Babcock & Brown Takes Hit over Asset base

The future of Babcock & Brown Infrastructure Group (BBI) looks even more uncertain as the company declared yesterday that it might see a $900 million massive hit over its declining asset base. The auditor’s of the company warned that the company might find itself under pressure in the future as far as the present situation is concerned. A rescue plan which was proposed for BBI that includes an injection of equity by a fresh cornerstone investor and the asset sale is likely to come at a higher cost for the company. Babcock & Brown recorded a loss of $977 million after an $895 million worth of write-down came against its accounts for the year ending June 30. However according to BBI, it is expected to be compounded by a $900 million charge against business that are possibly going to be sold either partially or completely which has a book value worth of $7 billion.

It was still to be specified by the company that which assets would have to be written down. However, it boosted the prospect of another dilution to its British ports business (PD Ports) along with the Dalrymple Bay Coal Terminal operation which is located in Queensland. World’s largest coal exporting facility- Dalrymple Bay is considered as the most important operation of BBI. Part or all of it is likely to be sold in an attempt to trim down a debt of more than $9 billion-plus.

It is taking longer than what BBI expected to bring in a new investor and doubts are building around whether the company will be able to secure a better future as it is currently finding it difficult to reduce the crippling borrowing. According to Deloitte, the auditor of BBI, a material uncertainty is there regarding BBI’s continuation. The main reason behind this is the liabilities of the company had passed the assets by as much as $426.5 million. The sum excludes those assets and liabilities that are for sale and which is expected to pump in the necessary funds.