I had the opportunity to speak to the trustee yesterday. He...

I had the opportunity to speak to the trustee yesterday.

He confirmed a few things to me. I am sure these have already been covered off in this forum, but just in case:

1. The Trustee acts in the interests of the note holders, not BNB.

2. The note holder exit notice has to be lodged with BNB directly as per the details in the prospectus.

3. The Trustee has been in contact with BNB and is conducting its own review internally to look at options.

4. BNB have confirmed they will be contacting note holders in 'the next few days' with a series of options. It sounded to me like the Trustee was waiting to see what these are.

He also sent me a copy of the Trust Deed, which I know a number of you already have. If you would like a copy, please send me an email at the address on our profile and I will reply with it attached.

So, as I see it the situation boils down to that which has already been discussed in this forum:

1. The trigger event has taken place. BNB acknowledged this by way of an announcement.

2. Note holders now have the right to request repayment of the face value of the notes.

3. BNB appears to have insufficient means to repay the notes and is looking to make an offer to note holders, which will be voted upon at an upcoming meeting. BNB have already primed note holders that it is likely to be a low-ball offer.

4. Failure to reach an agreement with note holders would likely trigger the directors to put BNB (the listed entity) into administration.

5. Section 1.6 of The Trust Deed appears to prohibit note holders from forcing administration on BNB. This really is academic; if BNB is unable to repay a debt, the directors will be forced to do so anyway.

6. The whole situation needs to be resolved by 15/3, which is the next interest payment date for the NZ notes. There is a clause in the note holder agreement which prevents BNB conducting a capital restructure while interest on any of the notes is outstanding.

7. The key appears to be the guarantee issued by BBIPL. Section 12 of The Trust Deed states that "[BBIPL] unconditionally and irrevocably guarantees to the Trustee and the Holders the due and punctual payment of the Monies Owing."

8. If BNB cannot repay the face value, the Trustee will call the guarantee and the amount owing will become a liability for BBIPL.

9. The restructure of BBIPL announced last week confirms that BBIPL will continue trading, therefore if they are unable to pay the amount due to note holders under the guarantee, the directors of BBIPL will be forced to call in the administrators. Doing so will right royally screw up the chances of the banks recovering full value for their debt, but it was also likely mean nothing for note holders. Section 12.3 appears to subordinate any claims of note holders to all other creditors of BBIPL in the event of a wind-up.

In my view, there is no hope of BNB (the ASX listed entity) repaying the amount. I sense that ultimately the argument will be around the strength and wording of the guarantee issued by BBIPL, the 'new' agreements put in place by the bankers and the economic pain that will be caused to BBIPL if the Trustee calls the guarantee.

I would urge you to not lose sight of the fact that BNB owes you A$100 for every BNBG you own. If it is unable to pay (which is likely), the Guarantor then owes you $100 for each BNBG you own. The question then is whether the Guarantor will pay up or not.

I would also urge you to take a professional, business approach to the situation. I would like to see evidence of why BNB are unable to pay as they are contractually required to do and then evidence of what the Trustee and Guarantor are going to do about the situation based on their contractual obligations before coming to any conclusions.