Not the least of B&B's problems will be what to do with B&B Infrastructure. The fund has great assets but is massively overgeared. Its look-through debt is about $11.7billion: $7 billion on its balance sheet and $4.7 billion off balance sheet, but it now has a market capitalisation of only $112million, with the price of its securities down from a high of $1.95 last year to only 4.7c.
BBI clearly needs a major equity recapitalisation but in its current parlous state the equity market is unavailable to it. That has led to speculation that it may seek to resolve the problem by using some of its unlisted funds to privatise BBI, with the hapless security holders taking a bath, and then using the unlisted funds to achieve a recapitalisation.
BBI Price at posting:
4.7¢ Sentiment: None Disclosure: Not Held
