Ann: Update on Forecast 2008 Final Result , page-19

Sydney - Wednesday - January 7: (RWE Australian Business News) -
Babcock & Brown (ASX:BNB) believes that asset impairment charges will be
such that the company will be in a substantial negative net asset
position at 31 December.
This position encompasses the reclassification of "non-core"
assets on the balance sheet as "available for sale", in line with the
company's revised business strategy announced to the market on 19
November.
The impairment process is subject to finalisation and audit
review which will not be completed until closer to the scheduled release
of the results currently expected on 26 February.
As detailed in its announcement on 4 December and reiterated in
its response to the ASX on 6 January, the company is in discussions with
its banking syndicate regarding a debt for equity swap or equivalent
restructuring to stabilise the long term capital structure of the Group.
Any debt for equity swap or similar arrangement will be designed
to allow Babcock & Brown to continue operating its business and sell
assets with a view to reducing its overall levels of debt.
Any such capital restructure is expected to significantly
dilute existing shareholders, negatively impacting the value of equity.