After sleeping on it, I see this scenario if the majority of Sparcs lodge a conversion request:
Sparcs are a liability of the NZ company holding the 42% share of PowerCo and that debt is subordinated to BBI. The Directors of the holding co "current intention" is conversion to BBI securities under the subordinated agreement.
They have offered Sparcs holders better reset provisions from November. I think to get more people to roll-over.
However, if the majority elect to convert, then the intention may change to cash. However under the subordinated agreement BBI cannot pay the cash if a senior debt enforcement envent exists. Therefore, the senior lenders lodge this with the trustee.
The Sparcs cash debt becomes a liability, but is unable to be paid until the senior debt is satisfied. I don't think this liability will accrue interest and will not be converted to staple securities.
Therefore, lodging a conversion request for Sparcs becomes a risky proposition and takes away the right to interest. Thin of BNBG for those that held and you may find an answer.
Cheers
BBI Price at posting:
3.5¢ Sentiment: Hold Disclosure: Held
