ONE party that will be keep a weather eye on the B&B position is Lend Lease, which is keen to consummate a deal that would hand it a 41 per cent holding in Babcock & Brown Communities (BBC) and management of the fund.
It's suggested that one potential sticking point is that BBC's bankers, led by ANZ, contend the transaction would constitute a change of control and they have been seeking to switch the $600 million facility from an unsecured negative pledge basis to a secured basis, an increase in the interest rate, and some paydown of the debt.
Under the deal as announced, Lend Lease would take a placement from BBC at 68c a security and buy B&B's 12.5 per cent stake at an average of 58c a security. At the time the deal was announced the market price of BBC securities was 41.5c.
The price of BBC securities has now slumped to only 12c and it is possible that may lead to a change in the placement terms, with Lend Lease to emerge with a slightly larger stake than originally contemplated.
