insider trading complaint form, page-115

Hi there JoeWolf,

I am a little puzzled by your remark:
“At no time did I expect that management would have made these statements and the disparity in value was Beppa was undervalued and BBI was overvalued. I never considered how that could be.”

I am not an insider – I have been out of the country while most of these events have unfolded – but I was never in any doubt as that BBI were overvalued and BEPPA were undervalued! Simple facts – BEPPA are primarily debt instruments. Debt holders rank above equity holders in a wind up (or should). If BEPPA are really worth 99 cents, then BBI are really worth zero. It has taken a while, but the market is finally starting to understand that simple logic. (The fact that the deal structure is at odds with that principal is another subject.)

What puzzled me during August-September, when BEPPA were trading at 7c, was why the lending banks hadn’t pulled the plug. The fact that they hadn’t indicated that there was likely to be much more asset cover, and the BEPPAs worth much more, even in a wind up. The directors had said that BEPPA holders might have to take a haircut, they didn't say that BEPPAs were almost worthless! I think that the market over reacted. A lot of people sold: I didn't.

I didn’t need to be an insider to make that call.

All the best!


The writer is a BEPPA holder still deciding which way to vote.