babcock and brown investors to vote on future

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WATCH the video (3:56) Australian investment group Babcock and Brown has already negotiated a restructuring deal with its banks but thousands of Australian and New Zealand investors are fighting back and say they should get their money back first.

The company owes more than $3.3 billion to several banks with assets only amounting to half of that.

"I don't think anyone had any inkling of the severity and the rapid deterioration of the financial markets and systems in 2007 and 2008," says Babcock and Brown CEO Michael Larkin.

"With the trauma that...happened to the global financial markets, we suffered more than most and very quickly."

The company has negotiated a deal with the banks to wind the company down over several years, but its tens of thousands of Kiwi notehold investors have been offered just one cent for every $100 they are owed if they want out now.

"Banks are simply saying 'we're going to capture all the assets grab all the money we can and to hell with the investors'," says Chris Lee of Chris Lee Sharebroking.

David Gibson invested more than $AU1 million and is part of a group of New Zealand investors fighting the banks for control over the company's remaining assets.

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Gibson says investors want answers and the only way to get them is for Babcock and Brown to be put into liquidation.

"The quantum of loss, it focuses the mind. Basically when you see the scale of the loss across the New Zealand retail investment sector, this is a tragedy of monumental proportions," he says.

Not only have millions of dollars in retirement savings for Kiwi mum-and-dad investors gone, but share broker Michael Warrington stands to lose $50,000.

Warrington has 20 years experience as a share broker and says the loss is a worst case scenario.

"I approached it with 'if this investment goes wrong I would expect to recover 50% of my money, three quarters of my money during a failure event' so to travel from $50,000 to zero is a bit of a shock," he says.

On Friday, Kiwi investors will gather in Auckland to vote on whether to let Babcock and Brown be wound down over the next few years, whether to take the settlement on offer, or vote to get the company put into the hands of an administrator and into liquidation.

"I'll be voting against what the banks want, and I'll be unco-operative and I'm hoping that will make the banks be forced to take a course of action that might mean they have to take us investors into consideration," says Lee.

But Larkin is warning investors to think carefully about voting for administration.

"It would be an emotional response from people from many people, we understand that. However, we do believe it is in the best interest of noteholders to vote for these (settlement) amendments," he says.

Australian investors will vote on Friday afternoon in Sydney. However, if New Zealand investors vote for Babcock and Brown to be put into liquidation then there will be no need for the Australian vote to go ahead as the company will have to be wound up.

Legally, a "yes" vote on both sides of the Tasman is required for the company's plans to go ahead.



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