Fact of the matter is that Asciano got it right. They raised equity rather than enduring a forced sale of assets. I fully realise that the BBI situation was viewed as dire and the EPS issues would have complicated an equity raising.
We have the following developments in the balance sheet:
On the negative side: - Significant asset impairments - Increased borrowing costs - Provision for a large tax bill - Marginal "current ratio" - Unknown cash flow state after current asset sales
On the positive side: - revenues seem to be holding up, nicely - looks like there might even be scope to pass on some of the increased borrowing costs
The name change is a psychological boost - however, it will not add to the cash flow.
The situation with the EPS is disturbing. Clearly, the intention to revoke the "convert to alternative security" in the event of a change of control event was forced. The $2m pa payout "buys off" BNB ... but it still is possible to have a change of control event. Further, nothing changes the EPS interest and capital conversion to stapled events.
It all hinges on the asset sale: - it MUST happen - we will only understand the cash flows once the detailed terms are known.
Consequently, I got out of my remaining BEPPA, yesterday. Will review the situation once the terms of the deal are known.
Good luck to holders!
BBI Price at posting:
11.0¢ Sentiment: Hold Disclosure: Not Held
