melua's recap plan a winner for beppa

The best scenario for BEPPA holders is the following:

BBI management meet with the largest BEPPA and SPARCS holders and show them if no deal is agreed upon, they will have to take their chances in administration/liquidation. The larger BEPPA/SPARCS holders may even be offered a participation in any institutional cap raising at say 1c. That's the carrot. BEPPA/SPARCS holders then agree to the following:

Conversion of both BEPPA and SPARCS will take place simultaneously at an agreed discount to face value and at an agreed 5c per BBI. The haircut on face value is say 50%.
So 780M BEPPAs and 100M SPARCS convert on a 10:1 basis into BBI. That then leaves zero hybrids and a total of 11.4Bn BBI securities post conversion of all hybrids.

This takes care of all hybrids.

It is my opinion that BBI need to raise $1.5Bn. This clears the Oct 30 PD Ports Holdco debt of $200M and clears the remaining $1.3Bn of corporate debt.

A condition of all this of course is that the banks agree to extend the Oct 30 $200M debt until such time that the cap raising can be completed.

Where does that leave BBI?

NAV is currently $1.7Bn (66c) so removing the hybrid debt adds $880M to the NAV. New NAV is $2.58Bn or 22.6c per BBI.

Now, Mr Cornerstone can enter because he knows how many BBI are issued post hybrids conversion and he will probably want to tip in $500M at a juicy discount and the other $1Bn will come via the instos, also at a juicy discount.

If they are issued BBI securities at 1c, that will create an additional 150Bn BBI securities.

Total issues BBI would now be 161.4Bn.
NAV is now $4.08Bn after adding in the new $1.5Bn in cash.

NAV after all the dilution is $4.08Bn divided by 161.4Bn securities. NAV then equals 2.5c per BBI.

A 1:100 consolidation can take place to clean up the register.

What does that mean for current BEPPA holders?
Well, each current BEPPA gets converted to 10 BBI's which are ultimately worth 10x 2.5c or 25c. Now the post dilution NAV is 2.5c but the market might price it at a small discount to NAV so perhaps BBI might trade at 2c. Therefore the BEPPAs today that are trading at 8c could ultimately be worth 20c. How's that for a positive analysis?