Browned off

18 June 2008 By Mike Prest

A rushed deal with its banks has allowed the Australian investment company to avoid being bushwhacked by an obscure clause in its loan agreements. That s been renegotiated, at a price. Now B&B has to show investors that its model works in bad times as well as good.

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Babcock & Brown, the Australian infrastructure investment company, said on June 30 that it had renegotiated its borrowing agreement with a consortium of banks.

The 25 banks have agreed to remove a market capitalisation clause from their A$2.8bn ($2.7bn) corporate debt facility and waive rights to a review under a clause that allowed the banks to review their lending to the company if its market capitalisation fell below A$2.5bn. B&B's capitalisation fell below that level on June 12.

B&B will repay A$400m of the corporate debt facility from asset sales. It will also pay an extra 50 basis points on its borrowing from the consortium, raising the borrowing margin over a basket of lending benchmarks to 200 basis points. The higher margin will cost the company an additional A$10m a year.

B&B's rose almost 18% to A$7.50 on the Australian Securities Exchange on June 30.

Context News

Babcock & Brown, the Australian infrastructure investment company, said on June 30 that it had renegotiated its borrowing agreement with a consortium of banks.

B&B's rose almost 18% to A$7.50 on the Australian Securities Exchange on June 30.

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