regarding the numbers quoted in the press of BBI reducing the asking price for PD Ports from GBP 450M to GBP300M.
In summary Helen said that no financial data had been provided by BBI. This data had been originated and perpetuated by the UK press, despite BBI pointing out that they had not provided that information. (They cannot affirm or deny).Helen also noted that the supposed reduction in price of GPB150M, were it true, would be a material amount and require disclosure under the ASX Listing Rules. Helen also said that, as notified in April, negotiations with interested parties are continuing.
My view is that a price reduction of that amount would have been disclosed immediately by BBI under the listing rules so IMO someone in the UK press is telling porkies. Since when did the truth ever sell papers. Its the screaming headline, especially if the Aussies are getting hammered, and girl on page 3.
Cheers

I want to remind people of what BBI IR said.

There is a lot of focus on the numbers in the press for PD Ports. I think that the above comments by Helen of BBI IR are very important. I expect the price for PD Ports to be significantly higher than that in the press, simply because of what BBI IR said as per above.

Cheers

 

[banska bystrica]

I would be surprised and disappointed if they sold PD Ports for 300M GBP. That is not in keeping with their stated objective of selling assets at book value or above.

 

[nathanblack]

I would be surprised and disappointed if they sold PD Ports for 300M GBP. That is not in keeping with their stated objective of selling assets at book value or above.

but at what point do you see the potentential debt reduction of a PD Port sale being outweighed by the benefit of capital growth and earnings growth potential?

personally a quick, clean , 100% sale for 500mil pound would be the lowest i'd accept. any lower and the asset is too cheap and better value to BBI longterm to build a business around.

anymore(which i expect) and i guess we need to reluctantly let it go.

but with euroports almost definately going, and DBCT possible 100%, i'd prefer tokeep this one.

i dont want the company to place all assets on the market and effectively wind up the company, even if it meant full repayment of BEPPA and a handsome special dividend for BBI.

i want BBI to keep enough quality assets to build and grow around in the future. i guess they could limit themselves to one asset class, either ports or energy. if DBCT goes then obviously we keep NGPL but i think theres room for PD Ports too. i cant see much growth potential in westnet rail.

 

[hardyakka]

but with euroports almost definately going, and DBCT possible 100%, i'd prefer tokeep this one.

i dont want the company to place all assets on the market and effectively wind up the company, even if it meant full repayment of BEPPA and a handsome special dividend for BBI.

i want BBI to keep enough quality assets to build and grow around in the future. i guess they could limit themselves to one asset class, either ports or energy. if DBCT goes then obviously we keep NGPL but i think theres room for PD Ports too. i cant see much growth potential in westnet rail.

Nathan,

My sentiments entirely. With Tesco coming online, the wood fired station 3 years off, recovery of Corus once markets pick up I see PD Ports adding significant value. When you consider EV is based upon future EBITDA then these must be factored in to produce a minimum acceptable price.

Personally I would like to see BBI retain PD Ports rather than sell it at firesale prices reflective of a distressed seller.

Cheers

 

[nathanblack]

Exactly. And they could always keep it until 2012 and sell it to cover BEPPA. Imagine the sale price then.