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BBP - Babcock and Brown Power

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Good little run this afternoon with BBP - managed to offload 1 x parcel at $2.02, now only have 31,210 units :eek:

Next target is sell at $2.12 or buy back at $1.95. The switch to $0.05 spreads rather than $0.10 spreads has me quite excited. It will be interesting to see what the budget effects will be, must keep in mind the return of capital on June 25.

BBP has now become a little more interesting in comparison to BBW since the percentage swings are much greater. In fact BBW has been stuck in a range for around 2 weeks now.

BBI is still there and analyst sentiment says to buy, but at $1.14 - $1.1.6 for a month with a lower dividend yield than BBP/BBW seems to scream - not yet.

Actually hoping for a lower day tomorrow, nothing is as sweet as getting back the shares you sold at a profit for less :cool:
 
Great day today for BBP - up $0.11 or 5.56% with a volume of $12 Mil - that's huge for BBP :)

I am going to have to think hard about my next sell target since the ex div date is slowly getting closer
 
yeah it was good roland.

about time we hadan upward move on this one its been a dissapointing buy for me.....................
 
SenTineL said:
yeah it was good roland.

about time we hadan upward move on this one its been a dissapointing buy for me.....................
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maybe you should see BBP in a different light. With the capital return, your investment will, over time, end up having cost you less. I don't think that you could expect a huge SP gain on a stock that returns such a large dividend.

The secret to this stock (IMO) is to hold for a couple of dividend returns and let the tax defference work for you. Don't worry too much about the SP, just think about the % return.

Aegis still have a 12 month target of $3.56, so if you can hang in there, the 10% return now, will be the equivalent of a 20% return on your capital in a year or so.

Have faith SenTineL - nothing is going to stop the demand for electricity :cool:
 
Well, all BBP holders - all 3 of us :confused:

What a shocker of a day ..... down $0.135 or 6.72%, the hit on financials today decided to give BBP just that little added whack :banghead:

Just as well I was selling last week as the SP improved, had to buy all the silly buggers back again - that wasn't the plan :mad:

Back to holding 39,210 - way too many! In contrast, BBW did so much better (or less worse?)
 
Way too many I agree, my holding is only small and I should have never allowed it to go below 10% loss.

I've been holding on but my patience is running out, I will look at putting in new stop loss ASAP on this sucker and if it goes there I'm going to cut my losses which I hate to do. I don't get into this position often so I'm spewing a bit.

New disciplines will take effect
 
SenTineL said:
Way too many I agree, my holding is only small and I should have never allowed it to go below 10% loss.

I've been holding on but my patience is running out, I will look at putting in new stop loss ASAP on this sucker and if it goes there I'm going to cut my losses which I hate to do. I don't get into this position often so I'm spewing a bit.

New disciplines will take effect
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Hey SenTineL, maybe you should consider holding for the div, it's really worth waiting for - hasn't been announced, but should be around the 25th June.
 
yeah thanks roland, i was looking at doing something soon but also remembered the divies so will hold until after June, maybe July so maybe good timing.
 
I'm holding through. Everyone uses power, even in a recession. Not concerned for the long term, not a trader.
 
prana said:
I'm holding through. Everyone uses power, even in a recession. Not concerned for the long term, not a trader.
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Me neither Im slowly accumulating at these low prices.

This is the most shorted stock on the ASX once it starts going up it will fly as people will be covering their shorts.
 
BBP zapped again!

I nervously grabbed some more at $1.765

and now .... we have some news coming - please be gentle
 
Boring stuff again...

BBP DEBT REFINANCING UPDATE
Babcock & Brown Power (ASX:BBP) today confirms that it is on track to
finalise the debt refinancing. In addition to the $3.1 billion of corporate debt
facilities, BBP’s current capital commitments are approximately $3.4 billion
which includes additional capital expenditure associated with a number of
assets including Tamar, the Newman expansion and the purchase of
minority interests in Braemar and Uranquinty.

In this context, BBP is considering its overall capital structure and
appropriate gearing level. There are a number of options available to fund
the additional capital commitments including debt, asset sales, asset joint
ventures or various forms of equity. BBP intends to reach a decision on
the optimal capital structure around the time of the close of the core
refinancing with funding expected to occur in early June 2008.
Mr Paul Simshauser, CEO said " As stated previously we have been very
pleased with the strong support we have received from a wide range of
banks which in the current difficult credit environment is a strong
endorsement of the quality of the BBP assets.

“We are all looking forward to the time when the focus will move away
from our financing requirements to the strong industry dynamics in which
BBP’s assets operate and the related long term growth prospects for BBP
securityholders.”
 
Just after that announcement I sent them a rudish email, saying how badly worded it was. Obviously I wasn't the only one to notice.

This came out just on close:

22 May 2008
CLARIFICATION RE BBP DEBT REFINANCING UPDATE
Babcock & Brown Power (ASX:BBP) wishes to clarify an earlier statement
made to ASX today on the BBP debt refinancing. BBP advises that the
current total capital commitments are approximately $3.4 billion only; this
amount includes corporate debt facilities of $3.1 billion. The close of the
core corporate debt is due to close in early June 2008 as announced
earlier today. BBP reiterates that it is considering a range of options to
fund the additional capital requirements.
 
roland said:
BBP zapped again!

