http://www.businessspectator.com.au/bs.nsf/Article/Babock-shocks-lenders-with-struggles-LJKLP?OpenDocument
Babcock shocks lenders with struggles
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Babcock & Brown stunned its lenders when it called a surprise meeting on Tuesday night, admitting that it may breach covenants on a huge loan owned to a syndicate of 25 banks, including Australia's big four lenders, according to The Australian .
The troubled investment firm called the meeting to advise its banking syndicate of a restructure plan, which is expected to help repay more than 50 per cent of its $3.1 billion corporate debt facilities by 2011.
Babcock & Brown Ltd plans to become a specialist infrastructure investment business, in a restructure expected to cost 1,000 jobs by 2010.
Babcock's chief executive Michael Larkin said the group had no choice other than to undergo a restructuring, according to media reports.
"We are concerned about the potential for us to breach a covenant," Mr Larkin said.
"We recognise that Babcock & Brown is a very complex company and it is extremely important to us to simplify the company, to size the company, in a way that is appropriate for current market conditions," Mr Larkin told the Australian Financial Review.
The Australian reported that Westpac Banking Group is believed to be owed $240 million, half of which is secured, the Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) are owed $150 million each, and ANZ Banking Group (ANZ) $120 million. Those three loans are secured.
The AFR however reported it was estimated that Westpac was owed up to $250 million, CBA $200 million, ANZ and Suncorp $125 million, and NAB $100 million.
The Australian said panicked investors were concerned about Babcock's position, and a Spanish construction giant had flown its international director to Australia to find out whether it should continue to do business with the investment bank.
Acciona Concesiones international director Borja Gari Munsari held emergency talks with B&B Asia-Pacific infrastructure head John Bowyer yesterday, telling the paper "we heard rumours about the financial difficulties of B&B, that's why I'm here in Sydney."
Mr Larkin was reported as saying he believed there were substantial prospects for Babcock in infrastructure in the US and Europe, as well as Australia and Asia.
News of Babock's plans caused Standard & Poor's Ratings Services to cut its credit rating for the firm.
S&P lowered Babcock's long-term credit rating to "CCC+", citing an increased risk the company will be unable to meet its $3.1 billion debt obligations and its lenders will speed up the payments.
BNB
babcock & brown limited
