Hi Melua.Agree, the downgrade of 'normalised EBITDA' is not...

Hi Melua.

Agree, the downgrade of 'normalised EBITDA' is not good.

However, the solvency question is a cash one, so the debate above (net cash generated) is still relevant.

Normalised EBITDA is less than Interest so in a normal year they are burning value. The burn rate will depend on many factors, including if there are other non cash losses (like Wholesale Market m2m) or cash receipts on the balance sheet (like asset sales).

If the burn in a year is less than cash in the bank, then value is gone, but they are not insolvent.

The asset sales help cash and to get the interest bill down.

In BBP's case this poor earnings performance will have a big feed through into value, but (IMHO) does not imply insolvency.

There are several big hurdles to BBP trading thru, like the debt reset early next year and the cash impact of buying carbon permits when the scheme starts up, but not (IMO) short term insolvency.

Of course, if the Banks pull the pin, then all this discussion is moot. The Banks have a much lower trigger than Statutory Insolvency Rules.

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