BNBs bsuiness model was/is buying assets on the bal sheet with debt and spinning them off into listed satelites riding the value uplift and charging advisory/structuring fees on the way through and then mgmt (base and performance) fees for 25 years based upon GAV and SP performance...all great in an asset bubble environment fuelled by cheap and ready access to debt...forget about recourse/non-recourse debt...what happens when the satelites (not to mention the head stock) are over geared and need to de-leverage?
Assets in the satelites get sold to pay down the non-re-course debt which lowers the GAV and in turn the fees that BNB receives? A nasty situation.
Until you understand the optimal capital structure of all the satelites you have no idea on the appropriate multiple that you should pay for an income stream that's in serious decline...BBC precedent says not much! Approx 1.0x infact.
Finally forget about profit figures...have a look at every cashflow statement released by BNB since 2004 and add up the cash deficit...where has it gone? Mark to market the value of all BNB's residual holdings in their satelites and it doesn't equalize...no where near so.
It appears that the emperor is wearing an invisible Zegna suit!
BNB
babcock & brown limited
