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Australia

Forced wind asset sale continues -- Babcock & Brown

Babcock & Brown, a listed Australian investment company and wind project developer, has been placed in the hands of administrators after bondholders rejected a plan for dealing with the company's A$3 billion ($2.1 billion) debt. The main operating and asset owning company, Babcock and Brown International, however, is not in receivership and will continue selling assets to reduce debt.

Babcock & Brown (B&B), a listed Australian investment company and wind project developer, has been placed in the hands of administrators after bondholders rejected a plan for dealing with the company's A$3 billion ($2.1 billion) debt. The main operating and asset owning company, Babcock and Brown International, however, is not in receivership and will continue selling assets to reduce debt.

B&B is one of the world's largest independent owners of wind plant, with activities in Australia, Europe and America. Outside of America, it has typically sold completed projects to its listed investment fund, Babcock & Brown Wind Partners (BBW). B&B and BBW have been trying to sell their European wind farm assets, so far finding buyers for holdings in Spain and Portugal. But B&B must still find buyers for almost 1 GW of projects either operating or under development in Portugal, France, Germany and Greece and a pipeline of projects in the US, including seven it acquired from Gamesa back in January 2008 with a combined capacity of more than 750 MW.

BBW has recently submitted an offer to acquire B&B's wind assets in Australia and New Zealand and some of its wind assets in the US for a maximum cash payment of A$30 million ($21 million). But BBW has come under pressure from shareholders to instead dispose of its European and US wind farm assets, accounting for about 10% and 60% of BBW's total portfolio. The Children's Investment fund (TCI) says BBW's share price does not fully reflect the company's true value and that selling assets and, ultimately, selling BBW is the only way to maximise value for shareholders.

TCI, a UK-based hedge fund and BBW's largest shareholder, says BBW's European assets are small and mature and its US assets are also mature and attractive to a utility or infrastructure fund. TCI believes BBW's 580 MW portfolio of Australian wind farms in operation or under construction is its most attractive asset, but that consideration should be given to what price the projects could fetch as sales of European and US assets are carried out.

BBW recently terminated the management and exclusive financial advisory agreements it had with B&B and is now seeking to change its name to Infigen Energy, as well as establish an equity incentive scheme for BBW employees.

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