I nervously grabbed some more at $1.765

and now .... we have some news coming - please be gentle
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Another fairly bad move down again!!!!!

As I said previously, until they refinance the market is going to be jittery. I'm still sidelines until such time as the clarification comes through

They would have been better to have said nothing than the rubbish they put in front of us today!! Oh well, new low reached of 1.39....

Cheers
 
I'm still fuming about this:

In addition to the $3.1 billion of corporate debt
facilities, BBP’s current capital commitments are approximately $3.4 billion
which includes additional capital expenditure associated with a number of
assets
Click to expand...

Can you believe that this announcement quotes their debt at $6.5 billion! Easy enough to clarify the announcement, after the market closes, in the meantime I lose $17,000

What a bunch of unprofessional morons :mad:
 
interesting time ahead tomorrow.

this stock has done the opposite of my original Alinta Gas Shares.

rubish
 
Geez BBP sold off way to much today in my opinion over potential capital raising - reuters is reporting that Babcock parent are going to fund the shortfall so it shouldn't be a problem. At the end of the day it is an annuity like a bond >20% sell off is an overreaction
 
Excert from Comsec's Research Insight 22/5/2008

Analysis
2010 electricity futures prices now reflect a carbon premium. Prices for 4Q 2010 futures for the most liquid SFE markets (Victoria and NSW) are showing an implicit carbon price of around $10 - $15/ MWh (~$17-$25/CO2e) despite the uncertainty surrounding the design of the ETS, emission targets, permit allocation rules etc.

Of the ASX-listed utilities, Babcock & Brown Power (BBP) generation portfolio has the most to lose, particularly the Playford power station in SA if the Government decides not to allocate free permits to coal-fired power stations.

BBP(2): BUY/OUT PERFORM Valuation: $3.47

(2) 2 Members of the Commonwealth Group have received fees within the previous 2 years from Transfield Services Limited, Wesfarmers Limited, Babcock & Brown Power and Mariner Financial Limited
 
May 23rd - The Australian

Babcock shares battered on fears of $300m shortfall in capital

Adele Ferguson | May 23, 2008
BABCOCK & Brown and its satellite Babcock & Brown Power were slaughtered on the market yesterday on fears that the power offshoot is facing a $300 million capital shortfall and will be forced to go to the market with a deeply discounted rights issue to fund capital commitments due in the next month.

Babcock & Brown Power dived 20 per cent, to $1.49, and Babcock & Brown fell almost 8 per cent, to $13.28, on speculation from debt markets that banks had cut the loan sought by BBP from $3.1 billion to $2.7 billion and the remaining $400 million would be funded by Babcock & Brown.

Both companies were unavailable for comment, heightening concerns about the lack of transparency, accountability and opacity of the financial accounts.

In a statement released yesterday, BBP said it expected to secure funding for a debt refinancing package by early next month. It has been trying to secure a deal since last year.

It said it was trying to finalise a $3.1 billion debt refinancing package but it had capital commitments of $3.4 billion, suggesting a $300 million shortfall.

These capital commitments are believed to be due within the next month, which would make

it difficult to sell assets in time to pay the bills. Possible assets BBP could sell include the Alinta retail business, which is worth about $1 billion.

But if it needs the money quickly, BBP would be forced to go to shareholders and make a rights issue at a deep discount to the share price.

According to a note written by Goldman Sachs JBWere yesterday, in terms of an equity raising at less than $1.50, the yield on the new securities would be more than 17 per cent using the current 2008 dividend per share of 26.1c.

"This is not sustainable. As such, BBP either needs to sell assets or stop paying distributions," Goldman said.

The additional capital expenditure required by BBP is associated with assets including the Tamar Valley gas-fired plant, the Newman expansion and buying minority interests in Braemar and Uranquinty.

The news sent the market into a frenzy because the company did not hold an investor conference to explain what it all meant for Babcock & Brown or Babcock & Brown Power. Its chief executive Paul Simshauser was also unavailable for comment.

In a statement, the company said there were a number of options available to fund the additional capital commitments, including debt, asset sales, asset joint ventures or various forms of equity.

More than $2 billion of the debt refinancing stems from its acquisition of Alinta's power generation and power generation and retail energy assets.

The bankers are believed to include ANZ, Suncorp, Commonwealth, BNP Paribas and NAB.

In a note to clients yesterday, Goldman Sachs JBWere said: "This is disappointing and a surprise."

Any party wanting to bid for BBP would have to resolve the management agreements with Babcock & Brown. The management fee is 1 per cent of market capitalisation or $11 million.

One fund manager said the fact that Babcock & Brown has bailed them out to the tune of $400 million, yet they still need money, went to the heart of the problems with infrastructure funds.

"They have lost a lot of credibility the way they handled this today," he said.
 
Down another 20% today, should have listened to my own advice.

I hate turning a paper loss into a real one, but this is another lesson, should have minimalised my losses much much earlier.

Actually reading Nick Radges book now and it's such an obvious thing after it's pointed out - you don't have to always be right, accept the wrongs and minimilise losses. I'm in too deep now but that's what happens....
 
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