bbp full year loss widens; says future uncerta

By a staff reporter

Babcock and Brown Power Ltd (BBP) has recorded a net loss after tax for the 2009 financial year of $3.53 billion, and said it was uncertain of the outlook for its trust Babcock and Brown Power Trust (BBPT), with the power station operator in negotiations with its major external creditor, Babcock & Brown, for the settlement of it's borrowing facility.

BBI posted a net loss after tax in FY09 of $3.53 billion, compared to a loss of $2.03 billion for the 2008 financial year.

The key factor behind the company's result relates to a reassessment of the repayment profile of the loan to BBP and an impairment charge recognised against the loan.

BBPT is a passive investment vehicle with its primary investment being a loan to its co-stapled entity, Babcock and Brown Power Ltd, referred to in the company's statement to the Australian Securities Exchange (ASX), as "BBPL".

BBP is currently in negotiations with its major external creditor, Babcock & Brown (B&B), for the settlement or restructuring of BBP’s borrowing facility.

Negotiations are also taking place in respect of loans provided by a banking syndicate to a subsidiary of BBP.

"The outcome of these negotiations is uncertain and if not satisfactorily resolved may significantly reduce the recoverability of the loan to BBPL. Accordingly, the Directors have reviewed the carrying value of the BBPL loan, which is reflected in the loss for the year," BBP said.

BBP said the company faced an uncertain immediate future as it focussed on restructuring.

"The Directors acknowledge that there is significant uncertainty over the ability of BBPL to continue as a going concern until it successfully completes the negotiations with its financiers.

"If for any reason BBPL was unable to realise its assets and operate as a going concern, the ability of BBPT to realise its loan receivable from BBPL in full may be compromised. Accordingly, while BBPL’s negotiations are outstanding, there is significant uncertainty as to BBPT’s ability to realise its loan receivable in the ordinary course of business," the struggling power company said.