market cap and nav, page-93

"I like what you said about DBCT sale propping up SP only to have it fall again after dilution takes hold."

and vice versa. if sparcs convert first, sp will fall, then recover after dbct sale. thats why the timing if right will offer a benefit in that the VWAP will benefit BBI for sparcs conversion.

"Once DBCT is sold, why can't BBI propose some sort of "extraordinary resolution vote" allowing SPARCS and BEPPA hodlers to roll over their debt once again. This would cost them interest ofcourse BUT would provide much needed breathing space for BBI and it could use DBCT cash to manage to rest of the business."

Sparcs would be foolish to rollover. i know i would take the deal, you need to remember they are getting their full $1. they gain little by rolling over, especially when market values the sparc below $1. If they wanted to rollover they should cash out of sparc and buy beppa, effectively rolling over til 2012 with huge leverage.

I agree with Dargie on Beppa. Its still 2.5years away. rolling over isnt much point. and as a holder your putting the $1 further away and only gaining interest that isnt even being paid. The new Bepaa would continue to trade 13c and your only way out will be maturity(now beyond 2012).

Certainly, if rollover was to occur of Beppa it would be similar to sparcs, you either do or you dont, and it would be left until late 2011(if they still exist) before offering that. no point doing it sooner.

"My logic tells me that should holders agree to roll over again with additional interest, by the time came to pay them out the economy would be well and truly in a recovery."

Yes i agree that IF left til maturity, BBI will be in a much better position to payout Beppa.

But its similar to the sp rising after dbct sale only to fall again after sparcs dilution.

If Beppa still existed in 2012, and hypothetically sp was 40c with a 60c NAV. What would happen when Beppa converted? dilution MIGHT not be as significant as now but could bring NAV down to 45c.

Nobody will be willing to pay 40c/share in the lead up to beppa conversion, knowing that the nav and sp will drop post conversion.

basically the shares will trade at a price that factors in the dilution, so might as well convert them anyway.

i guess the hard part for BBI is what ratio to offer, it needs to benefit them but also entice Beppa holders to accept.

Offering 2BBI now is a win for BBI(if in 2012 BBI<50c..likely). but would Beppa holders accept?

Offering 3BBI now is basically a bet that they think BBI<33c in 2012, i wouldnt offer 3BBI because i believe it would cost them less in 2012(even factoring in interest).

Somewhere between 2-3 lies the solution. beppa =13c, 3xbbi=18c. the closer to 2x(1.78 is 0dilution) the better for BBI.

The outcome, and the decision to hold or sell really comes down to a few issues:

1.will dbct sell 100%
if 100% doesnt sell, all bets are off. no time to sell NGPL. restructure a must in order to do cap raising.

2.how long will asset valuations remain deflated.
If you/BBI are confident that economy, particularly europe will pick up in 1-2years time it is doable to delay conversion until then. at which point you sell PD Ports.

If you are concerned of a prolonged downturn, then leaving beppa until 2012 and then not having sellable assets is not an option. Beppa would be better converted now.

converting now is like a hedge against downside forces, it will limit the downside but also the upside, adding much needed stability.

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think of it as a variable or fixed mortgage. fix now and protect yourself against rising interest rates(but lose out if rates fall). But you have certainty.

OR

keep your variable rate, and ride the waves.

to fix or not to fix depend on what you think rates will do(will assets recover) and what the fixed rate(conversion ratio) is. no point fixing @12%pa(or converting at 5x) but fixing at 5% (2x ratio) is smart. Anything in between is worth considering.
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