As a going concern, BBG need to take stock of the effectiveness of the $200M in purchases in 2010. Revenues at $1.6Bn are near all time highs and 30% higher than 2007 pre-crash at $17.5 SP.
BBG is an interesting case of asymmetry in trading bias (ratios) since the highs in 2007 when CBA started to sell down BBG. But the SP performance is hardly due to CBA istelf.
Debt is always a problem - but no more than the capacity to service it and pay it down. To suggest they can't trade out of it with a solid track record of performance and $1.6Bn in sales is signalling more than fundamental business issues brought on by debt.
BBG is not the first one to be dragged down from darling to derilect by institutions. To now flood it with 'massive dilution' would be consigning it to the rubbish bin from this point onwards.
They can knock themselves out if that's how they want to play it. But larger personal holders would want it resurrected with minimal dilution to pay down the debt.
It appears CBA is treating BBG like a disposable nappy. Have management soiled BBG that badly? Time will tell. BBG would have been fully cognitive of their lending covenants and borrowing limits surely. Has $200M debt increase bought zero cost benefit for BBG?
They were a $3.5Bn company at one point, now allegedly being offered $765M on record revenues represents good value? While it does not surprise me, am merely pointing at the hypocrisy.
Will be interesting if this gets laughed at or recommended. Stranger things have happened.
BBG Price at posting:
$1.42 Sentiment: None Disclosure: Held
