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THE BREAK-UP of the troubled Allco Finance Group moved a step closer yesterday after one of its arch rivals, Babcock&Brown, swooped on three of its main property trusts that could eventually be sold to pay off its parent's crippling debts.

With Allco being forced to get rid of much of its remaining shareholdings in the Rubicon Japan Trust and its sister American and European funds to meet margin loan calls by its lenders, B&B took advantage of the chaos by snaring 5 per cent stakes in each of the listed businesses.

The move has put B&B, which has real estate operations, in a prime position to influence Allco's plan to either sell some of the commercial, office and industrial assets held in the funds or dispose of them completely.

The timing, size of the individual shareholdings and the actual percentage stakes indicated that B&B and its own Japan Property Trust had acquired the stock from investment bank Credit Suisse, which had grabbed control of the units from Allco.

A slump in the share prices of Rubicon Japan Trust (RJT), Rubicon Europe Trust (RET) and Rubicon America Trust (RAT) triggered Credit Suisse's move under the terms of the margin loan taken out by Allco to buy its original holdings. Just over 41million units in RJT were sold by Credit Suisse at 22cents, 46million in RET at 15cents and 46million in RAT at 13cents. Allco now has only tiny shareholdings in the Japan and Europe trust. It is left with 5.7 million units in the American fund.

B&B has yet to talk to the Allco-run trusts about its plans as a key shareholder but its intention left the market in little doubt that it wanted a seat at the table when their futures are decided. Allco Finance is looking to sell the substantial numbers of assets to reduce a near-$7 billion debt load.

In the meantime, Allco's shares yesterday slipped 10cents to 52.5cents after the Bank of Scotland and National Australia Bank took control of Allco stock previously held by a company run by the group's senior executives to meet a separate margin loan call against it.

In market briefings last week, Allco indicated RJT might be able to sell between $400million and $600million of its assets "at a fair price" - with proceeds to first pay debt owed by its initial parent company, Rubicon, and owned by Allco since December.

RAT could raise even more by offloading assets said to be worth up to $800million while RJT also needs to lower its debt through certain disposals.

Yesterday's announcement came after B&B had to make a separate announcement to the ASX denying rumours it would have to sell shares in its managed funds, including B&B Wind, to meet short-term loan commitments. The chief executive, Phil Green, said B&B was "comfortable" with its positions and it had no intention or need to dispose of the stock.