More directors resign Babcock board

Following the resignations of the firm’s founder, Jim Babcock, and former chief executive, Phil Green, Dieter Rampl and Joe Roby, non-executive directors based overseas, also have resigned from the board of the struggling Sydney-based infrastructure specialist.

Joe Roby and Dieter Rampl have resigned their positions as non-executive directors on the board of Babcock & Brown, bringing to seven the number of directors who have stepped down from the board since the firm announced a strategic review of its business lines in June. 

Both directors were based offshore, with Roby in the US and Rampl in Germany, a situation that forced the two men to shoulder personal demands because of the time differences and the difficult issues facing the firm, a person familiar with the matter said. 

Rampl was appointed to the Babcock board in 2005. That same year, he was appointed to the board of European banking giant UniCredit Group, parent of German bank HypoVereinsbank (HVB), for which he had previously served as chief executive officer and chairman.

HVB now is in a dispute with the firm over what it calls a deposit of material value, reportedly more than A$100 million (€50 million;$50 million), which Babcock is actively negotiating to unfreeze.

The person said that Rampl was not conflicted in any way and resigned solely for reasons related to the difficult demands the job was placing on him as an offshore director. Concerns over those demands had been brought up even prior to the issue of the disputed deposit, the person added.

Prior to Rampls’ and Roby’s resignations, Babcock founder Jim Babcock and former Babcock chief executive Phil Green also resigned from the firm’s board amind larger management shake-ups. In August, directors Jim Fantaci and Martin Rey, who was also affiliated with HVB, stepped down to increase the proportion of sitting independent and non-executive directors. A fifth director, Michael Sharpe, left for health reasons and was replaced by Pat Handley on 1 September.

HVB is part of a syndicate of 25 banks that participated in lending Babcock a A$2.8 billion evergreen facility, which was reviewed by the syndicate in April 2008 and extended to 2011. In June, the facility was renegotiated to remove a market capitalisation covenant in exchange for a higher lending margin. Babcock’s total corporate debt level stands at A$3.1 billion.

In related news, credit agency Standard & Poor's withdrew its CC/C ratings on Babcock & Brown International, the holding company within which Babock houses it’s A$3.1 billion corporate debt facilities. It had been downgraded to CCC+/C by S&P on 19 November.

The ratings had been put in place late last year when Babcock was thinking of raising debt in the US but it ended up not using them for any debt-raising purposes. As keeping the rating in place takes time and money and wasn’t adding any value at the moment, the firm asked for it to be withdrawn, the person said.

A suspension of Babcock’s shares and subordinated notes remains in effect while the firm continues its negotiations with HVB over the deposit.

“It is expected that the suspension will end when [Babcock & Brown] is in a position to make a further announcement in relation to those discussions and negotiations, which is expected to be early during the week of December 1,” Babcock said in a statement.