BBI (ASX) article in australian

Originally posted by melua ↑

Hi Melua

It is my understanding that the Moody's comments on their cash requirements over the next few months are correct.

They are required to pay around $160 million for the other 24% of WestNet rail. It was a put/call option, and the other holders "put" it to BBI early this year, and BBI is required to stump up. The equity component is around $85 to $90mill and they have to pay out the attaching mezz debt of around $60 to $80mill, as it is unlikely that this can be refinanced. This has to be done by end next month.

There is also the $100m corporate debt that has to paid out by Feb.

There is also a proportion of PD Port debt that has to be refinanced (75mill pounds)by Feb as well. This should happen, but in this environment you never know, and they may have to stump up a part of all of the of the 75m pounds.

However, I think these issues are manageable, due to axing of distributions, pending settlement of 50% of PowerCo, but they should ideally get an asset sale or two at a reasonable price. I think there is a reasonable chance of this given the uniqueness of their assets (although I have my doubts on EuroPorts quality). The DBCT asset is top class, and I would be shocked if they don't get a good price for it.

I have pointed these issues out in previous posts.

I am not negative on BBI, but these issues and risks are real and contributed to the negative sentiment in BBI, hence the low share price.

I agree with you on where BBI may go under certain scenarios, although distributions may take longer to recommence as I reckon that once they meet their immediate requirements, they will try to buyback the BEPPAs on market (at a meaningful discount to $1 face value per share, albeit at a much higher price by then than the current price), but this will be for the longer term benefit of BBI holders.

I am a holder of BBI (not as many as you, Melua, although meaningful for me), as it is my view (like most in this forum) that although the situation is risky, that the risks are manageable and the share price slump is way overdone.

Cheers