The market is factoring in the demise of B&B sometime this week or next - just look at its share price. As such, the market is predicting that this event will trigger the conversion of BEPPA into BBI stapled securities. This conversion at current prices would mean that the current security holders will be wiped out via a massive dilution, so insto's are obviously heading for the exit door, in the fear that after dilution the current security holders will be worth 0.001.
However, as has been stated on this forum before, the voluntary administration of BNB does not in itself convert BEPPA into BBI. So, one could say that the share price at the moment is going a bit overboard. To my current calculations, the buyout of BEPPA will cost somewhere in the order of $760 million, which means BBI will need to borrow, hold retained earnings and sell assets to the net value of this amount, in order to stop the conversion if BNB were to go into liquidation. This event however, may take place years after BNB goes into administration, enough time to find the net proceeds to buyout BEPPA rather than see them convert into BBI
BBI Price at posting:
5.2¢ Sentiment: LT Buy Disclosure: Held
