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Babcock & Brown heads step down

Thursday 21st August 2008

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Babcock & Brown replaced chief executive Phil Green and chairman Jim Babcock as part of a review of the Australian infrastructure fund manager whose stock has sunk 90% this year.

Green will be replaced by chief financial officer Michael Larkin and the company will embark on a hunt for a new CFO, it said in a statement. Babcock will be replaced as chairman by deputy Elizabeth Nosworthy. Three other directors will leave.

The company today posted a 24% drop in first-half profit, reflecting impairment charges and trading losses across its four divisions. The global credit crunch eroded its ability to debt fund the acquisitions of infrastructure assets that it pours into funds to extract management fees.

"Babcock & Brown has been very successful at achieving substantial growth based on high levels of liquidity in capital markets," Larkin said in his first statement as CEO. "This led to the group being too highly leveraged and not sufficiently focused," he said.

The stock fell 26% to A$2.54 on the ASX. Assets under management rose to A$74.34 billion in the first half, from A$52.6 billion a year earlier, it said today.

Group profit for the full year isn't expected to exceed last year's A$643 million, it said.

Babcock and Green will remain as non-executive directors of the company.

By Jonathan Underhill

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