Babcock and Brown Infrastructure Group (BBI) said it had entered into an interim agreement with a potential cornerstone investor, with the aim of reducing the company’s $10.3 billion debt. The company said it entered the agreement with the potential investor to continue to negotiate in good faith the development of the proposed transaction.
BBI said the total amount included about $2.7 billion in proportionate debt maturing in FY2010 and FY2011, including approximately $300 million of corporate debt required to be paid down in February 2010.
“The Board believes that the participation of a well-capitalised investor would significantly increase the likelihood of a transaction being successfully completed prior to the group’s debt facilities maturing,” the company said.
This agreement includes a non-solicitation obligation on BBI, a capped cost reimbursement provision in favour of the potential cornerstone investor and a three month right of first refusal over the sale of certain assets, if BBI chooses to seek to sell those assets.
BBI said a comprehensive recapitalisation on the terms discussed requires the consent of existing lenders and that the company had approached the lenders to obtain their consent to the recapitalisation.
The company said the current position is highly uncertain, and that there is no assurance that agreement would be reached in relation to any transaction.
BBI also sought suspension of its securities while the transaction was further developed and negotiated, but the request was denied.
