trying to find something positive

I actually take something positive away from this whole mess of the two competiting proposals: I think the banks are terrified of the BAM proposal and that terror is BBI's negotiating leverage to getting a decent outcome.

If BBI goes with the BAM proposal, the banks may lose a lot of their net asset value simply in asset sales up front. Having written off the value, BAM can then sell off the remaining portions of the choicest assets below their true value, then leave the remaining BBI shell to fail and then give them a partial return based on liquidation in Administration.

The banks simply cannot allow that to happen. That has to be why RBS is so actively pursuing this new proposal, and even offering up some corporate debt as part of the offer.

If they are good negotiators (there is a big question mark there...), this is BBI's opportunity to get the best deal they are ever going to get from RBS and the hedge funds.

Here is the deal I would hope for as a best outcome:

1) Convert the hybrids now. BBI holders sorry you are dead if this happens, but it simply has to happen or the market is never going to revalue this company's shares and allow for continued growth in valuation as they pay down debt.

2) The RBS hedge funds come in on a straight equity basis with a warrant for additional shares at a higher share price. That gets the hedge funds' interests aligned with shareholder interests to move BBI common values higher. Under no circumstance should BBI accept a convertible bond or any instrument that pays interest. We don't need to trade one form of debt for another. The warrants can be dilutive, but it has to be equity not debt.

3) The bank sweep goes away.

In effect BBI is signaling to the banks that they will go with the BAM cornerstone proposal if they don't get a good enough deal. In my opinion they should exercise this leverage to the full extent and extract a deal that cleans up this debt mess at least to a level that gives the company some hope of paying off remaining debt from future cash flows.