B&B hits another debt issue
Hard-pressed Babcock & Brown (B&B) has revealed it is facing new liquidity pressures — this time stemming from a debt facility provided by troubled US bank Wachovia.
B&B informed the Australian Securities Exchange (ASX) this week that a vehicle that holds US loan asset investments on behalf of a B&B joint venture with GPT had received a notice of acceleration under a debt facility provided by Wachovia Bank.
It said discussions between the parties were ongoing, but if the talks were not successful, the joint venture might suffer a loss upon the liquidation of the loan assets by Wachovia.
“The total amount of the Wachovia Bank loan is approximately US$112 million,” the ASX announcement said. “It is a non-recourse loan and therefore the maximum B&B/GPT joint venture exposure as a result of this action is limited to the equity invested plus retained earnings and amounts to approximately US$82 million.”
The announcement said this represented approximately 4 per cent of the joint venture’s ordinary and preferred equity and that due to the requirement of the joint venture agreement for ordinary equity to bear first loss across the portfolio, B&B’s maximum exposure to any potential loss would be the equivalent of 50 per cent of the joint venture’s exposure or approximately US$41 million.
AUTHOR
Mike Taylor
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
