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B&B lost half its market value last week as investors questioned its complex, debt-fuelled structure and worried that the loss in capitalisation could result in debt defaults or covenant breaches.
The funds manager has defended its financial robustness and credit position a number of times in the past few business days.
The company reaffirmed today that a fall in its market value below $2.5 billion did not constitute a debt default or breach of covenants for the $2.8 billion facility. The company's bankers had included the capitalisation clause in documents for the three-year facility, which was signed off in April.
It allows the syndicate of 25 bankers the right to call for a review of the facility if B&B's market value falls below $2.5 billion.
"The facility banks have not yet made a decision as to whether such a review action is appropriate," B&B said.
Debt talks to start
A spokeswoman said B&B was today holding talks with its bankers about the issue. "They start today and they will probably go for a number of days," she said.
B&B says it may take its bankers, which include the big four Australian banks as well as European institutions, a while to decide whether or not to go ahead.
"A decision may take some time in line with normal banking syndicate processes," B&B said.
If the banks call for a review it would entail a four month consultation period.
During that period, B&B will continue to operate as normal and says there will be no impact on its access to funds in the facility.
B&B shares slumped last week, and the company was left with a market value of $1.75 billion on Friday, down from $3.71 billion a week previously.
Shares inch up
But its statement today appeared to give investors some reassurance, with B&B shares stabilising and adding 12 cents, or 2.29 per cent, to $5.37 by 12.13pm AEST.
B&B today also pledged to speed up a current review of its listed funds, with the appointment of external advisors.
It plans to work with the funds and the advisors to review ways to remove the gap between underlying asset values in the funds and current trading prices, responding to market concerns about the listed fund structure.
"We will move as quickly as possible to restore investor confidence in a decisive yet orderly manner," B&B chief executive Phil Green.
In the meantime, B&B, in its capacity as manager of its funds, plans to immediately recommend the appointment of independent chairmen to the boards of the four listed funds - Babcock & Brown Infrastructure, Babcock & Brown Power, Babcock & Brown Wind Partners and Babcock & Brown Residential Land Partners.
Asset sales on cards
B&B is continuing with planned asset sales, announced earlier in the year, as it de-leverages its balance sheet.
B&B expects this week to receive first round indicative offers for the previously announced sale of European wind energy assets.
"Based on the level of interest received and current indications, these sales are expected to be finalised in the third quarter and reach financial close either simultaneously or early in the fourth quarter of 2008," it said.
Founded in San Francisco in 1977 and listed on the Australian stock exchange in 2004, B&B uses debt to buy transportation, power and real estate assets around world that it then packages into listed and unlisted funds.
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