Struggling Swiss investment banking giant UBS floated Babcock & Brown in 2004, so it was no surprise to see Babcock delivering this detailed presentation at a UBS financial services conference today.
Check out all the graphs and claims on debt, property, infrastructure and aircraft, but then supplement it by reading this Business Spectator piece by Tony Boyd today.
Boyd is a former banking editor of The AFR who only last month was spinning away at the Everest Babcock & Brown AGM. He’s now back in journalism and has produced a belter about one of his former clients, focusing on the overall exposures that banks have to the entire Babcock empire.
Babcock itself was upbeat about its banking negotiations today, providing these key update comments:
The discussions with the corporate facility banks regarding the review event are progressing well with excellent support from the banking syndicate. B&B will update the market when we have further information expected within the next week or two, subject to individual bank processes.
Full year 2008 guidance was reconfirmed at the AGM. The 2008 guidance is subject to the resolution and impact of current discussions around our corporate debt facilities, market conditions, and outcomes of the 2008 asset sale program.
It seems bizarre to have a $750 million net profit forecast in the market when about half of this is expected to come from one deal – the big European windfarm sale. And given the plunging value of investments in its listed satellites, surely auditor Mark O’Sullivan from Ernst & Young will insist on write-downs exceeding $200 million.
While Babcock & Brown shares have ended three days of losses and gained 29c to $6.09 in a falling market, its two most troubled listed funds, BB Power and BB Infrastructure, both hit fresh lows today. If investment markets continue to weaken, BBP, BBI and the GPT property joint venture, which together are saddled with about $17 billion of debt, might end up with worthless equity.
However, provided no bailout was required or volunteered, the parent would probably survive courtesy of other deals such as its coming windfarm windfall and talk that its $232 million investment in 37% of oil play Coogee Resources last year has at least doubled.
While everyone is reading the last rites to the Macquarie Model of highly geared infrastructure funds that borrow to pay distributions, those at the Millionaire Factory are deluding themselves that life goes on.
The prospectus for $1.2 billion BrisConnections tollroad floats reveals the Millionaire Factory will reap more than $100 million in fees and debt-funded distributions will flow straight away.
If the investment opportunity is so good, why flip it into the public market when earlier Sydney deals were equity funded by the bank itself, or at least supported by the listed Macquarie Infrastructure Group? This offer will be a very hard sell.
Check out this Babcock package, including a get square interview with Richard Glover last Friday and the commentary on Saturday’s Sky Business View program.
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