Yes its a pooh that there is no divvie. Yes its a pooh that the ann came out at 3.58pm - why the timing - to stop the shorters...well they missed out there.....
In reading the AFR over the past week or so following the BBP debacle There were some analysts (one from Citigroup if I recall correctly) who were saying they would prefer no dividend and a reduction in debt to provide sustained value.
Given the farce that BNB has gone through over the past 2 weeks, undoubtedly the management team have been in touch with their cornerstone investors - who will be potentially the source of future equity raisings to fund future growth. Undoubtedly they have sought countenance from them before making such a move as removing the divvie.
The reality is that this works for their short-term agenda agenda - it gets the more prudent stakeholders - the banks and equity providers on their side.
In the short-term the shorters and hedge funds will have a field day tomorrow as many investors, and especially day traders, will panic and probably send the share down intraday into the 50's but its the age old game the patient (ie stronger) hands taking advantage of the weaker hands.
We know the game will be played - and we are all undoubtedly thinking how do we minimise the problems. its ironic that the value of the share has just increased through their action (when you look at the cause of the problems for BBP and BNB and where the SP should.
It will be a long road back to 1.29 and above and the road will also be very very painful for DT's. But that's the game - its to underpin longer-term shareholder value and not some scabby DT's weekly income (and I do put myself in that category).
On balance it is the right thing to do to restore confidence in the longer-term viability and to restore confidence with longer-term stakeholders - notwithstanding how it was achieved.
PT
BBP Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
