"I would suggest that funds from the PowerCo asset sale may be used to redeem SPARCS for cash, and maybe the new part owner of PowerCo this year, picks up some of the liability of SPARCS ?"
ejd, my investigations of both this SPARCS bond (BBN010) and the other BBI Networks bond (BBN020) is that the company is not obliged to use the Powerco proceeds to settle these bonds. The company itself has told me this. They also commented in a NZX/ASX anncmt as follows:
"Net proceeds from the sale of Powerco’s New Zealand operations are expected to total approximately NZ$400 million, with financial close expected in Q1 CY09. The capital raised will be applied to reduce corporate debt as well as fund organic growth opportunities across BBI’s international portfolio of infrastructure assets."
These bonds have both been trading for between 20-30 cents on the dollar. There is NZ$150M outstanding on the BBI Networks bonds.
My understanding is that the BBN020 bonds are rated as senior bonds and rank at the same level as the corporate facilities.
If you were an ordinary shareholder, you better hope like hell that they can either rollover the SPARCS bonds (albiet at a much higher interest rate) or find the money to pay them back. Somehow I would think the corporate facility banks would be very unhappy to see money being paid off the bondholders without them getting a slice of some of it.
Let's see if we have any posters who seem to be able to ignore these risks with the dilution/repayment of bonds and just blindly buy the shares.
Interesting times.....
BBI Price at posting:
12.5¢ Sentiment: None Disclosure: Held
