Babcock & Brown Shares Suspended from Trading

Babcock & Brown (BNB), a global investment and advisory firm based in Sydney has voluntarily requested for the suspension of its shares from trade. Company said that it has asked for the suspension because it has not received a final response from its lenders in relation to a refinancing proposal. At present there is no announcement about the resume of share trade but the trading halt is expected last till next week. Last week Babcock & Brown submitted a revised business plan to its financiers that it hoped would stave off administration.

Babcock and Brown said "The reason for the suspension is that the company has not yet received a final response from its lenders with respect to the proposal submitted to them''. It said, “The company is continuing discussions with its lenders”. The company said that it is expecting a response from the bankers in the last week of January and the share trade will be suspended till then. BNB previously said that it would make arrangements with the bank syndicate within 9th January but failed to do it.

Among the 25 bank syndicate Westpac (WBC), a multinational financial services company based in Australia was the highest lender with $250 million followed by Commonwealth Bank (CBA), the largest bank in Australia with $200 million. The balance sheet of BNB shows assets worth of $14.1 billion and liabilities worth of $11.5 billion. Last year the company revealed that it had made a loss of $441 million from the write-downs in its real estate business.

With the revised business plan that BNB has submitted, the banking syndicate will determine whether the company is insolvent or not. The company said that the agreement would most likely be a debt for equity swap. The company warned that such an arrangement would significantly reduce the value of any existing equity.