b&b close to deal with bankers

B&B close to deal with bankers
Eric Johnston
December 2, 2008

BABCOCK & BROWN has extended its share suspension until at least tomorrow as it attempts to thrash out a fresh funding agreement with its bankers.

Talks have entered their 12th day but sources close to the negotiations were last night confident a deal could be struck by tomorrow.

The majority of B&Bs 25-strong banking syndicate - including the big four Australian banks - are believed to be prepared to support the revised proposal which will involve up to $200 million being injected into the group, giving it time to push ahead with its program of planned asset sales.

Several offshore banks are yet to commit to the new deal which, if approved, would result in Australian lenders, which have the bulk of the exposure to B&B, taking control of any future talks.

In return for the funds, B&B has agreed to the greater involvement of the banks' nominated corporate restructuring advisers, McGrathNicol.

One person with knowledge of the negotiations said the majority of banks were behind a financing deal "but they're not all over the line yet".

If B&B is unable to secure the support from all of the banks for the new facility, it risks being placed into voluntary administration, given it would struggle to repay $3.1 billion in loans.

"It is expected that the suspension will end when Babcock is in a position to make a further announcement in relation to those discussions and negotiations, which is expected to be by Wednesday," B&B said yesterday.

Its shares have been suspended from trading since November 20, when it was forced into talks with its lenders after a dispute had emerged with the release of more than $100 million held in deposit by key banker Bayerische Hypo-und Vereinsbank. One banker yesterday said the new funding package was not conditional on the release of funds.

The extended trading halt came as one of B&B's satellites, Babcock & Brown Japan Property Trust, yesterday attempted to reassure investors it was meeting all of its debt covenants and did not need to refinance $300 million worth of loans until March 2010.

http://business.smh.com.au/business/bb-close-to-deal-with-bankers-20081201-6ous.html