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BASIS POINT-BBP, lenders in talks to amend A$2.6 bln loan terms
13/05/2009 3:53:49 PM
MELBOURNE, May 13 (Reuters Basis Point) - Babcock & Brown Power Ltd (BBP.AX


BABCOCK&BRN PWR13 May,200913/05/2009 16:13 Sydney, Australia.
Price Change % Change
0.100 -0.005 -4.760%

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BBP.AX , 0.100, -0.005, -4.760%) (BBP) is in talks with its lenders to amend the terms on a A$2.6 billion ($2 billion) project finance loan to give it breathing space to sell assets, banking sources said.

The terms of the loan mean BBP needs to obtain a second credit rating, from an agency such as Moody's or Standard & Poor's, by June 3 or face a review event by its lenders, the sources said. The loan is already rated BBB- by Fitch.

The power investment company, whose shares are currently on a trading halt, had no comment when contacted by Reuters Basis Point. UBS, which is BBP's financial adviser on potential asset sales, was not available to comment.

"Under its current structure, and barring further asset sales, BBP looks unlikely to get a second investment grade rating by June," said Matthew Spence, infrastructure and utilities analyst at Bank of America Merrill Lynch.

One possible resolution being discussed is to include mechanisms in the loan structure which would allow any free cash generated from BBP's assets to be used to pay down the principal loan, banking sources said.

The sources cannot be identified due to the confidential nature of the negotiations.

Holders of the loan include ANZ, BNP Paribas, Commonwealth Bank, Dexia Bank, National Australia Bank, Natixis, Societe Generale, UniCredit and WestLB.

BBP, which has seen its market value dive about 95 percent in the past 12 months, has been looking to sell assets, or the whole company, since October after receiving approaches.

It said on April 28 that the sale process is continuing.

Like its parent company Babcock & Brown (BNB.AX


BABCOCK & BROWN13 May,200913/05/2009 16:13 Sydney, Australia.
Price Change % Change
0.325 +0 +0%

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BNB.AX , 0.325, +0, +0%), BBP has been punished by investors after the financial crisis saw confidence its debt-funded investment model collapse . ($1=1.309 Australian Dollar) (Reporting by Sharon Klyne; Editing by James Thornhill)