Deals

Babcock Infrastructure breaks away from management company

Babcock & Brown Infrastructure is to separate from management company Babcock & Brown and internalise its management structure, after which it will be known as Prime Infrastructure Holdings. It has just posted a A$1bn loss.

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Babcock & Brown Infrastructure is to separate from troubled parent company Babcock & Brown and internalise its management structure.

The infrastructure investor said in a statement to the Australian Securities Exchange that the terms of the separation have been agreed, and it is now subject to the approval of the company’s corporate lenders. Once the move has been approved, Babcock & Brown Infrastructure will change its name to Prime Infrastructure Holdings.

The transition will also see the dissolution of all management agreements between the two firms, the settling of outstanding management fees and the offer of reemployment to all staff involved in the management of Babcock & Brown Infrastructure.

The announcement of the separation comes as Babcock Infrastructure made a loss of almost A$1 billion (€581 million; $827 million) for the full year ending June 30, 2009. The company made a net loss for the year of A$977 million, compared to a loss of A$44.4 million the previous year. Its revenue rose 16.8 percent to $1.41 billion.

The loss was largely due to an A$895 million impairment charge and a A$227 million mark to market movement (both pre-tax). These two charges were offset by Babcock Infrastructure’s A$123.7 million pre-tax gain on the sale of its 58 percent stake in New Zealand electricity and gas utility Powerco.

Babcock Infrastructure is currently awaiting bids for its UK port operator PD Ports, which is reportedly attracting the interest of private equity firms Terra Firma, HgCapital, CVC Capital, Carlyle and Star Capital. Last month Babcock Infrastructure revealed it had amended an agreement to sell its Euroports business, which would result in a €120 million loss on the transaction.

Babcock Infrastructure’s share price closed today at A$0.11 on the back of the news, an increase of almost 90 percent.

Since Babcock & Brown went into administration in March, a number of its listed and unlisted satellite funds have sought to terminate their management agreements with the firm, including Babcock & Brown Capital and Babcock’s PPP business Babcock & Brown Public Partnerships.