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Babcock & Brown cuts jobs & sells assets

Wednesday 19th November 2008

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Babcock & Brown, the Australian investment group that's lost 99% of its market value this year, will cut more jobs and sell assets to avoid being wound up by its banks.

The company plans to split off and retain its infrastructure assets while lining other investments up for sale, it said in a statement. Its workforce will be cut by more than 60% to 600 by 2010, it said

Babcock, which modeled itself on Macquarie Group in pooling assets into funds and reaping management fees, is in talks with its banks to renegotiate some A$3.1 billion of debt. Rival infrastructure fund manager Allco Finance Group was handed over to outside managers as it loomed near default on its debt.

Wachovia Corp. may seize collateral on a $112 million loan, Babcock said earlier this week. It hasn't put a time limit on additional asset sales, giving it more flexibility to dispose of investments in a slumping market with little availability of credit. The stock tumbled 21% to 24.5 cents on the ASX today.

One of the group's funds, Babcock & Brown Infrastructure Group (BBI), separately said it is considering the sale of as 49% of Dalrymple Bay port, Australia's second-biggest coal-export facility. The sale may reap A$2.3 billion, the Australian Financial Review reported. Miners including Xstrata Plc has made the approach, the Review said.

Earlier this month, BBI agreed to sell 50% of the New Zealand assets of Powerco to Australia's QIC for about $400 million, to repay debt.

By Jonathan Underhill



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