bionicboy, you are a little too optimistic my friend, you need to change your tought process mate, you are thinking rationally in what is an insanely irrational market.
the situation is this
babcock will breach their debt covenants in december - their admission that it would be "difficult" to meet them is a crystal clear signal there will be a breach
if they breach the covenants, it gives the banks the right to move in and demand their money back.
thus babcock needs to restructure its debt facility before then to remove/modify the covenants - in other words, babcock is in exactly the same position allco was at the end of the year
a few things to bear in mind
1. it will take months of hard and tense negotiations to restructure the facility - the banks can be complete a holes when they want to. look at allco, it was an 8 month slog and they only lasted 2 months.
2. there will be severe penalities and a very tight repayment deadline. which means if they are unable to offload in time, it's game over, just like with allco.
3. the banks may just decide to pull the pin. it's clear that the reason this bank doesn't want to release babcock's deposit is because it believes babcock is insolvent and wants to set-off the money against the debt babcock owes it.
as for babcock's stock price, it will contine to dwindle away and my prediction is it will be in penny dreadful sub 10c territory within the next two weeks. there is absolutely no catalyst for a re-rating while this uncertainty remains, and this uncertainty will be around for years to come.
imo michael larkin and his crew (especially the incompetent elizabeth nosworthy) are entirely to blame for this debacle. when babcock's share price was above $2 a few weeks ago and they received takeover offers they should have realised the gig was up and tried to get the best deal they could.
i don't see why babcock is any different from bear stearns, wachovia and co. the directors of those companies realised the game was up and they had the foresight to do a quick deal so that the shareholders would get at least walk away with something.
babcock on the other hand rebuffed all takeover offers, thinking they could trade their way out of trouble. and now the share price is 25c, the buyers have probably walked away and she is s tuffed. the directors failure to sell the company smacks of negligence and is absolutely despicable. they should be held liable for their actions. but don't worry, they will golden parachute away from babcock, leaving the shareholders with nothing.
BNB
babcock & brown limited
