beset b n b looks for sales in wind

Another financial colapse.....I wonder when it all will stop.....

Beset B & B looks for sales in wind

BABCOCK & BROWN may sell its most easily disposable assets to help shore up its plummeting share price after investors yesterday delivered yet another vote of no confidence in the struggling investment group.

With the company's banks circling following Thursday's disastrous fall in its market capitalisation, which triggered a potential review by its bankers of its debt facilities, B&B hunkered down yesterday with its advisers to try to reverse what analysts and fund managers described as a "crisis of confidence" in its business.

After seeking two days ago to assure a sceptical investment community that B&B was under no immediate financial threat, the chief executive, Phil Green, chose not to meet investors yesterday as his company's stock took another pounding.

By the close of trading, B&B's shares had lost another 24 per cent of their rapidly diminishing value. The stock fell as low as $4.70 - 30 cents below its initial stock market listing price in 2004 - before staging a slight recovery to close at $5.25.

But that was still $1.65 below Thursday's final price of $6.90, which in itself capped a dreadful day for the company, when its shares slumped 28 per cent.

In another frenetic few hours of buying and selling yesterday, 41 million shares changed hands - yet another record after the level set on Thursday, when 25 million shares were traded. That meant that 20 per cent of the company's equity had gone through the market in just two days.

B&B is now worth just $1.75 billion in market capitalisation, compared with its $11.5 billion price tag a year ago. The group has lost $1.42 billion of that amount since Wednesday's market close alone.

Analysts indicated that the company needed to make a serious effort to put a floor under its stock price. The fall in that price has opened the way for its lenders to review the position of the debt it carries after it passed a critical $2.5 billion market capitalisation trigger point.

Nonetheless, Merrill Lynch said the triggering of the debt review reflected a "loss of confidence in management". An analyst, Kieren Chidgey, said: "This is a further blow to management's already fragile credibility."

B&B recently renegotiated its $2.8 billion facility with its lenders to bolster market confidence that it was not heading the same way as the debt-laden Allco Finance Group and Centro Properties Group, which effectively are being run by their bankers.

B&B has insisted that, under the terms of that renegotiation, its market value would have to remain below $2.5 billion for at least four months before banks could demand early repayment of debt. It is also understood that B&B is looking to get a waiver from its banks to avoid the review taking place.

But the broker Credit Suisse has estimated that the B&B empire - made up of the head company and its listed and unlisted satellites - is exposed to the tune of $46 billion of debt. Little of that is said to have a direct channel to B&B itself, but investors have still taken fright at a possible knock-on effect.

In a flurry of announcements by its stock market offshoots yesterday, B&B's listed infrastructure and communities funds were putting out statements seeking to distance themselves from the group's debt issues.

Babcock&Brown Infrastructure, however, lost 10c, dropping to just 75c, whilst B&B Capital slipped another cent to close at 40.5c. Shares in B&B's beleaguered power generation fund, B&B Power, whose recent problems in refinancing its $3.4 billion debt needs gave rise to the crisis, were smashed again, falling another 21 per cent, or 19c, to 71c.

The group's one saving grace may be in selling assets from B&B Wind, which has $2.5 billion of assets ready to be offloaded. The broker ABN Amro indicated a prompt sale of European wind farms could "alleviate some of the [current] stress, but management now has little margin for error".

B&B, though, is still acquiring businesses through its unlisted funds. Only yesterday it said a consortium it leads had bought a train leasing company in Britain for $7.5 billion.

B&B has insisted that, under the terms of that renegotiation, its market value would have to remain below $2.5 billion for at least four months before banks could demand early repayment of debt. It is also understood that B&B is looking to get a waiver from its banks to avoid the review taking place.

But the broker Credit Suisse has estimated that the B&B empire - made up of the head company and its listed and unlisted satellites - is exposed to the tune of $46 billion of debt. Little of that is said to have a direct channel to B&B itself, but investors have still taken fright at a possible knock-on effect.

In a flurry of announcements by its stock market offshoots yesterday, B&B's listed infrastructure and communities funds were putting out statements seeking to distance themselves from the group's debt issues.

Babcock&Brown Infrastructure, however, lost 10c, dropping to just 75c, whilst B&B Capital slipped another cent to close at 40.5c. Shares in B&B's beleaguered power generation fund, B&B Power, whose recent problems in refinancing its $3.4 billion debt needs gave rise to the crisis, were smashed again, falling another 21 per cent, or 19c, to 71c.

The group's one saving grace may be in selling assets from B&B Wind, which has $2.5 billion of assets ready to be offloaded. The broker ABN Amro indicated a prompt sale of European wind farms could "alleviate some of the [current] stress, but management now has little margin for error".

B&B, though, is still acquiring businesses through its unlisted funds. Only yesterday it said a consortium it leads had bought a train leasing company in Britain for $7.5 billion.

http://business.smh.com.au/