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B&B Power strikes deal with lenders on debt restructure


Babcock & Brown Power Ltd (BBP) says it has reached an in-principle agreement with its lenders on a restructuring of its $2.7 billion debt, with a repayment extension to September 30 2012.

The energy company has also forecast full year earnings before interest tax depreciation and amortisation (EBITDA) to be in line with its adjusted 2009 result of $288 million.

BBP said the 11 banks in the BBPF syndicate had agreed to a comprehensive restructure of its syndicated loan facility, with only one credit approval outstanding as of this morning.

Assuming the final lender's credit committee approves the agreement at a meeting today, BBP said the intention was to execute documents on Monday December 21.

BBP chairman Len Gill said the agreements gave the company the time to needed to sort out its financial troubles.

"... The agreements announced today area major advance for the business, allowing it to proceed with an independent future under a new name and on a path to improving value," Mr Gill said in a statement to the Australian Securities Exchange (ASX).

"The restructure debt facility provides the time and flexibility we need to put the company onto a sustainable financial footing."

Mr Gill said the board regretted that it had been unable to improve value for shareholders during the year.

"It has been an extraordinarily demanding year for BBP and the board sincerely regrets that securityholders have not yet seen an improvement in value."

Under the restructure deal, BBP has also reached agreement for Alinta to deal with the financial impact of the North West Shelf arbitration outcome, settlement of the outstanding Babcock & Brown International Group loan, and termination of the management and advisory agreements with Babcock & Brown International Group at a nominal fee.

BBP said that under the new restructured facility, a portion of two interest payments would be used as a part of the settlement in the North West Shelf join venture.

The company has also established two new finance facilities worth a total $100 million to manage the outcome of the arbitration.

BBP said in principle agreements had been reached with all stakeholders in the North West Shelf project, subject to certain approvals, that would serve to enable Alinta to deal with the financial impact of the interim decision.

"BBP has only been able to negotiate this outcome due to the goodwill displayed by each of the couterparties and the willingness of all parties to work with BBP to find a solution," BBP said.

BBP is also proposing to change its name to Alinta Energy Ltd, saying the move would enable it to benefit from the ongoing strength and recognition of the Alinta brand in Australia.

"BBP believes that changing its name is a critical step in moving forward as an independent, stand-alone energy business."

Securityholders will vote on the proposed new name at the company's annual general meeting.