nta, page-7

The value here will be driven by free cash flow not by accounting driven concepts of assets, carrying value etc..

Free cash flow is in the range of $330-$360m (largely in line with EBITDA).

One would think a competitive bidding process would lead to offers in the range of at a minimum 10x FCF. Or in the range of $3.3b to $3.6b. One would hope 12x FCF would be a fantastic outcome.

It should be noted that many companies are trading on multiples of 8 x earnings (the accounting concept of earnings) - although BBP's assets are less susceptable to large declines in profitability so one would think 10 to 12 x FCF is a good outcome.

If it came in at 10x FCF(say $3.4b) that leaves $200m for equityholders (debt $3.2b approx). Approx 4x current cap.

If it came in at 12x FCF (say $4.4b), that leaves $1.2b for equityholders - approx 24x current cap!!

The carbon trading scheme announced by Rudd was a big boon for BBP. The impact will be minimal (they have one of the worst polluting brown coal power plants in Australia) on BBP and this should lead to higher offers.