Administrators called at BNB
(17 March 2009 – Australia) What was formerly Australia’s second biggest investment bank, Babcock & Brown, has called in the administrators, ending a crisis at the bank that has developed over the past year.
The Directors of Babcock & Brown Limited announced that investors in the company’s subordinated notes listed in New Zealand have voted against a proposal to restructure the terms of the notes. Note holders in Australia will not even have a chance to vote on the proposal.
The vote forced the company's board to appoint David Lombe and Simon Cathro of Deloitte Touche Tohmatsu as voluntary administrators.
A majority 58.14 percent of New Zealand investors holding $600 million of Babcock unsecured subordinated notes voted against a debt restructure plan which includes the acceptance of just 0.1c in each $1 invested.
The rejection meant Babcock would be insolvent as it will not be able meet a $15 million interest repayment now due.
The Australian banks hold at least $725 million of exposure to Babcock, with Westpac having the most through a $300 million secured and unsecured loan.
Through its subsidiary B&B International, Babcock owes its 25 member banking syndicate more than $3.1 billion.
The subsidiary owns and operates all of the business assets of the group and the banking syndicate has a priority claim to those assets.
The syndicate is currently overseeing a sell off of B&B International's assets, which is expected to be completed within three years.
The satellite funds, particularly Babcock & Brown Infrastructure and the separate Power entity, have distanced themselves from the parent company's collapse, and said that they are unaffected.
The vote forced the company's board to appoint David Lombe and Simon Cathro of Deloitte Touche Tohmatsu as voluntary administrators.
A majority 58.14 percent of New Zealand investors holding $600 million of Babcock unsecured subordinated notes voted against a debt restructure plan which includes the acceptance of just 0.1c in each $1 invested.
The rejection meant Babcock would be insolvent as it will not be able meet a $15 million interest repayment now due.
The Australian banks hold at least $725 million of exposure to Babcock, with Westpac having the most through a $300 million secured and unsecured loan.
Through its subsidiary B&B International, Babcock owes its 25 member banking syndicate more than $3.1 billion.
The subsidiary owns and operates all of the business assets of the group and the banking syndicate has a priority claim to those assets.
The syndicate is currently overseeing a sell off of B&B International's assets, which is expected to be completed within three years.
The satellite funds, particularly Babcock & Brown Infrastructure and the separate Power entity, have distanced themselves from the parent company's collapse, and said that they are unaffected.
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