Babcock expecting wind farm offers

Babcock & Brown said it will get offers for European wind farms this week as the company tries to stave off a review of A…

Babcock & Brown said it will get offers for European wind farms this week as the company tries to stave off a review of A$2.8 billion ($2.6 billion) of debt after a 53 per cent stock slump last week.

Babcock, Australia's second-biggest securities firmthat ultimately controls Eircom, remains on schedule to sell assets including the Enersis business in Portugal in the third quarter of this year, it said in a statement today.

The shares rose for the first day in three, before closing unchanged at A$5.25 at the close in Sydney, giving the company a market value of A$1.75 billion.

The sale could yield as much as A$2.5 billion to shore up its balance sheet as investors question its strategy of buying assets and bundling them into funds, according to analyst Kieren Chidgey at Merrill Lynch & Co.

"This will be the start of a long series of moves by Babcock to keep it's head above water," Greg Canavan, head of Australian research at Fat Prophets, said in an interview.

"The market is essentially saying that the business model is completely finished in terms of how it used to derive most of its earnings."

Chief Executive Officer Phil Green is in talks with bankers after last week's slump pushed Babcock's market value below A$2.5 billion.

Banks will have the right to force the Sydney-based company to pay back debt early or sell assets if it remains below that level at the end of a four-month review period.

"Banking is all about confidence and they need to demonstrate to the market that they are on top of the situation," said Mr Canavan. "The banks won't be panicking too much as yet and will be happy to see Babcock conduct a number of asset sales."

Babcock Brown Capital, a listed fund managed by troubled investment bank Babock Brown which immediately owns Eircom sought over the weekend to that the debt review had no effect on it or on the debt positions of Eircom and its only other asset, Israeli Golden Pages.