Eric Johnston
March 16, 2009
Fairfax online
ADMINISTRATORS of Babcock & Brown will seek meetings with the key players behind the collapsed infrastructure financing house, including former chief executive Phil Green and former executive chairman James Babcock.
Deloitte partners David Lombe and Simon Cathro, who were last week appointed as voluntary administrators to the listed Babcock & Brown, are expected to also hold talks with the bankers who continue to support the unlisted Babcock entity — Babcock & Brown International — that houses all of the assets but remains out of creditors' reach.
Mr Lombe has, in effect, taken over a corporate shell. He told BusinessDay it was still too early to say what the chances were for recovery for creditors, which are principally the noteholders. "We're very conscious of uncovering any assets that Babcock & Brown is entitled to or any transactions, or any action that could be recovered in favour of the noteholders," Mr Lombe said.
Part of the investigation could include interviews with Mr Green and Mr Babcock, who both cut ties with the company late last year after banks took charge and forced the troubled finance house to sell down assets.
The investigation by administrators will eventually form the basis for a recommendation to creditors to either continue to run Babcock & Brown in its existing form or liquidate it.
Babcock & Brown's only real connection to Babcock International is its 99.7 per cent shareholding, now worthless, and the $600 million from Babcock noteholders that was lent to Babcock International.
However, the loan is effectively worthless because it is "subordinated" to the $3.2 billion debt from Babcock International's banks.
Still, Mr Lombe insisted the bankers to Babcock International — including the Big Four Australian lenders — would not be driving the administration.
"Its a creditor-driven exercise," he said of his appointment.
If administrators uncover other loans to Babcock & Brown International they may have the right to demand repayment.
Analysts say the chances of noteholders or even shareholders recovering funds could be slim given limited holding of direct assets, while their debt ,which is in the form of subordinated loans, rank behind banks.
BNB
babcock & brown limited
