the sky has not fallen yet, page-10

At a market cap of less than $2B surely it's value is below it's equity holding of it’s tangible assets. Is the business and everything they have done over the past three years worth nothing?

In the press, a Credit Suisse analysts said they saw Brookfield Asset Management (BAM) as the only credible potential buyer of the Babcock & Brown business in its entirety. These guys look like a great fit, but given the staff 40% shareholding, a script for script deal would be the only way forward.

Another short term option may be to loosen their grip on the satellites. If they change the management agreement to enable a change of manager of the funds, this will no doubt increase the value of the satellites and expose them to possible takeovers. As a large shareholder BNB would benefit from a higher share price & sale proceeds from their funds.

Take wind for example, I believe MQG are trying to set up a wind business. Wind farms have increased in cost by 79% since 2005 but we are yet to see this increase in the BBW share price, despite it’s assets increasing by this amount. I know strategically (long term) this would not be a great thing, but this would certainly unlock value in the short term and ensure they are around to fight the next fight.

The way I read the announcement last week, profits will be flat or slightly lower for C08, but well down in the first half. I believe in the most part this is because they could not sell the wind farm holding until Sep/Oct (2nd half) as well as the unexpected hedge fund and real estate results. This was already priced in.

There is value going forward into C09 .They will need to concentrate on their development pipeline, not purchasing and packaging, so holding onto cash and cutting distributions would be a good thing until their regain the credibility.

M O D Y O R