bnb news shows the danger in these situations, page-10

Now AgentCooper, that is the way to reply to a post in disagreement without having a slanging match. Now we can have a meaningful discussion about this. May I reply to your post as follows:

"There is no indication that ANY of their lenders across any of their businesses is exerting ANY pressure on the group that I am aware of."

That is most certainly not my understanding. If they had not have sold Powerco they would have defaulted on their short term commitments. If they have any European banks in their lending group, then you can most certainly expect very considerable pressure on them to reduce exposures where the bank is worried. There are internal workings in these banks that people do not understand. They are under considerable pressure to shut down any loans to foreign companies and keep the credit for the local companies. There has already been similar trouble for BNB with the witheld deposits and Oz Minerals are also having similar problems. Do not understand the seriousness of this issue with the debt facilities.

They are under very considerable pressure to reduce their corporate facilty and make repayments when they fall due. Failure to meet these repayments will be fatal. They need more asset sales.

"appreciate your posts and cautionary outlook on this one over recent weeks however, I do not share (to the same degree) the concerns of a few others here about the risks in BBI"

Agreed. The pity is this string became a fiasco and derailed the debate. I have put the offenders on ignore so you will not see me debating it with them any more.

"I humbly suggest that the worries surrounding BBI have been overdetermined by the market."

Yes, I think so too, but BBI has to show the market this is the case and they have not done this yet and so the market has priced them accordingly until this is illustrated. Maybe it will take a while to do this. Perhaps once their 31 Dec 08 accounts are out in the open, they may further share with us the way forward for 2009 and beyond for BBI. They specifically need to show that the cashflow retention and cost reductions are enough to keep it all together. Also it will be interesting to see what their auditors say in their audit report about the rollover of debt facilities etc. That will be a clear guide as to the seriousness of the situation.

"BBI has always been highly leveraged. They have been addressing this in an orderly way."

They need a big asset sale, like >$1B so that perhaps the $2-300M cash leftover after paying down recourse debt will see them right through 2009. That money and combination of cashflows should see corporate debt being reduced and this will keep the banks happy. They are geared at about 62/38 by my calcs. I did see they were aiming for 55/45. That really does seem quite manageable if they get it to that level.

"In closing, let me re-iterate - I am not attacking you but I respectively disagree with your view that the risks outweigh the rewards at current prices."

Well that's not quite what I am saying. My key point is that there are 3 different entry points to this company (ordinary shares, preference shares, bonds) and people are not fully comprehending the tradeoff between the three. What is really disturbing is that people think the BEPPA dilution issue in 2012 is simply going to go away. The company has to satisfy both its banks and bondholders before even thinking about its BEPPA situation. Those are very big hurdles to cross that no-one seems to be too worried about. There is a long way for BBI to go.

Finally (not you ACoop), the dreamers who think they are going to see a dividend in 2009, let alone 2010-2012, well they are truly posts for a massive LOL. I mean, for God;s sake, the BEPPA dividends are in suspension and I cannot see them being reinstated anytime soon.

Once the annual accounts come out, I will show you why there will be no dividends. If we can keep this string civil, I will present a full financial analysis for you and then we can really crack into it.

This is what Hotcopper should be really like.......