B&B rights sale
MEANWHILE, the break-up of the house of Babcock & Brown continued yesterday with the sale of management rights and a shareholding in its $US1.9 billion international unlisted infrastructure fund.
The company refused to disclose the price and told The Australian: "All significant sales have to be approved by McGrath Nichol and the agent for the banks." Babcock & Brown administrator Deloitte said it was not involved in the transaction.
For the company's 8000 subordinated noteholders who are owed more than $600 million, that is cold comfort.
These people are totally in the dark about what assets are being sold, and at what price, due to the existence of a guarantee between Babcock & Brown and Babcock & Brown International Pty Ltd (BBIPL), the operating company that holds all the Babcock assets.
The guarantee prevents assets in BBIPL being made available to Babcock & Brown until all senior debt is paid to the senior secured creditors, the 25 banks.
Going by the latest accounts, this could be a very long time. In the year to December 31, BBIPL had negative equity of $2.1 billion, total interest-bearing liabilities on corporate debt of $3.8 billion, and total interest-bearing liabilities on project facilities of $8.9 billion.
Indeed, the auditors wrote: "As a result of these matters there is significant uncertainty whether the company and the consolidated entity will continue as going concerns, and therefore whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report."
This goes to the heart of the question of why the company isn't already in liquidation and a different process followed.
BNB
babcock & brown limited
