my analysis of today's announcements

Internalisation

As we all know, the words Babcock and Brown have brought with them major negative sentiment and held the company back for a long time, so even though minimal management fees have been paid to them recently, it's definitely positive to detach ourselves from BNB and rename to Prime Infrastructure as soon as possible. While this has taken far longer than expected, with a result expected months ago, it's an extremely good outcome as we only have to pay $2 million per annum for 3 years and they will be completely gone, compare this to BBW/IFN who paid $40 million and BJT/AJA who paid $22 million, so this is very good news. Additionally, in order to avoid a change of control event which could cause potential BEPPA conversion and therefore, dilution, the agreement will remain in place for the responsibile entity until the 2012 conversion date. As such, the only way for a change of control event to occur is for a sale to a company outside the Babcock and Brown group, but this is unlikely as it represents no business benefit for anyone and could be easily avoided in any case.

We can draw some conclusions from this announcement, other than the improved sentiment to cut ties with BNB, most importantly that management do not intend on redeeming BEPPA in any way before 2012 and this would include a restructure. They are, however, leaving their options open and will be able to force conversion if they see fit, but this would appear to be the opposite of what they want and they will try to avoid dilution as much as possible.

BEPPA

Following on, the announcement regarding BBI EPS is quite strange, because they've just explained that change of control won't occur, then they go on to say that if it does happen, then they don't really know how. Obviously this is a complex issue and they're still seeking advice as to whether or not issuing equivalent securities is possible, but it shouldn't come to that assuming no change of control event happens.

Results

Obviously the most important issue at the moment is the asset sales process, we didn't really receive much of an update in regards to that other than the fact they have received interest in both DBCT and PD Ports at both minority and 100% levels, with a approximate time frame of two months for DBCT at least.

- revenue up 16.8% (due to acquisitions)
- EBITDA up 22.4% (adjusted)
- net asset backing per security of $0.66

Overall above expectation results, given the global financial crisis and contraction in volumes particularly throughout our European businesses.

- $390 million of debt paid off
- refinanced $518 million Australian Energy Transmission and Distribution facility
- refinanced and increased WA Gas Networks facility from $165 million to $195 million
- extended maturity on PD Ports debt
- Multinet refinanced $135 million facility
- DBNGP refinanced $480 million facility
- two year extensions to two European ports facilities

- finance costs have increased by $173 million

What this tells us is that the banks are more than happy to refinance, for the most part, heck, they even loaned us another $30 milion, which isn't exactly as dire as some have expressed in regards to the situation with the banks.

"These options include pursuing further asset sales, investigating the ability to raise additional capital and or refinancing the loans."

This is probably the first indication by management that they are looking at capital raising in order to pay off some of the debts, which is interesting because it seems they want to leave BEPPA as they are until 2012, so perhaps they believe some form of capital raising is possible without restructuring the preference shares, that's one potential connotation at least.

- acquisition obligation of $130 million, partially cash settled after year end for $80 million with the remaining $50 million deferred for three years

- $104 million cash at bank
- $99 million net operating cash flow

It remains that asset sales are the catalyst for change for BBI and DBCT is the key, it must be sold prior to February 2010 when corporate debt is due, unless this facility can be refinanced.