>Do you feel the BBI management is doing a similar job of grinding the company into the banks coffers or would you say they genuinely want to stay in business and pay distributions ? or both ?
In the case of BBI, I believe there is a serious attempt to find a path through the mess left by the collapse of BNB and to establish BBI as a viable, independent, infrastructure investor.
The reason, I believe, they have a good chance is because of the size and age of the deals. Generally, I would suggest any and all of the latter deals will cause trouble. These deals were done with wafer thin margins and were predicated on the continued flow of easy money. The early deals (DBCT is a primary example) offer better margins with some scope for organic development of these assets (again, DBCT).
It is tragic that BBI loaded up with recourse debt to fund the bonus payments of BNB executives (which is the most charitable way I can characterise the last few deals).
If the Bankers rush towards the exit ... BEPPA holders will have no other option but to watch listening to the gurgling sound (the sound of money being flushed down the toilet). The BEPPA trust dead shares alot of things in common with the BNBG trust deed - a scandalous disregard for the usual rights of a debt holder.
Beware of Goldman Sachs and McGrath Nicol entries in the BBI visitors book!!
I think the path forward is:
- Significant asset sale - Elimination of a good chunk of the recourse debt - A capital restructure that clarifies the position of EPS holders against ordinary equity (stapled securities) - A capital injection stabilising the balance sheet
I would suggest this is also the general consensus of the thread.
One opinion I am keen to get across loud and clear is that EPS debt has completely no "leverage" over senior debt. EPS has only weak leverage over equity. Hence, as a BEPPA holder, do not believe you are going to see 100% of face value + interest. This payout would be the ruin of equity holders and they have some limited power to stop this from happening. (The death spiral scenarios are examples of this ... EPS debt "taking over the company" from the equity holders means senior debt "taking over the company" from the EPS debtors ... there will be nothing for the EPS and equity holder).
Take your queue from the DBCT asset sale ... a sale in the lower ranges, you will see ~35cents total for your BEPPA+interest. A sale in the average range, ~50cents on your face+interest. A sale at the top end ... including, eventually, some of the "dog" assets ... the BBI equity holders will be in charge, again, and you just might see $1face and your interest.
BBI Price at posting:
6.5¢ Sentiment: Hold Disclosure: Held
