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Babcock & Brown Infrastructure (ASX: BBI) announces that Babcock & Brown WA Rail Holdings Pty Ltd (Trustee of Babcock & Brown WA Rail Trust) has agreed a short-term extension to 17 December 2008, of the approximately $66m Mezzanine Debt repayment that was due on 15 December 2008. This extension is to allow finalisation of negotiations and documentation with the lenders regarding an extension to the facility, such that the funds can be repaid from operating cash flows from BBI’s businesses and the expected proceeds of the sale of 50% of Powerco, which was announced on 4 November 2008.
Negotiations are ongoing and BBI expects to be able to announce further details in due course.
BBI is also in negotiations with two parties relating to a commitment to purchase the remaining 24% economic interest in the WestNet Rail Group. This obligation falls due on 19 December and BBI is negotiating with the two parties regarding an extension of the time for payment, such that this obligation can also be paid from the expected Powerco sale proceeds together with other operating cash flows from BBI’s businesses.
BBI Rail Holdings Pty Ltd is a wholly owned subsidiary of BBI and in turn directly and indirectly owns 76% of Babcock & Brown WA Rail Trust which holds the assets of the WestNet Rail Group.
BBI Managing Director Jeff Kendrew said “BBI has for some time been working on a range of funding solutions for meeting the obligations to repay mezzanine debt and purchase the remaining 24% interest in WestNet Rail. Given deteriorating capital markets and the resulting inability to secure an external funding solution, BBI has sought the agreement of the counterparties involved to an extension of time to a point where BBI believes it will be able to meet these obligations.”
“The underlying WestNet Rail Group continues to trade to expectations, remains able to fund committed capital projects and operations from internal cash flows and undrawn facilities and is a solid and viable business within the BBI portfolio.”