smh article

from
http://business.smh.com.au/business/bbi-asset-sales-under-pressure-20090511-b0lo.html

"
BBI asset sales under pressure
Danny John
May 12, 2009

THE planned asset sales of debt-laden Babcock & Brown Infrastructure have run into further trouble, as the global recession takes a toll on its hopes of disposing of a British ports business.

BBI told investors yesterday that the mothballing of a steel-making plant in the north-east of England could have a big impact on its nearby PD Ports operation, through which materials flow to and from the factory.

PD Ports is one of BBI's key businesses, and the subject of a proposal to bring in outside investors or sell it outright as the ASX-listed trust battles to reduce $9.6 billion of borrowings at its asset level and $1.4 billion within the corporate side of the group.

Any shutdown of steelmaker Corus's facility on Teesside would have a "material impact" on revenue and cash flow of PD Ports, BBI said in a statement to the sharemarket. It may also have to take a large impairment charge against its 100 per cent holding.

Market observers said the closure would have as big an impact on BBI's hopes of getting a decent price from a co-investor or a buyer for its subsidiary.

"The news regarding Corus is clearly a concern to PD Ports and has the potential to adversely impact its sales process given it represents a risk which bidders will likely factor in to assessing the value of the asset," the broking firm Goldman Sachs JBWere said last night.

Any setback would put pressure on BBI to sell even more of its big assets to reduce corporate debt, the firm said.

The Corus report, which could lead to the closure of its Teesside plant, underlined how difficult it was for BBI to offload such businesses. "This is obviously very challenging in the current environment," Goldmans said.

The news comes two weeks after BBI was given until the end of June to secure an agreement to sell 30 per cent of its Euroports business to two outside investors.

That deal and the PD Ports problem will only add to the need for BBI to get a good price for its best asset, the Dalrymple Bay coal terminal in Queensland.

BBI told investors there would be more bad news in its full-year results, which will be hit by the mark-to-market problem that led to a net loss of $245 million at the interim stage.

Replying to a "please explain" about a 45 per cent rise in its share price to 16c last week, BBI said its use of derivatives to hedge against interest rate and currency movements would have affected its June 30 year-end figures.
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I know this is common knowledge here, just wanted to note the press commentary

Cheers