If the cornerstone investor is a prviate equity company, and these private equity companies are by definition completely merciless (and then some), they would hold a gun to the BEPPA holders heads and say "restructure or die". If I had to make the choice of "restructure or die", well I know what I would choose.
I just cannot see them particating at an ordinary level for a rights issue and not doing over the BEPPA holders as well.
The only possibly way is that if they have a plan that removes the corporate debt now by raising at least $1B and selling 49% of DBCT now as well, then they may be able to see their way clear by conserving their entire cashflow between now and 2012 and see the BEPPA paid out in cash in 2012. If they were able to achieve this and reverse the death spiral, then the ords by that time would be worth a multiple of what they would force them through at now in a rights issue. It would deliver some hefty gains to the BEPPA holders. However I am not sure they would want to do that. I would think they would rather screw the BEPPA holders over.
They will simply let the SPARCS convert and factor that into their workings.
They cannot get at the BBI Networks holders as these are senior bond holders on the same level as the corporate banks.
They will then come in over the top of all the new ords holders (SPARCS convertees and BEPPA survivors) with a very steep rights issue (like 3-4:1 at 10 cents or so) and really put the blow torch to the other equity holders. Of course these equity holders have the right to participate to avoid dilution, but it is going to hurt - bigtime hurt.
As melua says - they now hold all the Aces. Stand by to get royally screwed over.
BBI Price at posting:
7.8¢ Sentiment: None Disclosure: Held
