As I have already mentioned the CFO of BBP has flagged further bad news on the way and in addition to this bad news there are reports of a significant announcement coming shareholders' way sometime over the next four weeks. The significant announcement and the expectation of further bad news are not one and the same thing the way the article in the AFR reads.
Furthermore you speculated that the expected further bad news to be released would be regarding bank loans but this seems unlikely thanks to recent developments as follows:
BBP has already secured an extension to refinance debt from a consortium of eleven banks.
BBP has also already secured easier terms with lenders, lowering the minimum default interest cover ratio on the credit facilities from 1.35 times to 1.1 times for the June quarter.
If the banks were going to pull the plug they would have done it already so if there are to be any more negative announcements I expect them to be further earnings downgrades instead.
You stated that BBP has recorded two write-downs this year, but including the most recent write-down released to the market yesterday, they have now recorded three write-downs this year. Given such a record I would expect any further bad news to be yet more write-downs as it would be true to form for this company.
This makes more sense as the author of today's AFR article cites BBP's new managers combing through contracts and businesses to head off more negative surprises. This being in addition to the comments attributed to the CFO.
As for the CFO not being a reliable source of information on financial matters and general developments involving the company I completely disagree. The CFO is right up there with the CEO as being the person you want to be hear from. The CFO is intimately involved with the inner workings and financial performance across the entire company and they are just as well placed to inform shareholders of what is going on as the CEO as both managers are in the inner sanctum and know everything that goes on in the company.
On a final note I don't think that you can summarily dismiss everything that the management of BBP say just because they have missed earnings guidance, albeit on three occasions thus far this year. Dispute future earnings guidance all you like, sure, but not everything across the board. That suggests that management are in the business of deliberately lying to the public or they are completely and utterly incompetent, unaware of everything that's going on around them and I just don't buy that.
The new CFO, for one, only joined BBP late last year so give the guy a chance and when he says that "We are doing a lot of work to right this ship and get it sailing in a stable fashion" I believe he should be taken at his word.
The new management team had a hell of a lot to deal with when they took over the reigns last year so give them a chance to sort out this mess that the company and shareholders of the company find themselves in at the present time.
BBP Price at posting:
7.1¢ Sentiment: Hold Disclosure: Held
