17 November 2008
POTENTIAL LOSS IN GPT JOINT VENTURE
International investment and specialised fund and asset manager Babcock &
Brown (ASX: BNB) today advises that on Friday November 14 2008 in the US a
special purpose vehicle, HTM Fund 1 Subsidiary A LLC (HTM), which holds US
loan asset investments on behalf of the Babcock & Brown/GPT joint venture,
received a notice of acceleration under a debt facility provided by Wachovia
Bank, as a result of HTM's decision not to provide the additional collateral
requested by Wachovia Bank.
Discussions between the parties are ongoing, however if these talks are not
resolved satisfactorily the Babcock & Brown/GPT joint venture may suffer loss
upon the liquidation of these loan assets by Wachovia Bank.
The total amount of the Wachovia Bank loan is approximately US$112 million. It
is a non-recourse loan and therefore the maximum Babcock & Brown/GPT joint
venture exposure as a result of this action is limited to the equity invested in
HTM by the Babcock & Brown/GPT joint venture plus retained earnings and
amounts to approximately US$82 million. This represents approximately 4.0%
of the Babcock & Brown/GPT joint venture ordinary & preferred equity (in A$
terms). Due to the requirement of the joint venture agreement for ordinary
equity to bear first loss across the portfolio, Babcock & Brown's maximum
exposure to any potential loss will be equivalent to 50% of the joint venture’s
exposure or approximately US$41 million.
The book value of Babcock & Brown's net equity investment in the joint venture
with GPT stood at A$169 million as of June 30 2008.
ENDS
For further information please contact:
Kelly Hibbins
Babcock & Brown
+61 2 9229
BNB
babcock & brown limited
