bnb announcement

International investment and specialised fund and asset management group
Babcock & Brown Limited (ASX: BNB) today reconfirms, following certain
incorrect and misleading commentary in relation to its debt facility, that the
market capitalisation clause in its corporate debt facility does not constitute a
default or breach of covenant.
Babcock & Brown’s $2.8 billion three year evergreen facility was reviewed,
extended to 2011 and signed off by its banking syndicate in April 2008.
The market capitalisation clause, provides for the facility banks to have the right
to call for a review of their position under the facility rather than any specified
action. The facility banks have not yet made a decision as to whether such a
review action is appropriate.
Babcock & Brown formally meet with its banks and will update the market when
it has further information. A decision may take some time in line with normal
banking syndicate processes.
If the banks call for a review it would entail a four month consultation period with
lenders during which time Babcock & Brown would continue to operate as
normal with no impact on access to its corporate debt facility.
Separately, the decision by Standard & Poor’s (S&P) last Friday afternoon to
downgrade Babcock & Brown to BB+, consistent with its move to downgrade
other financial related stocks around the world, was not based on any
information provided to S&P by Babcock & Brown or the facility lenders. The
change in S&P rating does not constitute a review event or event of default, or
otherwise entitle any lender to require a prepayment of any financing facility
within the Babcock & Brown Group.
Listed Funds Review
Babcock & Brown intends to accelerate the current strategic review of its listed
funds through the appointment of external advisors. Babcock & Brown will work
with the funds and the appointed advisors to review the current arrangements to
remove the gap between the underlying asset values and the current trading
prices and to respond to market concerns regarding the listed fund structure.
The results of the review being carried out, will be presented to the Boards of
the funds for consideration. Babcock & Brown will continue to update the
market on the details and progress of this strategic review as it relates to each
fund.
As a first step in this process, Babcock & Brown, in its capacity as manager,
intends to immediately recommend the appointment of independent chairmen to
the Boards of the four Australian listed funds that do not already have
independent chairmen, namely Babcock & Brown Infrastructure, Babcock &
Brown Power, Babcock & Brown Wind Partners and Babcock & Brown
Residential Land Partners.
Phil Green, Chief Executive of Babcock & Brown said, “We will move as quickly
as possible to restore investor confidence in a decisive yet orderly manner.”
Capital Recycling
Mr Green added “Babcock & Brown will continue the asset recycling and freeing
up of capital that has previously been outlined to the market; de-leveraging our
balance sheet and, further, will move to narrow our investment focus to core
activities including development and co-investment.”
Babcock & Brown has a significant pipeline of assets in greenfield development
including wind (16,000 MW), solar (1,400 MW) and gas fired power generation
(3,360 MW) assets, and power transmission assets; and PPP projects in
countries around the world including selected countries in Europe, North
America and Australia. Babcock & Brown’s development and acquisition
pipeline is one of the key attractions for investors in both our wholesale and
listed funds. Babcock & Brown remains committed to investment in this pipeline
to deliver a source of competitively priced, attractive assets for its managed
funds platform.
During this week, Babcock & Brown will receive first round indicative offers for
the unique portfolios of European wind energy assets. Based on the level of
interest received and current indications, these sales are expected to be
finalised in the third quarter and reach financial close either simultaneously or
early in the fourth quarter of 2008. This process is being conducted in
conjunction with Babcock & Brown Wind Partners.
“Our employees remain strongly aligned and committed to the ongoing success
of Babcock & Brown and its listed and unlisted funds. We have received
significant levels of support from our partners globally who recognise the depth
and expertise of Babcock & Brown’s people and business as evidenced by the
announcement of the Angel Trains transaction in the UK last week. As always
we will continue to update the market on the outlook for the business.” Mr
Green concluded.