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Babcock & Brown begins unwinding, sets stage for break-up
http://www.news.com.au/business/story/0,23636,24544730-14334,00.html

STRUGGLING debt-laden investment group Babcock & Brown has officially begun the process of unwinding its business, which may lead to a break-up of the company.

B&B said it was reviewing interest from several parties about setting up strategic relationships.

The move is the latest result of the ongoing review of the business, started in August, which has seen the main listed Babcock entity and its six listed satellite funds forced to sell off assets to repay debt.

"The process is at a preliminary stage and there is no certainty that any agreement will eventuate,'' the company said in a statement.

"As the process has only recently commenced, no formal timetable for resolution of any agreement has yet been determined, although Babcock & Brown would expect the process to continue into the new year.''

Already this week, satellite fund Babcock and Brown Power said it might sell all or part of its business, reports The Australian.

The satellite fund also unveiled changes to corporate governance rules that would bring the group in line with normal companies and trim the fees they would pay the parent company.

But market analysts said the moves did not go far enough, still leaving Babcock with watertight management contracts with its satellites.

But unlike Macquarie Group, which released its management contracts this week, Babcock's is still keeping the contracts with its satellite funds secret.

Babcock chief executive Michael Larkin has promised to cut the company's debt and cut a quarter of its 1600 workforce.

Speculation surrounds the identity of the interested parties, with private equity tipped to be involved.

"What you can be sure of is, no one is going to be giving Babcock a free kick,'' Austock Securities senior client adviser Michael Heffernan said.

"They're maybe going to be saving them from starvation, but not giving them a cordon bleu lunch.''