a decent bid at 45 cents on the BBN020 would shake out a whole lot more I suspect. I agree with your comments on some of the poor advice holders are receiving.
If (say) BBi parted company with 49% of DBCT and this freed up approx $5-600M of free cash, well the sweep would take approx $500M of this and this would probably mean around A$30-40M would go into the sweep account for the bondholders. The company has indicated it intends to buy these bonds back on market at a discount rather that make a pro-rata payment to all bondholders. Apparently this fulfils their obligations and also allows an exit for any bondholders who want out. I am guessing, but I would think a buyback of that magnitude would easily shift the price up to 75 or 80 cents as you say and would end up wiping out almost have off these bonds.
The question being put by melua though is would you gain more from doubling your money on these bonds than you would from (say) buying more BEPPA.
Notwithstanding that BEPPA carries a lot more risk that BBN020, BEPPA would provide more gains. However, I think BBN020 would be a less riskier play and also perhaps deliver over a shorter timeframe (ie you can sell into the buyback in a few months time) than the longer term play of waiting for the BEPPA to be sorted out.
It's all becoming very interesting.
BBI Price at posting:
9.9¢ Sentiment: None Disclosure: Held
