B&B Power goes back to the bankers after trading halt
Sydney Morning Herald
Thursday November 12, 2009
BABCOCK & BROWN POWER has been forced to suspend its shares from trading and hold a fresh round of talks with its bankers over a disputed gas contract that has the potential to sink the company.Shares in the utility were locked in a trading halt yesterday as it assessed the impact of an arbitration ruling on a contract between BBP's Alinta business and the North West Shelf joint venture.The ruling, handed down on Monday by the former High Court judge Michael McHugh, is a crucial test for the company's efforts to refinance $2.6 billion with its global banking syndicate. The company has not revealed Mr McHugh's decision, and would not provide further comment yesterday as it continued negotiations with the North West Shelf and the BBP bankers.The stakes could hardly be higher for the debt-crippled utility, which is scrambling to salvage value for investors who have suffered a 98 per cent share price fall since May 2007.BBP has not revealed the value of the gas contract, but the annual report said a poor outcome in the despite could "impact BBP's future as a going concern".A source within the banking syndicate said the matter had come as a surprise to some of the lenders, although they remained hopeful of keeping BBP afloat.BBP has previously said it was confident of achieving a workable decision on the contract, but did not provide further comment yesterday.As well as restructuring the $2.6 billion owed to its bankers, BBP is also locked in discussions to achieve a binding agreement over a $400 million loan to Babcock & Brown International, part of the collapsed B&B empire.BBP has developed a restructuring proposal which it hopes to put to a shareholder vote at its annual general meeting on December 18.BBP's latest gas contract dispute is a legacy of its takeover of the Western Australian power retailer Alinta.A spokeswoman for North West Shelf €“ an alliance of oil and gas giants €“ declined to comment on the contract because it was "commercial in confidence"."Negotiations with Alinta Sales and its owners, Babcock and Brown Power Ltd, in relation to the interim award remain ongoing," the spokeswoman said in a statement.
© 2009 Sydney Morning Herald