You will most certainly have to 'pay the ferryman' when a cornerstone investor comes in with a bunch of money, but given the choices If the cornerstone investor wants to make money, they have to........... wait for it............ REVERSE THE DEATH SPIRAL.
To reverse the death spiral, I would think you would have to address:
1. The SPARCS conversion, before Nov 17 2010 conversion date. That will be interesting. 2. The BEPPA situation, with perhaps a restructure of some sort prior to the recap proceeding. 3. Spell out what they intend to do with the BBI Networks notes. 4. Raise the money via an issue of ords. Will probably include some sort of SPP.
Once they have addressed this, then they would need to:
5. Pay off a large chunk of corporate debt with the proceeds. 6. Renegotiate remaining corporate debt. 7. Cease all asset sales. 8. Get their investment grade credit rating back ands reduce interest expense. 9. Get into a position whereby cashflow from all of the assets is flowing up the chain into the corporate entity again. An improvement in credit rating would certainly help this to be achieved.
Let's see what the announcement on Friday morning actually says. You need to bear in mind the cornerstone shareholder is effectively saving our bacon. We will have to give up some of our positions to allow him to come to the table.
Potentially this is the best news we have had in BBI this year.
BBI Price at posting:
7.8¢ Sentiment: None Disclosure: Held
