Babcock, banks continue crisis talks on debt
Eric Johnston
November 28, 2008
BABCOCK & Brown was last night locked in talks aimed at convincing its banking syndicate to restructure the company's $3.1 billion debt.
The talks were the latest in a series of negotiations this week discussing the future of the troubled company.
Babcock's remaining independent directors, including chairman Elizabeth Nosworthy, are believed to have appointed US law firm Jones Day to provide advice, while investment bank Caliburn has also been advising Babcock over its restructuring options.
Babcock's board is believed to have audit company Deloitte on standby if it decides to place the infrastructure funds manager into voluntary administration.
Babcock's bankers have been reluctant to support a revised timetable to repay its $3.1 billion debt, or extend more cash, given concerns the company will not be able trade out of its current problems.
Babcock this week extended a trading halt on its shares and subordinated notes until next week as it attempted to secure the release of more than $100 million in deposits from the HypoVereinsbank.
The German-based bank froze the funds to bolster its security over loans tied up in Babcock.
Babcock has so far been unable to secure the release of the funds despite exhaustive talks with the bank.
With an uncertain outcome, nerves are on edge among Babcock's syndicate of 25 lenders, which is considering a debt restructuring proposal put by Babcock.
The talks come as the Babcock empire continues to fracture.
Babcock & Brown Wind is pushing to cut ties with its founder by internalising its management. Meanwhile, property developer Lend Lease yesterday finalised its acquisition of retirement home operator Babcock & Brown Communities.
Babcock's lending syndicate includes each of the Big Four Australian banks as well as an assortment of European banks. Suncorp Metway, a smaller lender, this week confirmed it had increased its provisioning against its Babcock exposure.
At their height, Babcock's shares hit a record $34.63 last year, giving the company a market capitalisation of almost $12 billion.
But with the company's shares suspended at just 25¢ each, the market capitalisation has sunk to below $100 milllion.
In an attempt to fight off collapse, Babcock last week dramatically widened its restructuring, pledging to cut its workforce by two-thirds and scale back its business through a possible spin-off of its aircraft leasing arm.
http://business.theage.com.au/business/babcock-banks-continue-crisis-talks-on-debt-20081127-6k4w.html
BNB
babcock & brown limited
