my bbi valuation / dbct sale flows, page-39

The only fault in your logic is who has the power to determine conversion.

Come August 2012, if BBI can't redeem (and there is very little chance of generating enough cash flow or selling enough assets to do this) then the holder has the option to convert if they don't like the reset terms.

The ability to extend has everything to do with how good the new terms are. In normal markets where investors are yield chasers, this is really easy. Hopefully in 3 years this will be the case.

When investors are yield chasers, so to are the banks. So BEPPA will be easy to replace here. DUET managed to replace hybrids in 2007 with senior bank debt. This is the ideal outcome.

But if the banks are wanting BBI to reduce corporate debt now, how quickly will they turn around and allow more debt just for the benefit of equity holders? This is the paradox. The biggest investor (the banks) is telling BBI now that they don't want any more of this stuff. If they don't want it, who does??? If nobody does, conversion is the only other option, and this is at their choice.

If we are talking about retained dividends to pay back BEPPA, when are equity dividends going to be turned back on? 2015? Infrastructure is only useful to equity holders for cash flow, they don't produce any earnings after tax remember....