bbi posts record loss on impairment charge

By a staff reporter

Babcock and Brown Infrastructure Group Ltd (BBI) has posted a $9.77 billion loss for the 2009 financial year, after an impairment charge of $8.9 billion, as well as negative market movements related to interest rate and foreign exchange hedges, hit the company's bottom line.

BBI flagged the massive impairment charge to shareholders in August, as its loss shaped up, dwarfing its net loss of $44.4 million for the 2008 financial year.

The company said the loss was offset somewhat by a gain on the disposal of 58 per cent of its stake in Powerco, totalling $123.7 million.

BBI said the global financial crisis had a negative effect on the company portfolio, particularly in the Northern Hemisphere ports sector.

The company said its lower growth forecasts were due to the continuing difficult nature of trading conditions.

"It is very important to stress that both the asset impairment and the mark to market adjustments are non-cash items which do not impact the underlying operating performance of BBI’s diverse portfolio of businesses," the company said in a statement to the Australian Securities Exchange (ASX).

BBI said it had had to adapt to dramatically changed operating conditions, and would continue to explore capital options, to better position the business.

"At the Group level, BBI’s immediate focus will be to implement the internalisation, and the possibility of engaging in a comprehensive equity recapitalisation transaction combined with sales of certain assets," the company said.

"In this testing environment, we remain focussed and are working hard to meet our debt obligations, stabilise the capital structure and address these challenging business conditions"

BBI said earlier in the week that it would continue to assess whether a refinancing proposal from the Royal Bank of Scotland (RBS) is superior to an existing offer from a cornerstone investor.

The RBS proposal, on behalf of a group of international hedge funds, consists of $600 million in convertible and redeemable bonds, a new $350 million corporate debt facility and $400 million in new equity, half of which would be sourced from existing security holders.