Babcock & Brown goes into administration(2)

The debt-laden Australian infrastructure asset manager appointed voluntary administrators after investors in New Zealand voted against a restructuring plan that included a possible debt for equity swap.

Babcock & Brown has appointed voluntary administrators after about 58 percent of investors in the company’s subordinated notes listed in New Zealand voted against the restructuring of the terms of the notes.

Investors had been offered a payout of one cent for every dollar they invested if they accepted the restructuring proposal, according to media reports.

The company has appointed David Lombe and Simon Cathro of Deloitte Touche Tohmatsu as administrators, who will manage the company on behalf of the bondholders.

A company spokeswoman said that Babcock & Brown going into administration is not expected to have an impact on Babcock & Brown International (BBIPL), the asset-owning entity of the Babcock & Brown Group. BBIPL will continue looking to sell assets over the next two to three years in a bid to reduce debt.

It was reported last month that Babcock is shutting down its India operations. The spokeswoman said that while the company was “winding down our operations”, it was not making separate comments with regards to specific operations.

The company also said that it does not expect there will be any value for equity holders and holders of the company’s subordinated notes following the sale of assets by BBIPL.

Trading of Babcock & Brown shares and the Australian subordinated notes is already suspended. It is likely that the trading of the New Zealand listed notes will also be suspended, the company said.

In January, the company had warned investors that ongoing discussions with its syndicate of lenders pertaining to a debt-for-equity swap were likely to leave its publicly traded shares worthless.

Trading of its shares has been halted since January 7, when the firm announced that it was negotiating with its lenders for a debt-for-equity swap or “equivalent restructuring” to stabilise its long-term capital structure.

Last month, Babcock & Brown reached an agreement with a syndicate of 25 banks to sell its assets over a two to three year horizon to begin to pay down the A$3.2 billion (€1.7 billion; €2.1 billion) of debt it owes them on a 'pay if you can' basis.

The results of today’s vote will not affect the activities of the separately listed Babcock funds, she said.

Babcock & Brown is the second Australian asset manager in recent months to go into administration. Last year, the Allco Finance Group, which also invested in infrastructure, went into receivership under the weight of A$1.1 billion in debt.