ive been both a BBI and a BEPPA shareholder. i now only hold BEPPA for the following reasons:
1) an insolvency of BNB is a trigger event under the terms of the BEPPA and BEPPA can be exchanged immediately for BBI's for full face value ie $1 per Beppa. thats 800m of BEPPA securities divided by 7c (BBI shareprice) which is a number so big that any current BBI shareholder will be diluted to oblivion. i think the chairman of BBI warned of this at the latest AGM.
2) in the event there are any problems with BBI itself BEPPA's rank senior to BBI. ie it clearly has short term funding issues otherwise why would it be cutting distributions. a simple current ratio will show you its short term liquidity is pretty bad. plus ratings agency actions reinforce this. in the event of a company windup debt will be paid first, then BEPPAs will be paid $1 (vs 14c currently) and BBI shareholders will get whats left(if any).
3) in the event there is a takeover any bidder will have to pay BEPPAs back first. this is a 7x return. i find it unlikely that BBI is going to increase 7x any time soon.
my 2 cents.
PLEASE DO YOUR OWN ANALYSIS.
BBI Price at posting:
7.5¢ Sentiment: None Disclosure: Held
