Babcock & Brown Power Get Refinancing

Submitted by Craig Strzelecki on 5 June, 2008 - 12:36

Babcock & Brown Power (BBP) has managed to refinance its A$2.7 billion of project finance debt. BBP Chief Executive, Paul Simshauser stated that the company further expects to arrange another A$360 million to finalise the corporate debt facility of BBP Holdings by August 31, 2008.

It also reiterated that Babcock & Brown would provide necessary backup financing, if required. Babcock Chief Executive, Phil Green had also told shareholders at its annual general meeting last week that it would provide BBP with about $200 million in bridging finance. It also stated that it would review its investment in satellite funds and ensure sustainability and capital structure. After refinancing, the interest rate on combined project and corporate debt for Babcock Power is expected to be 8.5 percent.

Babcock & Brown Power is Australia’s biggest publicly traded power producer. It had witnessed a record low fall in its shares on May 23 after it reported that it needs additional funding. JP Morgan Chase and Co. had questioned the management’s credibility on company’s statement thereafter.

Babcock & Brown Power (BBP) shares made up some lost ground at the Australian stock market after its announcement today about its refinancing. This move came as a promising sign amongst the global credit crisis scenario. BBP’s syndicate of banks includes ANZ, BNP Paribas, Commonwealth Bank, Dexia, nabCapital, Natixis, SG, UniCredit, WestLB, Suncorp-Metway, BOS International and Mizuho Corporate Bank.

Babcock & Brown Power has a number of quality assets available as well that will be available for sale; however, no final decision has been taken on that aspect. A number of parties have already expressed their interests in the BBP assets. The company currently has a power stations being built in Tamar in Tasmania which may be sold. According to Goldman Sachs other assets that are likely to be put up for sale are Ecogen, Oakey and Redbank. It is most probable that parties like International Power, AGL, TRUenergy, Origin, etc. would be interested in purchase of these assets. The company has hired UBS AG to advise sale of assets that do not fall under the project fund in order to meet the funding requirements.

After the announcement, Babcock & Brown Power (BBP) gained 5.9 percent or 7.5 cents to A$1.35. This has been its highest for two weeks, however, the shares are still 64 percent lower than in June last year.