Babcock & Brown Power Ltd (BBP) has declined to say whether expressions of interest in its business include a possible full takeover offer after it unveiled $451 million in writedowns.
Stapled securities in the power generator fund, managed by troubled investment firm Babcock & Brown Ltd (B&B), took another big dive, falling 30 per cent.
The sell-off came after BBP said deteriorating conditions in global credit markets had prompted it to take a $410 million impairment charge associated with the Western Australian power utility Alinta Ltd, acquired last year by B&B and associated funds.
BBP has taken another $42 million charge on the Tamar Valley Power Station in Tasmania, which the fund said it had sold to the Tasmanian government for $100 million, to pay down debt.
BBP said that it had appointed UBS to consider various expressions of interest already received from third parties.
When asked whether BBP had received offers for the whole business, recently appointed independent chairman Len Gill said "a range of options" would be considered.
"However, I think until you go through a comprehensive strategic review process, it's difficult to conclude whether there's any real substance to those," he told investors and journalists on a conference call.
Mr Gill said it was too early to consider ownership issues around the management rights of the fund in the event of a full sale of the business.
"Perhaps that will come up in another six months," he said.
BBP told investors that earlier guidance had indicated manager B&B would receive a $24 million management fee in fiscal 2008.
No discussions with B&B had been held in relation to a possible waiver of the management fees, BBP said.
B&B's fees would be considered under the UBS strategic review, it added.
No fees were payable to B&B on the sale of the Tamar Valley Power Station, announced on Monday.
Mr Gill said BBP had not yet "progressed to the matter" of whether its executives would receive bonuses for fiscal 2008, and that such information was usually disclosed in its annual report.
He said BBP had good quality assets that generated stable cash flows, but he acknowledged the fund was built on a "rocky financial foundation".
He said the fund's ultimate goal was to "put those assets in the space where they deliver the cash flows they are delivering but on a lower-geared footing".
The recommencement of distribution payments to securityholders would not necessarily depend on BBP reaching its optimal debt position, he said.
Mr Gill was appointed as BBP's independent chairman after investors lost confidence in the fund in May when it revealed a $300 million funding shortfall.
Together with two other previously announced asset sales, the Tamar sale had reduced its debt by $770 million, it said.
The fund also announced that it had extended a $120 million debt facility to March 31, 2009.
Post completion of the Tamar sale, B&B Power said debt would remain at around $3.7 billion, serviced by an average interest rate of around 8.8 per cent.
BBP warned that future distributions would depend on the company's ability to both refinance and pay down debt, after it cut its second half distribution in June.
