otakou, assuming the deal goes through, as it stands now all the corporate debt holders get repaid except BBN020.
I must say I was surprised by this, because under the sweep the banks had in place BBN020 was to get its share of the repayments in line with the other lenders, but the main difference was the company was using the sweep moneys for BBN020 to conduct an onmarket buyback of bonds at a discount rather than pro rata payouts to each bondholder.
The BAM offer documents give no clue as to whether this may still happen or not, so for now we need to assume the BBN020 run their course until 2012 and get paid out then. BAM have already indicated they intend to payout the SPARCS bonds on Nov 2010 rather than letting them convert into shares and you would think (assuming BAM want to maximise their BBI investment) that they would treat the BBN020's the sameon maturity in 2012.
BBN020's last traded around 79 cents, which is well up on the 50 cents they were before the deal was announced. If you buy at 79 cents and get the 8.5% interest along the way, that is a cash yield of 10.8% and a capital gain of 21/79 = 26% on maturity.
If the deal goes ahead, you would probably expect them to trade higher again, but we will have to wait until Nov 16 to find out.
BBI Price at posting:
4.1¢ Sentiment: None Disclosure: Held
