Shareholders Plan to Sue B&B

Shareholders of Babcock & Brown Power (BBP), the largest wind power producer of Australia are planning to file a lawsuit for misleading and deceptive behaviour. The outburst came after the announcement made by B&B, parent of BBP, about refinancing, after the acquisition of Alinta (ALN), an Australian energy infrastructure company.

BBP was confident that, it will refinance $3.1 billion debt facility. BBP also said it had offers for $3.1 billion debt to be underwritten. The company finally shocked the market by announcing that it could raise only $2.7 billion from the banks. As a result, the shares of BBP dropped sharply by 65%. The Asset sales like Tamar power station have helped BBP to reduce debt, still the cost of capital has gone up and the stock trades at 5.4 cents per share.

B&B took over Alinta competing against their rival Macquarie (MBL). B&B has divided the assets of Alinta between B&B powers, B&B Wind and B&B Infrastructure. The company has also acquired current interest bearing liability of $937 million, non-current interest bearing liability of $5.5 billion which brings up the total interest bearing liability to $6.4 billion. As a result, BBP’s total borrowings increased from $1.3 billion to $4.1 billion.

About 10000 investors of BBP are planning to sue the company. All the investors who have shown interest on the securities of BBP between August 30 2007 and August 29, 2008 are claimed to have suffered loss and damages. BBP on August 2007 said, the debt of Alinta was $1 billion but eight months later revealed that it is $1.4 billion. This was another mishaps made by the company. BBP also failed to inform the market about the corporate debt refinance facility and mislead them by saying that, it will pay the distribution guidance for the financial year 2008 of 26 cents per unit.