Was just searching for commentary on BBP's result. Found this...

Was just searching for commentary on BBP's result. Found this article - a few weeks old. Not sure if this was posted previously. High risk hold just got riskier with the half year results.

Eyeing Babcock & Brown Power
By Sharon Klyne and Fayen Wong
Reuters
Sunday, February 8, 2009

MELBOURNE: As the Australian power investment firm Babcock & Brown Power sells off assets to pay down debt, at least three companies are hatching plans to capitalize on the distressed sales.

Bankers and analysts say the Bahrain-based investment house Arcapita and the Australian energy retailers AGL Energy and Origin have an eye on Babcock & Brown Power's suite of assets, three people familiar with the deal said.

An Australian-listed energy firm, backed by an Asian sponsor, is also vying for a slice of Babcock & Brown Power, said one of the people with direct knowledge of the deal.

The people familiar with the deal that said Arcapita, advised by Citigroup, had put in a bid in December for all of the Babcock & Brown Power's assets, while AGL and Origin had submitted bids for parts of its assets.

Under the current sales process run by UBS, potential bidders were given the option to bid for the entire portfolio, or east or west coast assets, sources said.

"Some of BBP's power generation assets on the east coast would be very attractive for AGL and Origin because the power stations would give the utilities better risk management in their wholesale electricity hedge book," said an analyst who asked not to be identified because of company policy.

Citigroup said in a research note late last year that Origin could consider acquiring at least three of BBP's power stations, including the Braema and Osborne stations in Queensland as well as the Bairnsdale plant in Victoria State.

BBP, managed by the investment bank Babcock & Brown, began to seek bids in October after getting approaches for its assets or an outright sale.

BBP, which lost 96 percent of its market value last year and was the worst performer last year in Australia's benchmark stock index, has been selling plants to reduce debt and bolster its balance sheet.

The parent company, Babcock & Brown, is also grappling with debt problems, and it announced a restructuring deal with its creditors on Friday. Babcock & Brown is demanding that any new owner of BBP's assets buy out Babcock & Brown's lucrative management contract.

BBP's portfolio comprises 12 operating power stations across the country. The firm, which has a market value of about 443 million Australian dollars, or $290 million, also owns Alinta, the largest gas retailer in western Australia, as well as a minority interest in a gas pipeline.

According to two people working in banking who have knowledge of the deal, AGL has retained ABN AMRO Australia as financial adviser on the sale while Origin is believed to have retained Macquarie Capital Advisers to advise on the bid.

UBS and BBP could not be reached for comment.

In the current credit crunch, potential bidders interested in buying parts or all of BBP's assets will find it tough to raise large amounts of money unless they have existing corporate lines to draw on or have significant amounts of cash on their balance sheets.

But the bidders, awash with cash, are unlikely to forgo such a rare opportunity to mop up assets.

The people familiar with the deal said that AGL and Origin had told would-be financiers interested in funding their plans that they do not need to raise any additional debt.

AGL has bolstered its balance sheet with asset sales totaling 3.2 billion Australian dollars over the past year, while Origin is also cashed up and debt-free after it signed a $8 billion joint venture deal with ConocoPhillips last year.