news report

By Cynthia Koons
Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Babcock & Brown Ltd. (BNB.AU) said Friday that, given
discussions with its lenders, current market conditions and the fact that it expects to
report a negative net asset position, shareholders will be left with nothing under the
company's restructuring.
Babcock shares, which have been suspended since Jan. 12, last traded at 32.5 Australian
cents.
The beleaguered investment firm said that discussions about its revised business plan
and balance sheet restructuring are continuing and an announcement is now expected at the
end of next week or in early February. Babcock & Brown had previously said it
expected to make an announcement about the negotiations next week.
Babcock has been struggling with its debt burden and has had to seek concessions from
its banks because it was in danger of violating covenants. Its banks also had to offer
the company a short-term loan. The company's in the process of shedding assets and
selling off all but one of its business units to stay afloat.
In early January, Babcock it would be reporting a "substantial" negative net
asset position as of the end of 2008 when it announces results in February.
Given that fact, current market conditions and the status of talks with lenders,
Babcock said there will be no value left for equity holders under the revised business
plan and restructuring and negligible or no value for holders of the company's
subordinated debt.
Babcock had said it was expected to do a debt-for-equity swap as part of its
restructuring. Such an exchange can be used as an alternative to bankruptcy and gives the
debt holders, in this case the banks, a stake in the company.
Babcock's been negotiating with its lenders about the revised business plan since
late December.
The investment firm has been negotiating with its lenders for months and has been
successful in garnering concessions from its banks, yet only for short periods of time.
Its problems first became evident in June when it had to renegotiate a market cap
provision on its debt because of its dwindling share price.

-By Cynthia Koons, Dow Jones Newswires; 61-2-8272-4691; [email protected]