It will be at least another week before the fate of Babcock and Brown, the faltering investment bank based in Sydney, is sorted out: we hope.
B&B said it should be in a position to make a further announcement next week.
"It is expected that the suspension will end when B&B is in a position to make a further announcement in relation to those discussions and negotiations, which is expected to be early in during the week of December 1," (the company said yesterday in a statement to the ASX).
B&B shares last traded at 25 cents, which is tantamount to saying that it has no hope of surviving..
Babcock & Brown has extended a suspension of its shares, as the company tries to hammer out a last-minute agreement with its syndicate of 25 lenders.
Babcock & Brown, teetering under $3.1 billion in debt, also announced the resignation of Dieter Rampl and Joe Roby as directors.
"The reason for the suspension is that Babcock & Brown is still seeking to resolve the dispute with a bank, which holds a deposit of a material amount, relating to the release of that deposit," said in a statement to the Australian Securities Exchange.
"Babcock & Brown is in continuing discussions with its banking syndicate in relation to a restructure of its corporate banking arrangements."
B&B said it should be in a position to make a further announcement next week, after which it expects its shares to trade again.
Mr Rampl’s exit will add to worries that the German banks among Babcock & Brown’s creditors may baulk add extending its debt, moving it closer to administration. Mr Rampl was a spokesman of the Management Board of Bayerische Hypo-und Vereinsbank (HVB), according to B&B’s website.
It’s the bank that is hanging on to $70 in cash that was on deposit. HVB has been a long time funder and supporter of BNB, but seems to have gotten cold feet in the last two weeks.
HVB is under pressure itself: it is a Munich-based subsidiary of UniCredit, Italy’s biggest bank which is trying to raise 6 billion euros in asset sales, cutting costs and paying the dividend in cash. It wouldn’t be in a position to provide any more funding for BNB indirectly or otherwise.
Shares in Babcock & Brown have lost more than 99% of their value in the past year as the financial crisis has hammered companies with large debts and gearing levels.
Babcock & Brown said last week it hoped to pay down half of its debt by 2011 and revealed plans to cut hundreds of jobs.
A day later the dispute with HVB erupted.
Goldman Sachs JBWere yesterday provided "current media speculated exposures by each bank to the BNB corporate facility:
- ANZ ~$300m
- CBA ~$130 – $200m
- NAB ~$100m
- WBC ~$300m
- Suncorp $125m
Meanwhile Lend Lease Corporation has cut by half the amount per share it will pay for Babcock and Brown Ltd’s 12.5 per cent stake in Babcock and Brown Communities (BBC).
Lend Lease said yesterday it had agreed with BBC to change the agreement detailing the transaction to reduce the purchase price from 58 cents per security to 29 cents.
The price drop is one of a number of changes to the deal following due diligence and the completion of negotiations with the lending syndicate.
The result of the changes is that Lend Lease will end up with 43.2%, of BBC, once approved by security holders.
Other changes covered by the amended agreement include a reduced price for the $170 million placement component of the transaction from 68 cents to 60 cents per share and a further cash injection by Lend Lease of $25 million in BBC, thereby increasing the total injection to $195 million.
Lend Lease said its overall cash outlay would remain the same.
The proceeds from the issue of the new stapled securities and Second Notes will be used partly to reduce BBC’s debt and provide capital to maintain current operations and provide funding for future growth, the companies said in a joint statement.
Babcock & Brown Communities, (BBC) securities gained 3.5%, or 32%, to 14.5 cents
