chim chimney chim chimney.....

There was some activity today on the NZX in the BBI Networks bonds (BBN020) that rank equally with the corporate debt.

For those who are not aware, the 'sweep' facility put in place by the banks gives a pro-rata share of all monies 'swept' to each of the banks that make up the corporate facility and this includes these bonds. About 10 days ago they announced there was $1.65M sitting in the sweep account and that they would be coming on market to purchase bonds back.

Well today (I suspect) this looked like it happened as someone went in and took a whole parcel out at 50 cents on the dollar, up from the last trade of 32 cents on the dollar. This means the company made a 50 cents profit on the bonds it bought as it will cancel them.

While this is small beer, the ramifications for the company could be very significant when the sweep facilities gets applied to the sale of DBCT (assuming it sells of course, which I think it will). If say they sell 100% and (say) $1B is freed up after debt secured to the asset is repaid, then the sweep could end up with $50M plus in it for these bonds and that would be a whole lot of buying back to be done at a discount, if indeed this amount can be bought back at a discount.

The more of these that can be bought back at a discount, the more the company can make in windfall profits when they cancel the liability from their books at the full $1 value. It alls helps. It might not be big bikkies, but it will create more equity for the company.

Still, the sale of DBCT is the key, and as this process goes on it is apparent that the price they get will be very important as well. The different between getting (say) $2.6-7B and $2.2-3B is crucial to this whole debt repayment process. Let's hope it is a really big number.