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Babcock & Brown stock halted from trading for talks with banks

By Paul McBeth

Monday 24th November 2008

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Babcock & Brown, the Australian investment group thatís lost 99% of its market value in the past 12 months, had its stock halted from trading pending talks with its banks.

The company last week announced it will cut more jobs and sell assets to avoid being wound up by its lenders. It will cut its workforce by more than 60% to 600 by 2010 and will split off and retain its infrastructure assets while lining other investments up for sale. It hasnít put a time limit on additional asset sales, allowing it greater flexibility to sell investments in a weak market with restricted access to credit.

Last week, Babcock said Wachovia Corp. may seize collateral on a $112 million loan. Rival infrastructure fund manager Allco Finance Group was handed over to outside managers as it came close to defaulting on its debt.

Babcock, which modeled itself on Macquarie Group in pooling assets into funds and reaping management fees, is renegotiating some A$3.1 billion of debt. Earlier this month, Babcock & Brown Infrastructure Group agreed to sell 50% of the New Zealand assets of Powerco to Australiaís QIC for about $400 million, to repay debt.

BBI, one of the groupís funds, is considering the sale of 49% of Dalrymple Bay port, Australiaís second-biggest coal-export facility. The sale may reap A$2.3 billion, the Australian Financial Review reported.

The halt will remain in place until the market opens on Wednesday or when Babcock advises of the outcome of the discussions with its banks.

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