net asset backing..., page-49

A significant amount of their debt (of $3,687m).....may well be drawn down capital on new power plants under construction at NewGen Kwinana and Neerabup.

You have a situation here, where there is a time lag between expenditure of capital and contribution to balance sheet. Just the way it is in this sector.

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INFRASTRUCTURE - NewGen Kwinana Power Station
The NewGen Power Station is being constructed in Kwinana, approximately 30 kilometres south of Perth. When completed the $400 million, 320MW plant will provide electricity into the South-West Interconnected System (SWIS), Western Australia’s main electricity grid. The project results from the successful bid in 2005 by developers Wambo Power Ventures, an equal partnership between ERM Group and Babcock & Brown for the supply of base-load power to Western Power Corporation under a 25 year contract for the SWIS.Construction of the NewGen Kwinana Power Station is to be completed in the second half of 2008.

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BBP right now may have spent up to $400m on these projects.....thats about $32m annual interest costs, with NIL return (until they are commissioned or sold). Remember BBP has a market cap of only $130m.

Not sure the market understands this....in fact only in this extreme situation, which we have here - would this sort of detail be an issue.


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BBP gas sales revenues last financial year were about $400m....they announced an across the board gas price rise of 9% on the 23 June 2008. So that should contribute some additional $40m to revenues/ profits this years.

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The announcement yesterday was fairly straight forward....they have loan term bank approval for all loans, except that $116m (extended to March 2009).....but BBP will pay out that modest amount prior to March 2009.

They have no issue concerning debt.

In an ideal situation.....SELL the incomplete power stations (approx sale price would be $600m)....should see NPAT 2008/9 of about $120m compares with their cap today of $131m.

Long term very confident on this one.....but have been very incorrect SO FAR, on these beaton down financials.