Babcock & Brown Infrastructure (BBI) has put its $2.3 billion Dalrymple Bay coal port up for sale, to cover debt and find a partner to fund long-term expansion, reported The Australian Financial Review.
The infrastructure arm of troubled investment bank Babcock & Brown, BBI wants to sell 30 to 49 per cent of the Queensland port.
The paper reported it understands BBI was approached by a consortium of miners interested in buying Dalrymple Bay and has issued confidentiality agreements to interested parties.
"Where we know there is strong interest, it's appropriate that we test out appetite and pricing for co-investing, as that means we make decisions on which options to pursue with the best information at hand," BBI managing director Jeff Kendrew told the paper.
Sources said the sale will only go ahead if BBI negotiates a good price for the port asset.
While sources close to several of the customers that use Dalrymple Port, including BHP Billiton, Rio Tinto, Xstrata, and Anglo Coal Australia, said they wanted to grab an ownership stake in the port to further align their interests with BBI's and gain more influence over future upgrades and work, the paper reported.
These customers currently own DBCT, which operates and maintains the port through an outsourcing agreement with BBI. BBI owns Dalrymple under a lease with the Queensland government.
In May BBI warned that the Dalrymple Bay Coal Terminal upgrade would take longer than previously expected, with the ramp-up to 85 million tonnes per annum (Mtpa) capacity now expected by the end of the first quarter of 2009.
While the original schedule would have seen DBCT producing 85Mtpa by the end of the 2008 calendar year, heavy rains and flooding in the Mackay area in January and February led to the final stage of the project being split into two parts.
Separately, ratings agency Standard and Poor's (S&P) lowered BBI's rating to 'CCC+', from 'BB-', to reflect financial challenges faced by the company.
The alteration follows news that BBI's parent would embark on a comprehensive restructure program, which is expected to cost 1,000 jobs.
"The 'CCC+' rating reflects our view of an increased risk that BBI will fail to meet its $3.1 billion corporate facilities' financial covenants, which was also highlighted in the company's announcement today," S&P credit analyst Sharad Jain said.
The rating would likely to be lowered to 'D' if the lenders accelerate the payment of a facility, or restructure a facility in such a way that is deemed by S&P as a distressed exchange, the ratings service add"
First half of article seems o.k.
Second half,looks like some confusion between BBIPL and BBI.
BBI Price at posting:
4.7¢ Sentiment: Hold Disclosure: Held
