Babcock Infrastructure ponders new capitalisation proposal

The debt-burdened Australian infrastructure investor has halted the trading of its shares as it ponders a refinancing offer from a consortium of hedge funds. BBI has A$300m of debt due in February 2010.

Babcock & Brown Infrastructure (BBI) has suspended its shares on the Australian Securities Exchange as it mulls a new capitalisation plan.

BBI: shares

The infrastructure investor said this morning it had stopped trading of its shares with immediate effect after receiving an indicative non-binding recapitalisation proposal last night. BBI said it is in the process of considering the proposal and that it expects to have made decision by next Tuesday, when the trading halt will end.

The Australian newspaper reported that the recapitalisation plan has been put forward by an unnamed global investment bank acting on behalf of a group of hedge funds, citing a letter sent yesterday to two of BBI’s independent directors. According to the newspaper, the latest proposal represents an improvement of A$500 million (€296 million; $435 million) over the one previously put forward to BBI.

This previous proposal, which also led to BBI suspending  its shares earlier this month, involved a potential cornerstone investor entering the business. It had been reported that Toronto-based Brookfield Asset Management was to acquire a stake in BBI as the cornerstone investor.

BBI needs to recapitalise in order to address its level of debt. At the end of June the firm had A$9.1 billion in total proportionate debt and A$1.2 billion in corporate level debt facilities. Of this debt, A$2.7 billion is maturing in 2010 and 2011, including A$300 million which is due in February.

In August BBI opted to break away from its parent company Babcock & Brown and internalise its management structure. Following the internalisation BBI plans to rename itself Prime Infrastructure Holdings.