market cap and nav, page-77

Well I am glad everyone is starting to understand now the implications of the BBI and BEPPA death spiral. It has taken almost 9 months of posting to get this through to a lot of people and now they are starting to realise what a massive problem it is. However, it is not unsolvable.

As to letting BBI go into administration to assist BEPPA holders? You have got to be kidding me. That would be from 'death spiral' to 'death wish' in one quick easy motion. I can categorically absolutely 1000% assure you that BEPPA holders would receive a massive nothing in administration and remaining SPARCS holders (who do not convert) would be at the margins as well. BBI Networks holders I reckon would receive 50 cents or so on the dollar. Administration is about the worst thing that could happen to BEPPA holders.

Also people need to 'let go' of their BEPPA accrued interest. You are never going to see it. The best you can hope for is some form of restructure into ordinary shares to remove the interest burden from the company. This interest burden will sink the company as enumerate points out. And a half decent offer could see you with 40-50 cents worth of value in the end if BBI recovers as a company.

As melua points out, it is really all down to what happens with DBCT. If they sell DBCT for a reasonable price and get the Feb 2010 and Dec 2010 debt repayments out of the way and also along the way (with the sweep moneys) buyback a large chunk of BBI Networks bonds which would crystallise a capital gain and remove further debt servicing from the company, then this should provide the company with the breathing space to reorganise and survive.

However, I have a feeling that the company only wants to sell 49% of DBCT. We can all see now in recent months what a cracking asset this is. I understsand their reluctance to sell all of it, but this would not realise enough spare cash enough on its own to get BBI out of the woods, so I would assume it would only do this if they had a capital raising plan lined up alongside a 49% sale, and any such plan would absolutely have to include a BEPPA restructure of some sort as an integral part of the plan.

So I think it will be either:

1. Sell 100% DBCT, pay down debt, let SPARCS convert, restructure prefs. Maybe consider smallish capital raising (ie $2-300M) if required.

OR

2. Sell 49% DBCT, restructure prefs and then have a stiff rights issue/capital raising of atbleast A$1B (or even easier, a large placement and a SPP alongside, like AIO did), pay down corporate debt, try and pay down SPARCS if they can get this done in time before the end of November.

One thing we may be underestimating is that if a very positive DBCT sale result was to eventuate, the share price rally would make the SPARCS conversion a lot less dilutory. This is still a possibility, although the clock is ticking.

Good strong folks.