Australia's BBI announces $1.6 bln recap plan
Canada's Brookfield group rushed to the rescue of Australia's indebted Babcock & Brown Infrastructure on Thursday, agreeing to fund more than half of a $1.62 billion capital injection.
Brookfield said it would buy up to A$713 million ($643 million) in new BBI shares, out of a total A$1.5 billion BBI equity raising, and buy A$295 million in BBI assets, including a half share of Australia's biggest coal terminal, Dalrymple Bay.
Brookfield would take a stake of 35-40 percent in BBI and also end up with full ownership of Britain's PD Ports, and repay 100 million pounds ($160 million) in PD Ports debt.
The Canadian group is making the investment through parent Brookfield Asset Management and its satellite fund, Brookfield Infrastructure Partners , which in turn plans to raise equity to finance its interest in the deal.
BBI is desperate to cut its nearly A$9 billion in debt, with about A$3 billion of that maturing in stages by July 2011, and said it risked insolvency without the recapitalisation.
"If the recapitalisation is not approved, there is no certainty that the BBI corporate lenders will agree to a debt moratorium or any other debt restructure," BBI said. "If BBI is placed into administration, BBI directors are of the view that it is likely securityholders will receive no value for their securities...," it said, referring to its shareholders.
Credit Suisse (Australia) Ltd and Macquarie Capital Advisers Ltd are joint lead managers and underwriters to the plan, which will also change BBI's name to Prime Infrastructure.
Royal Bank of Scotland had also submitted a recapitalisation proposal to BBI but the latter said this and other alternatives were too uncertain. It did not give details.
Brookfield said it would buy up to A$713 million ($643 million) in new BBI shares, out of a total A$1.5 billion BBI equity raising, and buy A$295 million in BBI assets, including a half share of Australia's biggest coal terminal, Dalrymple Bay.
Brookfield would take a stake of 35-40 percent in BBI and also end up with full ownership of Britain's PD Ports, and repay 100 million pounds ($160 million) in PD Ports debt.
The Canadian group is making the investment through parent Brookfield Asset Management and its satellite fund, Brookfield Infrastructure Partners , which in turn plans to raise equity to finance its interest in the deal.
BBI is desperate to cut its nearly A$9 billion in debt, with about A$3 billion of that maturing in stages by July 2011, and said it risked insolvency without the recapitalisation.
"If the recapitalisation is not approved, there is no certainty that the BBI corporate lenders will agree to a debt moratorium or any other debt restructure," BBI said. "If BBI is placed into administration, BBI directors are of the view that it is likely securityholders will receive no value for their securities...," it said, referring to its shareholders.
Credit Suisse (Australia) Ltd and Macquarie Capital Advisers Ltd are joint lead managers and underwriters to the plan, which will also change BBI's name to Prime Infrastructure.
Royal Bank of Scotland had also submitted a recapitalisation proposal to BBI but the latter said this and other alternatives were too uncertain. It did not give details.