Hi Enumerate,you said "2) What restrictions are on Babcock &...

Hi Enumerate,

you said "2) What restrictions are on Babcock & Brown?

AMONGST OTHER THINGS, INCLUDING:

• undertaking any arrangement, reconstruction or reorganisation, which would have a material
adverse effect on the value of BBSN2."


I was looking through the trust Deed in relation to this point.

In the Trust Deed it does indeed say this but what concerns me is that it says it can't do the above if....."For so long as any Outstanding Interest or Repayment Amount remains due but unpaid or a payment of interest is deferred under clause 2.3(a) or where a Trigger Event subsists"

Now it defines Outstanding Interest as "Outstanding Interest means in relation to each BBSN the aggregate of any unpaid Deferred Interest and other unpaid interest which is due and payable".
Repayment Amount is defined as the principal and any outstanding interest.

Anyway my reading of it is that there is currently no Outstanding Interest as its not due to be paid until May so they probably CAN do things that are detrimental to BBSN holders. The one thing is that they have said they intend to defer the interest, maybe a court would say that intent is as good as the action itself?

I think if they convert $2bn of bank debt into perpetual debt that ranks above BBSN but they leave the BBSN alone then thats as good as we can realistically hope for and I'd be pretty happy with that. Gives them a chance to sell down and maybe have something left over and it doesn't change the priority over the BBSN notes as they were subordinated to the banks anyway.

Thats what I bought into these things for in the first place, the bottom drawer option value.