I would suggest that the difficulty BBI now find itself in is if they use the net proceeds from any assest sales and retained distributions to pay down the corporate debt facility, or to buy out the 700 million odd BEPPA securities outstanding.
If they choose to do the latter, it wont help its gearing level, currently at about 70% - which is a tad high in the current debt environment.
Also, it's ICR wont budge either and will stay at 1.78X which is a level it would not want to see drop based on lower revenues due tot he slowing economy - although lower revenues would be mitigated to the fact that 75% of revenues are regulated to tariffs and the like, also revenues from from the NGPL stake should help increase income in the short term due to the unforeseen collapse in the aussie dollar - when based on currency conversion provides a surprising natural life in profits for BBI. NGPL accounts for a third of all revenues.
This is an upside which has not been discussed, which could be a huge unfactored plus for the companies ability to repay debt, as all debt related to NGPL are non-recourse and based on U.S denominated debt, so the lower aussie dollar does not mean an increase in debt payments, which can act as a natural hedge and erase this unforseen gain.
BBI Price at posting:
5.2¢ Sentiment: LT Buy Disclosure: Held
