BBI commits to recapitalisation strategy
Babcock and Brown Infrastructure (BBI) has told its shareholders that it is in discussions with both its banks and a potential cornerstone investor in a bid to clear the way for a recapitalisation, but that the outcome remains highly uncertain.
The company said it would continue to pursue the strategy despite failing in a request to have its securities suspended on the Australian Securities Exchange (ASX) while the potential transaction was developed and negotiated.
What is more, BBI has confirmed that it has entered into an interim agreement with the cornerstone investor, which includes a non-solicitation obligation on BBI, a capped cost reimbursement provision in favour of the cornerstone investor and a three-month right of refusal over the sale of certain assets.
In an announcement released to the ASX today, BBI said it had $9.1 billion in total proportionate debt and $1.2 billion in corporate level debt facilities as at June 30 this year, and that until recently it had focused on sales of significant assets as its primary strategy for achieving debt repayment.
“However, achieving asset sales in the current environment on terms which would realise sufficient funds for the necessary reduction in BBI’s debt is proving difficult, with timing and value outcomes uncertain,” the announcement said. “Based on present circumstances, BBI’s current asset sales programs are unlikely to realise sufficient proceeds to meet BBI’s financial year debt maturities.”
The company said based on this information, the board had been focusing on the possibility of engaging in a comprehensive equity recapitalisation transaction combined with sales of certain assets and was in active dialogue with a potential cornerstone investor.
AUTHOR
Mike Taylor
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