massive wall being built, page-46

I can see why you think those things are illogical b00f, but the banks are under extreme pressure and as there are lots of different banks in the syndicate, some with earlier maturities may try and stick it to some with later maturities and so on. Hence the 1/3rd short term and 2/3rd long term arrangement. Gets the shorter term maturities paid off quicker.

The company could indeed take the view of not paying this amount in Feb 2010, but the risk is the bank puts them into administration and I don't think you would really want to take that risk, not in this environment.


Also this statement is incorrect:

"Management could've said sorry, no thanks, shove your sweep where the sun don't shine, we're meeting all interest payments and not breaching any covenants, so we'll just keep on doing so."

To sell Powerco, BBI had to get approval from the banking syndicate as some of the debts were secured by the Powerco asset. Without this approval, there would have been no sale. Therefore this was an opportunity for the banks to increase their control over the situation in exchange for agreeing to the deal, and the 'sweep facility' is their way of exerting further control. BBi did not have any choice in the matter. If they had not agreed to that, and therefore missed their corporate debt due on Feb 28 2009, then administration was likely as they would have been in breach.

I do not consider the Sweep to be a 'quasi administration', but it is definitely a shot across the bows for BBI, quite a big shot.


"But for some reason, they agreed, surely there must be some form of benefit in return. The banks were not in the position of power they are now, so what did they give us in exchange?"

They agreed because they had no choice. The banks most certainly had all the power. What did we get in exchange? The right to carry on in business for the time being instead of going into administration.