Waiver of Review Event
REVIEW EVENT - market capitalisation clause removed from loan agreements and banks waive rights to review
Babcock & Brown’s corporate credit facilities included provisions that relate to the market capitalisation of Babcock & Brown should it fall below a level of A$2.5 billion. This occurred on 12 June 2008. Following constructive discussions with our banking syndicate, the banks have agreed both to waive the right to conduct a review and to remove the market capitalisation review event provision from the financing documents entirely. This means the market can now have renewed confidence regarding Babcock & Brown’s financing arrangements.
With the corporate facilities market capitalisation clause successfully resolved, we will now focus on our core activities of infrastructure, real estate and transport operating leasing where we have strong global market positions and demonstrated competitive advantages. We are examining additional ways to capitalise on these strengths for the benefit of both Babcock & Brown and the various funds we manage. We will continue to reduce debt levels through the recycling of development assets and the sale of non-core assets.
At the same time, Babcock & Brown will continue to focus on raising and investing committed unlisted institutional capital and will work with third parties on direct co-investment opportunities leveraging our global origination expertise in infrastructure, real estate and transport.
Babcock & Brown will keep the market informed of any developments in relation to these discussions.
Recent ASX Announcements
12 June 2008 Review Clarification
16 June 2008 Babcock & Brown Market Update
30 June 2008 Banking Syndicate Removes Market Cap Clause And Waives Right To Review
FAQ
What is the review event and how does it work?
Babcock & Brown’s corporate credit facilities included provisions that relate to the market capitalisation of Babcock & Brown should it fall below a level of A$2.5 billion. This occurred on 12 June 2008.
Following constructive discussions with our banking syndicate, the banks have agreed both to waive the right to conduct a review and to remove the market capitalisation review event provision from the financing documents entirely. This means the market can now have renewed confidence regarding Babcock & Brown’s financing arrangements.
Why has Babcock & Brown’s share price fallen so much recently?
We believe the market volatility does not accurately reflect the strength of our business fundamentals and over the coming days and weeks management will be working hard to seek to restore market confidence by demonstrating that the Company remains in sound condition. We continue to believe that the hard assets that underpin our business model are quality assets producing predictable and solid cashflows.
What should I do / Should I sell / buy / hold?
We are unable to provide you with any financial advice. We can however advise you that following constructive discussions with our banking syndicate, the banks have agreed both to waive the right to conduct a review and to remove the market capitalisation review event provision from the financing documents entirely. This means the market can now have renewed confidence regarding Babcock & Brown’s financing arrangements.
We believe the market volatility does not accurately reflect the strength of our business fundamentals and over the coming days and weeks management will be working hard to seek to restore market confidence by demonstrating that the Company remains in sound condition. We continue to believe that the hard assets that underpin our business model are quality assets producing predictable and solid cashflows.
You should contact your broker, tax consultant or other financial advisor if you are unsure as to what to do.
What should I do with my Babcock & Brown shares?
We are unable to provide you with any financial advice. However you should note that the market capitalisation review clause in the group's corporate debt facility serves merely as a point where the company's lenders could choose to call a review of the company's position. It's important to realise that even though a Review Event has occurred, the banks have not at this stage called a formal review, and even then if a review is called, it does not trigger acceleration of the corporate facility debt.
Will Babcock & Brown still pay dividends?
Babcock & Brown’s dividend payout ratio to date has been 30%. Each dividend is the subject of a decision by the Board made following their receipt of the finalised financial results for the half or full year.
Will Babcock & Brown still pay interest on the subordinated notes?
We have always paid interest in accordance with the terms of the BBSN. We noted in our announcement on 12 June 2008, that the existence of a Review Event would mean that we would need the consent of our lenders to pay interest on the BBSN. As announced on 30 June 2008, that review event has been waived and accordingly we would no longer need our lenders consent to pay interest on the BBSN.
When will we hear from the Company?
Babcock & Brown will keep the market informed of any developments in relation to discussions with our lenders by way of ASX announcements and shareholder letters where appropriate.
You can register to receive email news alerts once announcements are made via the "Register here for NEWS ALERTS" button on the bottom of the left hand side of the Babcock & Brown website www.babcockbrown.com
Should you have any further questions with regard to this matter, please feel free to contact the Babcock & Brown Shareholder Information Line on 1800 818 562 (TOLLFREE within Australia) or +61 2 8280 7452 (outside Australia).