beppa restructure??, page-102

"Note: The 12 months of deferred dividends on BEPPA is up on November 5."

Unfortunately this clause cannot be used. OR i am missing something?

The key word missing from your statement is MANDATORY
deferred dividends. The announcement dated Nov 5,2008 clearly says it was there CHOICE and that they didnt make the choice lighly. if it was MANDATORY i assume they would have said such.

FURTHER more the definition of mandatory deferal event in the BEPPA constitution is:
Mandatory Deferral Evant: shall exist if the BBI interest cover ratio as at the end of the last quarter ending before the relevant dividend payment date is less than the minimum interest cover ratio.(2.25times)

What do we think the current interest cover ratio is?

Also BBI are on record as saying that the change of control event, ie BNB severing ties would not result in conversion, and they made an announcement to ease "concern of both BBI EPS and BBI holders".

Then there is SPARCS. clearly they tried to avoid dilution a few months ago, and no doubt they will make another offer before they inevitably convert. Doesnt seem like a company hell bent on conversion?

Also of some concern is that in all the mentioned scenario the power lies with BBI. ie BBI can elect to FORCE conversion or can chose to not convert. BEPPA holders get no say, they cannot force BBI to convert and cant knock back a conversion request.

Also all the clauses that have been mentioned as ways to FORCE conversion, have serious negative connotations. winding up, change of control, lack of dividends, etc. under those circumstances who would want to convert?

or more to the point, who would buy a new issue under those circumstances? trying a cap raising is not easy in those circumstances.

the AFR article was 1month ago, it hasnt been reported further, no official BBI announcement, infact when investor relations is asked they will say its not on the radar.

the other reason we are debating it is because the market is telling us thats whats happening? why? a one day spike to 17c Beppa? will the market still be telling us that its on the card next week when Beppa are back at 14c?

Also of note is that if its a forced conversion you will get the full $1 worth of BBI, where as if they OFFER a conversion, they can offer less(say 50c). At $1 and 7c +discount. Do the math 15BBI/Beppa, who in there right mind would create 10bil BBI securities to gain $700mil on balance sheet and repeat the process with SPARCs and BBI Network Bonds? And thats before we actually raise any funds to pay down debt?

NAV will fall to 20c, no insto will pay 20c/share to get 20c NAV. EPS and PER will be so unfavourable, nobody will want to hold BBI. there will be no longterm upside.

Shares will instantly fall to 3c, your BEPPA is now worth 15BBI shares x 3c= 45c. BEPPA win. BBI lost.

if the AFR wrote DBCT bidding stalls at $2bil, would we all be so quick to believe? or would we wait for company announcement and claim journalists are always wrong?

IN SUMMARY: BBI can probably find a clause that gives THEM the CHOICE to convert BEPPAs, but there recent actions with SPARCs indicates that they are trying to avoid dilution and will not invoke THEIR rights to convert.

ALL to clauses that can be used have negative connotations, so to hope or want BBI to use then to convert defies logic. IF you thing BBI are going down this path then BEPPA is still a solid investment. Pay 15c now, get 15BBI soon and sell them for 45c.

But BBI would be a huge sell.