Babcock & Brown Wind posts half-year loss of A$88m

Despite the 'accounting loss', the renewable energy business expects a significant net profit on a full-year basis and has recently made an offer to acquire ex-parent Babcock & Brown’s wind assets.

Babcock & Brown Wind Partners (BBW) posted a net loss of A$88 million ($58 million; €45 million) in the second half of 2008 as it seeks to distance itself from its troubled former manager, Babcock & Brown.

Nearly half the loss was attributed to an A$40 million management termination fee paid to Babcock. In December 2008, BBW ended an exclusive financial advisory agreement and management agreements with Babcock to internalise its management function.

The loss is also in line with the seasonal skew of revenues to the second half, according to BBW.

“Wind is seasonal and blows more strongly in the second half of the year in the US. The loss is an accounting loss and the business will see a significant net profit on a full-year basis”, Rosalie Duff, head of investor relations and media in BBW, told InfrastructureInvestor.

BBW’s revenue from continuing operations more than tripled to A$151 million from a restated A$43.3 million in the same period in 2007. Depreciation and amortisation expenses increased 303 percent to A$74 million from the same period in 2007, when BBW posted a restated loss of A$4.4 million.

BBW: moving past

BBW is pressing forward with measures to further distance itself from Babcock. This week it submitted an offer to acquire Babcock’s Australian and New Zealand wind energy project development assets, its US wind asset management business, and its minority interests in three of BBW’s existing wind farms. The offer involves a cash consideration not more than A$30 million.

Strategically, BBW will focus its attention on growth markets such as Australia and the US. It also intends to rename the business, relocate its premises, and manage IT systems and other B&B services on its own by June 2009.

While BBW bought back 3 percent of its stock in 2008, it intends to remain listed. “BBW hasn’t been active in its buy-back program because it has been negotiating with B&B over an offer made for B&B’s assets as well as the termination of management fees,” said Duff.

Listed on the Australian stock exchange in 2005, BBW has a market capitalisation of approximately A$700 million. The business has interests in 41 wind farms, which have a total installed capacity of about 2,246 megawatts.