>Risk/reward I would be holding Beppa over BNBG any day.
True enough ... the point I was making was that the subordinated nature of the EPS debt and the inability of a EPS holder to take any meaningful action to recover the money owed ... is equivalent to the BNBG situation.
"3.4(b) Holders are unable to seek a liquidation of BBIT or BBIL or require payment from BBIT RE or BBIL or exercise material remedies against BBIT RE, BBIT or BBIL prior to either liquidation of BBIT or BBIL or the Satisfaction Date (as defined in the BBI Deed of Common Provisions)."
What happened to BBL, in terms of BNBG holders, could happen to BBIL/BBIT and BEPPA holders.
The only saving grace, for BNBG holders is that they are able to refuse to convert their debt to worthless BBL shares. BEPPA holders have no such luxury ... the company decides to either redeem or exchange.
"4.6(c) The Company must at its election Convert, Resell or Redeem, or a combination of Conversion, Resale or Redemption, in accordance with clause 4.7 the EPS of Holders who gave a Holder Exchange Notice on the Reset Date (Retiring Holders)."
This is the "Dargie Death Spiral".
BTW - I think you and your friend should have some expectation of a return from BNBG.
I also agree, BBI is not dead ... there is a way out of the mess ... as long as the Bankers don't do anything stupid. The key advantage BBI has is that the Darylmple Bay and PD Ports deals were done in 2002 ... well before the excesses of 2006/7.
I think it is important for BEPPA investors to understand the full consequences of the unlikely downside scenarios. I do not see why anyone would want to be a BBI shareholder.
Finally, as time goes on, the prospects of a BBI capital reconstruction become NIL. This is because of the need to cover off payment of any Mandatory Deferred Dividend by issuing more stapled securities:
"3.3(a) ... BBIT RE and BBIL must issue such number of Stapled Securities as is necessary to fully fund payment of all outstanding Mandatory Deferred Dividends ... ;and
3.3(b) ... BBIT RE and BBIL must make such proceeds available to the Company to pay in full all outstanding Mandatory Deferred Dividends ..."
It is a tightrope walk ... with the "Dargie Death Spiral" as the abyss below us.
BBI Price at posting:
7.5¢ Sentiment: Hold Disclosure: Held
