BNB and AFG were structured very differently. Virutally no-one in the chat rooms or in the financial media seem to understand this.
Bear in BNB almost all of the BNB satellite companies are stand alone entities and would survive if BNB the parent fell over. In fact it may actually be beneficial to these companies if BNB goes.
Similarly, one of the BNB satellites could fall over and BNB will carry on as they are not guarantors of the satellites obligations.
People need to stop and think carefully about this fact. The way BNB is set up makes it almost pointless for the banks to put the various companies under. Does the bank want to manage a wind farm or a port or an electricity company or a power station? I don't think so.
They other thing to consider is that BNB itself has a load of 'assets under development' on its books. These are assets they normally would have brought to fruition (eg a wind farm being built etc) and then leveraged up and packaged up and sold on at a profit with retained mgmt rights etc.
Well now the banks will simply be asking them to sell these completed development assets to pay down the corporate debt and BNB will have to do this. Some of these assets will not have debts directly attached to them so when they sell them they should be free to use the proceeds to pay down debt. And you can bet your bottom dollar they will not be starting anything new until all the existing projects under development are produced out the other end of the pipeline. There still seems to be demand for the wind projects and other similar type infrastrucutre projects.
I think it is in the banks interest to allow BNB to carry on managing the assets it has and to see if it can sell off enough of its development assets to reduce debt and service its interest payments and commitments. Certainly with no dividends on the horizon and little in the way of cash bonuses likely until the corporate debt facility is cleared, BNB looks like it will be given time to claw its way back.
BNB
babcock & brown limited
