BBI 0.00% $3.98 babcock & brown infrastructure group

my analysis of today's announcements, page-8

  1. 315 Posts.
    Fact of the matter is that Asciano got it right. They raised equity rather than enduring a forced sale of assets. I fully realise that the BBI situation was viewed as dire and the EPS issues would have complicated an equity raising.

    We have the following developments in the balance sheet:

    On the negative side:
    - Significant asset impairments
    - Increased borrowing costs
    - Provision for a large tax bill
    - Marginal "current ratio"
    - Unknown cash flow state after current asset sales

    On the positive side:
    - revenues seem to be holding up, nicely
    - looks like there might even be scope to pass on some of the increased borrowing costs

    The name change is a psychological boost - however, it will not add to the cash flow.

    The situation with the EPS is disturbing. Clearly, the intention to revoke the "convert to alternative security" in the event of a change of control event was forced. The $2m pa payout "buys off" BNB ... but it still is possible to have a change of control event. Further, nothing changes the EPS interest and capital conversion to stapled events.

    It all hinges on the asset sale:
    - it MUST happen
    - we will only understand the cash flows once the detailed terms are known.

    Consequently, I got out of my remaining BEPPA, yesterday. Will review the situation once the terms of the deal are known.

    Good luck to holders!
 
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