not sure if this has been posted as so many different BNB threads. Apologies if it has.
UPDATE: Cynthia Koons | January 23, 2009
Article from: Dow Jones Newswires
BABCOCK & Brown warned today that, given discussions with its lenders, current market conditions and the fact that it expected to report a negative net asset position, shareholders would be left with nothing under the company's restructuring.
Babcock shares, which have been suspended since January 12, last traded at 32.5 cents, the day after the company, once valued above $8.4 billion, said it had a negative asset position.
"The board believes that in the current market environment and based on continuing discussions with the banking syndicate there will be no value for equity holders under the revised business plan balance sheet restructure,'' the Sydney-based company said today.
Austock Securities senior client adviser Michael Heffernan said. "Equity holders getting nothing, I don't think that's any surprise to anyone. They've been cut back so much already.''
Babcock shares became almost worthless last year as the company struggled to refinance $9 billion in debt, closing at a record low of 15 cents on December 30, having fallen from over $20 the year before.
On January 7, Babcock announced that it had a negative net asset position as of December 31, and said it had submitted a business plan to the 25-bank syndicate of financiers.
The beleaguered investment firm said that discussions about its revised business plan and balance sheet restructuring were continuing and an announcement was now expected at the end of next week or in early February.
Babcock has been struggling with its debt burden and has had to seek concessions from its banks because it was in danger of violating covenants. Its banks also had to offer the company a short-term loan. The company's in the process of shedding assets and selling off all but one of its business units to stay afloat.
In early January, Babcock said it would be reporting a "substantial" negative net asset position as of the end of 2008 when it announced results in February.
Given that fact, current market conditions and the status of talks with lenders, Babcock said there would be no value left for equity holders under the revised business plan and restructuring and negligible or no value for holders of the company's subordinated debt.
Babcock had said it was expected to do a debt-for-equity swap as part of its restructuring. Such an exchange can be used as an alternative to bankruptcy and gives the debt holders, in this case the banks, a stake in the company.
Babcock's been negotiating with its lenders about the revised business plan since late December.
The investment firm has been negotiating with its lenders for months and has been successful in garnering concessions from its banks, yet only for short periods of time.
Its problems first became evident in June when it had to renegotiate a market cap provision on its debt because of its dwindling share price.
Additional reporting by AAP
BNB
babcock & brown limited
