Babcock Power Loan Restructure Delayed Until October (Update1)
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By Katrina Nicholas
Sept. 28 (Bloomberg) -- Babcock & Brown Power, the Australian electricity producer that in February warned of a “cash hole,” said it won’t complete a A$3.1 billion ($2.7 billion) loan restructuring until mid to late October, later than previously forecast.
While Sydney-based Babcock Power remains confident of the deal, “until all members of the syndicate enter into legally binding transactions, a risk that the restructure is not effected remains,” the company said in a stock exchange filing today. There are 11 syndicate members and any resolution of the restructuring may also require a security holder vote, it added.
Babcock Power, which started trying to sell some of its power plants to reduce debt and bolster its balance sheet last October, began negotiations with its banking syndicate on May 29 and said at the time it expected an outcome by July 31. The company said it had expected legal agreements by Sept. 30.
Two loans are being restructured, one for A$2.7 billion from a group of 11 banks and one for about A$400 million from Babcock & Brown Group, Babcock Power’s parent company. The first has a three-year, A$1.6 billion tranche paying 220 basis points more than the bank-bill swap rate, as well as a five-year, A$1.1 billion tranche paying 240 basis points more, Babcock Power spokesman Jason Steed said.
The A$1.6 billion tranche is due June 2011 and the A$1.1 billion tranche June 2013. The loan from Babcock Power’s parent matures March 2010, he said.
The 11 banks are Commonwealth Bank of Australia; BNP Paribas; Australia & New Zealand Banking Group Ltd.; National Australia Bank Ltd.; Dexia SA; Natixis; WestLB AG, Societe Generale, HVB Group, Suncorp-Metway Ltd. and Mizuho Financial Group Inc. A basis point is 0.01 percentage point.
To contact the reporter on this story: Katrina Nicholas in Singapore at [email protected]
