Let’s do our own BBI stress test. Feel free to contribute.I will...

Let’s do our own BBI stress test. Feel free to contribute.

I will take Wilson HTM’s net equity figures as per their report on March 1 2009. Wilson HTM have been consistently quite negative on BBI so using their figures might be a good starting point for our stress test.

DBCT $772M
PD Ports 460M
Euroports 405M
Westnet Rail 215M
Powerco 291M
IEG 530M
CSC 1M
Tasmanian Gas Pipeline 254M
WA O&M 209M
Alinta Gas 111M
Multinet 30M
Dampier to Bunbury Gas Pipeline 349M
NGPL 953M

Total equity of $4.58 Bn

Let’s shave off a whopping 20% across the entire portfolio to bring equity down to $3.66Bn.

Now lets take off corporate debt of $1.3Bn. That gives us $2.36Bn.

Now let’s allow for SPARCS ($140M) and BEPPA ($780M). These two debts total $920M.

That leaves $1.44 Bn.

Now lets strip out the entire Goodwill of $1.4Bn (not that goodwill is worth zero but we are stress testing).

That leaves us 0.04 Bn or $40M which equates to a net value of 1.6c per BBI security.

So we can see that a 20% devaluation of assets across the entire portfolio does wipe out all of the equity for BBI holders. Under the above scenario, BEPPA holders receive $1 for each BEPPA. Food for thought.