B&B moves to address funding problems

Babcock & Brown has moved further towards addressing its funding problems, announcing today that it has reached agreement with its banking syndicate on a solution to address the immediate funding requirements of the business as well as the establishment of a framework to provide the banking syndicate with a proposal for its recapitalisation over the longer term.

The investment bank told the Australian Securities Exchange a group of the company’s existing lenders under the corporate facility had agreed to provide an additional $150 million facility to assist with funding the business through to the end of calendar year 2009.

It said Babcock & Brown and its banking syndicate would now work together towards a capital restructuring of the group.

It said it expected the restructure to include a debt for equity swap that would be subject to agreement with the banking syndicate.

Babcock & Brown chief executive Michael Larkin said the group remained focused on reducing debt levels while managing the business to meet its obligations and preserve the value of its assets and funds management platform.

“We will continue to seek to maximise value for all stakeholders through an orderly asset sale process, which is expected to take place over the next two to three years,” he said. “During this transition period there may be significant volatility in the earnings base of the business.”