BBI 0.00% $3.98 babcock & brown infrastructure group

the facts about potential insolvency of bnb

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    OK, enough of the BS, downrampers and uninformed garbage being spruiked on here. The following is what happens in the case of Babcock and Brown Ltd (BNB) becoming insolvent.

    VERY IMPORTANT POINT: Insolvency of BNB may take years after BNB are put into administration and administration is still no certainty.


    EFFECT OF AN INSOLVENCY EVENT
    An insolvency of BNB would NOT automatically give BBI board the right to terminate the management agreement (there has to be insolvency of the RE which technically can't become insolvent) - however if BNB were insolvent then "eventually" as the business was sold, this could lead to a change in control event i.e. a change in the Responsible Entity (RE). The RE is Babcock & Brown Investment Services, a wholly owned subsidiary of BNB. If a Change of Control Event occurs this triggers a redemption or conversion for BEPPA holders. If all BEPPA holders elect to take cash BBI will not have enough money to pay out cash and will be forced to convert BEPPA shares into ordinary shares (which will be highly dilutive to ordinary shareholders). BBI does not expect that BEPPA holders would want to convert to ordinary shares as they would lose their "preference status" i.e. they would no longer rank above ordinary shareholders in the event BBI would become insolvent.

    So, technically BEPPA could be converted to BBI if a few things happen that would take a number of years to conclude.

    1. BNB is put into administration
    2. Insolvency follows years later
    3. BBIS must also become insolvent and a change of RE happens.


    THERE WILL BE NO BEPPA DILUTION INTO BBI FOR MANY YEARS, IF AT ALL.

 
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