Hacker, have you ever thought that the indicative price might be that of BEPPA. BBI's recent price rise is driven by some other issues. From my experience of the comparison, Beppa selling drives BBI down because many believe Falsely that there will be a permanent gap, there will be a fluctuating gap, widely fluctuating in fact when one analyses the gap since August 2008.
Watch out for a sharp downturn in BBI, with BBI management very concerned about the ramifications of no reset, there will be a bloodbath if the numbers do not stack up on the day- at present they do not stack up - see
FYI (From a prominent NZ broker) We recommend clients do vote in favour of the extraordinary resolutions proposed by BBI. Holders have been offered an interest rate of 10% pa from 17 November until the next Reset Date and the next Reset Date will be 17 November 2010 The Extraordinary Resolutions seek approval for: Amendments to the Trust Deed. P5 of the Chairman's Letter sets out a table of the existing provisions of the Trust Deed and the Effect of the Proposed Amendments Clarifies that the Reset Notice sent by BBINNZ was timely. If these are passed then BBI will give a written undertaking to BBINNZ that it will not make any cash distributions on the Stapled Securities and BBI ESP the same undertaking to BBINNZ on the EPS for so long as there are any bonds on issue.
if the resolutions are passed, no bonds will be converted on 17 May 2009 (no matter what Conversion Requests have been received). However, the proposed amendments have made a further change such that anytime after the extraordinary resolutions are passed, a holder can make a conversion request which will be executed within a week. The conversion request will be at the new Min Exchange Number of A$0.175 (vs. old A$1.77) so while it is financially more rewarding (obviously) should the price of the BBI Stapled Securities be above this level, it does offer holders an exit strategy that was not available before. Current price of the securities is A$0.094.
Previous correspondence still applies regarding the issues with selling the converted BBI Stapled Securities on the secondary market and on balance favour giving the company a further year to try and get some resolution. The ability to convert on an ongoing basis may also take some of the lumpiness out of the conversion process.
It is important holders vote given the quorum. At least two holders and 50% by principal amount held is the quorum requirement. However, 75% of the votes must be in favour of the Extraordinary Resolutions. There are a number of larger holders ($146m outstanding, $110m is held by the top 11 holders including, Hastings Funds Mgmt $55m,Taranaki Electricity Trust $5m plus the custodian accounts) so a quorum is expected to be obtained. While we believe a number of the larger holders will vote in favour, the impact of some voting against will make it tough for the resolutions to be passed and the vote of the retail investors becomes important.
Attached is a letter drafted by Tom if you would like to send out a note to clients.
Further confusing the whole process, holders will have received a "right to withdraw "their conversion requests. (see below) They should do nothing with this.
The Securities Commission required BBINNZ to offer holders the right to withdraw as at the time of their conversion requests for May 2009, they did not have a prospectus available to them. The Securities Commission required a current prospectus to be in the market and this has now been lodged with the Companies Office and the Securities Commission exemption on the conversion given. This right of withdrawal must be exercised by 8 May - please let clients know they should ignore this.
And if BBI goes downwards (as it will) then Beppa will follow (as it shouldn't)
BBI Price at posting:
10.5¢ Sentiment: Hold Disclosure: Held
