Bluestar Group (BLU020)

[sleepdog]

sorry iam new to this stuff what does the volume refer to, i see that they are not paying interest on bonds now trading at 89.00 good thing or bad ?????

[Alan3285]

sorry iam new to this stuff what does the volume refer to

It refers to the number of securities that were traded.

Simple example:

If the unit price is $0.80 / bond and the volume is 10,000 units, then the value of trades will be $8,000.

i see that they are not paying interest on bonds now trading at 89.00 good thing or bad ?????

Well, depends on whether they start paying the interest again and if so, when!

If you are investing in something yielding 89%, you can bet that it is highly speculative and there is a good chance you will lose all of your investment, but if it comes off, then you will get 89% yield which is quite nice.

There is no 'good' or 'bad' as such - it is what it is, and you have to decide for yourself if it fits with what you want to do with your investments / portfolio.

If you do your analysis and think that 89% is more than enough compensation for the risk of losing whatever you invest, then you might want to get in.

FWIW I hold some BLU020 right now as I think it has potential, but if the economy takes a dive (double-dip) and / or BlueStar gooes completely belly up for other reasons, then I'll take a loss on it. Its my choice - no one else to blame or thank but myself!

Alan.

[Dubdee]

I think there is even more value in these bonds.

The valuations are being done based on the coupon rate however the bonds are accruing interest at 13% since coupons were suspended so they are pregnant with this extra Moulah as well. So the quoted yield materially understates actual yield being earned.

Disc material holder

[sleepdog]

with so many print company's going belly up at the moment and PMP taking on Blue star and Geon in the sheet feed market in NZ this must be a worry when it comes to paying the interest on bonds at 13% plus i think compounding interest ??

[Dubdee]

with so many print company's going belly up at the moment and PMP taking on Blue star and Geon in the sheet feed market in NZ this must be a worry when it comes to paying the interest on bonds at 13% plus i think compounding interest ??

Though the bonds are accruing interest at 13.1% they are not paying it in cash and will not do so until the banks allow them. So the problem is being carried forward until they are in a financial postion to pay. These bonds are subordinated and are acting as (the banks) intended= quasi equity. I think the key question is how much skin in the game the private equity players have. If its materal then I think they will prop it up rather than walk away. They are not short of capital but will not contnue to throw cash down a maoney pit indefinitaly. If they walk away the banks feed first then the bonds after the other creditors.

[sleepdog]

interesting news Former Blue Star chief executive Geoff Selig has returned to print by acquiring Sydney-based Quality Print Group, to be run by ex-Blue Star exec Mike Shannon.

[Dubdee]

BLU020 trading now at 100.00%+pa this equates to about 25cents per dollar. looking at the top holders, big holders seem to be slowly accumulating and the selling must be comming from small. Albeit the register is a bit dated.

It seems to me that the market is pricing in disaster but there is now 75 cernts per dollar capital upside plus accrued interest at 13.1%

Any views?

[Alan3285]

BLU020 trading now at 100.00%+pa this equates to about 25cents per dollar. looking at the top holders, big holders seem to be slowly accumulating and the selling must be comming from small. Albeit the register is a bit dated.

It seems to me that the market is pricing in disaster but there is now 75 cernts per dollar capital upside plus accrued interest at 13.1%

Any views?

Obviously it is possible I haven't got a clue, but it looks like a good deal to me (as long as you don't have too high a proportion of your portfolio in them).

I have some ;-)

Alan.

[Dubdee]

Looking at the last filed accounts the company seems to be making operating earnings but is overloaded by debt.

The bank debt is located upstream from BSPG but is required to be serviced by BSPG by way of upstream gtees and a bank cash sweep. this means that the BPSPG accounts do not fairly reflect the actual indebtedness but the good news is that free cashflow appears to be applied to prior ranking bank debt which relieves the position of the capital notes.

Disc I have quite a few of these but buying sub debt at times of distress I have found so far profitable (Exception BNBG)

[Alan3285]

Looking at the last filed accounts the company seems to be making operating earnings but is overloaded by debt.

The bank debt is located upstream from BSPG but is required to be serviced by BSPG by way of upstream gtees and a bank cash sweep. this means that the BPSPG accounts do not fairly reflect the actual indebtedness but the good news is that free cashflow appears to be applied to prior ranking bank debt which relieves the position of the capital notes.

Disc I have quite a few of these but buying sub debt at times of distress I have found so far profitable (Exception BNBG)

Yes - I regard my holding in BLU020 to be something of a 'punt'. If I lose the lot, it wouldn't be disasterous. On the other hand, I may do very well out of them.

More likely, the return will be 'okay' in that the gains will be good, but the timeframe will make the opportunity cost relatively high and hence the real return will be okay.

If I didn't already have them, I would buy them at the price I could today, so I figure that makes me a happy investor for now.

Alan.