Debt-ridden BBP suspends shares at gas contract ruling
The Age
Thursday November 12, 2009
BABCOCK & Brown Power has been forced to suspend its shares and hold a fresh round of talks with its bankers over a disputed gas contract with the potential to sink the company.Trading was halted yesterday as the utility assessed what impact an arbitration ruling between BBP's Alinta business and the North West Shelf joint venture would have.The ruling, handed down on Monday by former High Court judge Michael McHugh, is a crucial test of the company's bid to refinance $2.6 billion with its global banking syndicate.The company has not revealed what the decision is and would not comment yesterday on negotiations between the North West Shelf and BBP bankers.BBP investors 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 dispute could affect its future as a going concern.A source within the banking syndicate said the lenders remained hopeful of keeping BBP afloat.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 AGM on December 18.The gas contract dispute is a legacy of BBP's takeover of the Western Australian power retailer Alinta, after B&B's ill-fated takeover in 2007.A spokeswoman for the North West Shelf €” an alliance of oil and gas giants that supplies 65 per cent of Western Australia's gas €” declined to comment on the contract because it was "commercial in confidence'."Negotiations with Alinta Sales and its owners, Babcock & Brown Power Ltd, in relation to the interim award remain ongoing," she said in a statement.
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