Could Babcock and Brown Power be the second of its investment offshoots to be “rescued” or bailed out?

It looks like it after two days of what amounts to Keystone Cops activity involving the power company and the parent and manager, Babcock and Brown, which featured one misleading statement — a poor clarification on Thursday and then a 10 page “update” and emergency briefing on Friday for investors that didn’t stop the B&B Power shares tanking.

They lost 41% in value last week, with much of the fall coming on Thursday and Friday amid the incompetent update on debt: at one stage it was uncertain if the Power company had $3.1 billion or $3.4 billion in debt it was rolling over.

In fact there’s $2.7 billion in debt with a total of another $700 million that the B&B Power has to find from the banks, shareholders or by selling off some of its power assets.

It would be a big ask to approach the shareholders, seeing how the incompetence of the two companies, the board and management of B&B Power caused the shares to lose 84 cents or 41% in value last week. Making it tougher are suggestions that the dividend might be cut or withheld to help find the cash; while a leading investment bank’s power analyst reckons a rights issue to shareholders will cut earnings and value if the discount is anywhere near the closing price on Friday of $1.18.

Babcock and Brown CEO, Phil Green, was forced to go public Friday and offer to meet the $700 million extra finance for B&B Power if it couldn’t be found from elsewhere. He reckons that won’t happen, but with the credit crunch far from disappearing and the poor handling of the funding update last week, you wouldn’t bank on the extra coming from the banks.

Babcock and Brown itself has its AGM on Friday in Sydney and this will provide a neat opportunity for shareholders to quiz Green and other directors about the Power disaster, the question of European property values and of course Babcock and Brown Environmental Investments (BEI).

BEI was a bio fuel disaster, especially with the biodiesel refinery in Darwin. B&B was forced to take it over and remove it from memory. BEI shares fell from around $3.50 in may 2006 to where a bit of corporate euthanasia was practised to get rid of the embarrassment, with the shares bought at 50 cents cash. It was delisted 10 days ago.

Besides the power company embarrassment, Babcock and Brown should be questioned about a loan from Babcock and Brown Wind to the parent company (that’s been repaid) and a $200 million loan from Babcock and Brown Infrastructure to the parent company that appears to be still live.

So if need be can the parent investment bank find $700 million cash to help the Power company over its funding hurdles?