B&B successful on market cap review

Investment and funds management house Babcock & Brown has sent a message to the market regarding its debt exposure today, announcing an agreement with its banking syndicate that the market capitalisation review clause is to be removed from its corporate facilities.

The company said the banking syndicate had also agreed to waive its right to review the firm.

The announcement followed two weeks of discussions between Babcock & Brown and its banking syndicate to remove the market capitalisation clause in return for which the company agreed to a pricing change of 50 basis points to a 200 point margin under its corporate facility. Additionally, the company will repay the corporate facilities by approximately $400 million from previously announced assets sales once the transactions are completed.

The company said it did not expect this pricing change to have a material impact on its overall cost of capital.

Babock & Brown chief executive Phil Green said that with the market capitalisation clause now successfully resolved, the company was focused on reducing gearing levels, the sale of non-core investments, directing balance sheet utilisation towards primary businesses and further raising and investing committed unlisted institutional capital.

“Babcock & Brown and its listed funds have already initiated a number of actions aimed at closing or removing the gap between the underlying value of the funds’ assets and the current trading prices of the securities,” he said.