bnb is finished

TOP News
Babcock & Brown reaches deal with lenders 7:08 PM
News Corp posts Q2 loss of $US6.4bn on writedown, misses expectations 5:38 PM
NAB expects H1 profit to rise 20% to $4.8b 8:51 PM
ANZ sees H1 profit down more than 15% 5:42 PM
RBA sees only slight growth in Aust economy in 2009 11:38 AM

The Spectators
Gottliebsen: Rupert's executive secret
Babcock's bittersweet victory
Bartholomeusz: Falling earnings are old News
Bartholomeusz: Capital at any cost
Gottliebsen, Bartholomeusz: KGB INTERROGATION: Steve McCann
Reuters

Investment firm Babcock & Brown Ltd says it has reached an agreement with its bankers on a restructure of its corporate debt facilities and a revised business plan that will facilitate the reduction of those facilities.

Under the agreement Babcock & Brown chief executive Michael Larkin and senior management will sell down assets over two to three years to reduce debt.

Babcock & Brown's existing corporate debt facilities will be restructured, with all interest payments and about $2.12 billion of principal repayments to be on a "pay if you can" basis.

Babcock & Brown also reported earnings going forward would be volatile and significantly affected by the timing of asset sales and the prices achieved for those sales.

Babcock & Brown reiterated there would be no value for equity holders and no, or negligible, value for holders of the company's subordinated notes after it has implemented the revised business plan.

Furthermore, Babcock & Brown would not be in a position to resume paying interest on the subordinated notes or dividends on its shares.

"Having reached an agreement with the banking syndicate with respect to the restructure of the corporate debt, the board is now considering the position in relation to the subordinated notes," Babcock & Brown said.

A delisting event occurs under the notes if Babcock & Brown ordinary shares are suspended from trading on the Australian Securities Exchange (ASX) for a period of 20 consecutive business days.

The ordinary shares have been in trading halt for two business days and suspended for a further 18 business days.

Babcock & Brown said it is considering the implications of this and also a possible restructure of the subordinated notes.

No assurance can be given that a restructuring will be achievable.

"In the absence of the restructuring of the subordinated notes taking place, it is likely that Babcock & Brown Ltd will be placed in administration within the coming weeks," the company said.

"If that occurs, it is also likely that the shares of Babcock & Brown Ltd will be delisted from the ASX."

An administration of Babcock & Brown Ltd would not affect the solvency of Babcock & Brown International Pty Ltd, the primary operating company in the Babcock & Brown Group and borrower of the corporate debt.

"It will continue to operate and implement the revised business plan, including the asset sale program as outlined," Babcock & Brown said.

"Babcock & Brown proposes to seek continued suspension of its shares and subordinated notes at least until details of the position in relation to the subordinated notes is able to be announced.

"The board and management deeply regret the loss of shareholder and subordinated note holder value and acknowledge the financial hardship this has caused investors."

The agreement with Babcock & Brown's bankers provides for a $150 million short-term facility entered into in December 2008 and two other existing $2.8 billion and $US200 million corporate facilities to continue.

However the facilities will be restructured and the repayment dates changed.

The company is required to operate under expenditure parameters agreed to by its bankers and cannot make interest or principal payments in respect of the subordinated notes while the corporate debt facilities remain outstanding.

Babcock & Brown said that as a consequence of the revised business plan, the company would recommence a redundancy program started in the second half of 2008.