bnbg, page-14

Dargie,

You are right and this has been a consideration for me also. It's probably unlikely but certainly feasible.

Another angle which I forgot to mention, is the company could embark on an on-market buy-back. I didn't find anything in the prospectus that prohibits them from doing so but again, I'm happy to be wrong if someone knows different.

At a technical level, if the company wants to reduce debt they either pay it off (through asset sales or earnings) OR buy it back at less than face value. I guess in your example, they are effectively doing the same with shares.

The issue here is of course seniority. The banks probably wouldn't be too happy if B&B started buying back their own sub debt before paying of the banking syndicate. The question here of course is whether the lending group would actually have a say in the matter.

At current market prices, B&B could start retiring the debt for say, 5, 10 or 20c in the dollar. For every note they buy (at $5.50 current price) they retire $100 worth of debt on the balance sheet.

I am not sure of the ASX rules surrounding on-market buy-back of debt instruments and whether the company has to notify the market in a similar way to equities. If not, this could be something they are currently doing.

Finally, if a suitor was to emerge for the group, they would be well advised to start buying up the notes prior to an offer being made. The same reasoning applies.