Babcock reanimated
Some of the old Babcock & Brown satellites are showing signs of life as opportunists attempt to salvage something from vehicles once considered beyond repair.
Some green shoots are emerging from the wreckage of the Babcock & Brown empire as vulture funds, bottom feeders, contrarian investors and former Babcock staff all try to grab a bargain.
But shareholders and noteholders in the listed Babcock & Brown should not get too carried away. As unsecured creditors they are a long way from getting a cent.
All the action in terms of asset sales, resumption of distributions and other forms of money changing hands is occurring in the satellites. Any cash flowing upstream to the mothership is going straight to the Babcock banking syndicate.
At this stage the only visible role being played by Babcock & Brown's administrators at Deloitte is the release of asset sale updates to the ASX.
The latest green shoot to sprout from the Babcock & Brown wasteland is a proposal to buy Babcock & Brown Capital (BCM) from a company whose three founding partners are former staffers Rob Topfer, John Shin and Warwick Bray.
Topfer was the brains behind the highly leveraged structure used to finance BCM's purchase of the Irish telecommunications company eircom.
The market is taking the $1.05 a share cash proposal from Topfer seriously. BCM shares jumped about 18 per cent to 99 cents today after the proposal was released. The cash offer involves 75 cents paid on settlement and 25 cents paid quarterly over a 12 month period.
What Topfer is proposing is to effectively fund a takeover of BCM by using the $175 million in cash that is already sitting inside the group. His bid would attribute no value to BCM's 57 per cent stake in eircom or the 100 per cent ownership of Israeli directories business Golden Pages.
BCM's assets were written down by $1.4 billion in 2008 to a value in the balance sheet of nil. Topfer's scheme of arrangement would require board approval.
BCM said it was evaluating the proposal along with a number of others. In the meantime it has recommended shareholders support a plan to internalise the BCM management rights with the payment of $5 million to Babcock's bankers.
Another Babcock satellite that hit turbulence during the period leading up to the demise of Babcock & Brown is suddenly on a smoother flight path.
Babcock & Brown Air (BBA), the world's fourth largest aviation leasing business, overnight declared a quarterly cash distribution of US20 cents a share. BBA has distributed $US73 million in cash and share repurchases over the past year.
The management rights to BBA are up for sale along with everything else in the Babcock group and it is highly likely that the existing Babcock & Brown staff managing the company will put in a bid.
Shares in BBA have risen about 50 per cent in the past month to $US4.50. But the stock is down 80 per cent on the 2007 IPO price of $US23 a share.
One possible explanation for the recent surge in the value of BBA is that the sale of the management rights and the right to service and maintain the companies might unlock some value by ridding the business of onerous management agreements.
Another green shoot popped up in Singapore the other day when Babcock & Brown Global Investments (BBGI) sold its music assets for $US48 million to Pegasus Capital Advisors. The portfolio of music assets includes rights to the song "I'm too sexy" by Right Said Fred.
The funds from this deal were used to extinguish all BBGI's debt. BBGI said it expected to pay a dividend for the half year to June 30. That news helped share price of the stock on the Singapore stock exchange spike up about 50 per cent to S15 cents a share.
Meanwhile, other Babcock & Brown satellites are distancing themselves from the Babcock name as fast as they can.
Babcock & Brown Wind, which terminated its management agreement with Babcock & Brown in December, plans to change its name to Infigen Energy.
Babcock & Brown Japan Property Trust today finalised its severing of links with Babcock & Brown through the sale of the responsible entity to former Babcock staff and the internalisation of the management of the fund.
Eight more Babcock management agreements remain to be sold including BBA and BBGI. The other listed funds are Babcock and Brown Power, Babcock & Brown Infrastructure and Babcock & Brown Residential Land Partners. There are also three wholesale infrastructure funds in Europe, North America and Asia.
But shareholders and noteholders in the listed Babcock & Brown should not get too carried away. As unsecured creditors they are a long way from getting a cent.
All the action in terms of asset sales, resumption of distributions and other forms of money changing hands is occurring in the satellites. Any cash flowing upstream to the mothership is going straight to the Babcock banking syndicate.
At this stage the only visible role being played by Babcock & Brown's administrators at Deloitte is the release of asset sale updates to the ASX.
The latest green shoot to sprout from the Babcock & Brown wasteland is a proposal to buy Babcock & Brown Capital (BCM) from a company whose three founding partners are former staffers Rob Topfer, John Shin and Warwick Bray.
Topfer was the brains behind the highly leveraged structure used to finance BCM's purchase of the Irish telecommunications company eircom.
The market is taking the $1.05 a share cash proposal from Topfer seriously. BCM shares jumped about 18 per cent to 99 cents today after the proposal was released. The cash offer involves 75 cents paid on settlement and 25 cents paid quarterly over a 12 month period.
What Topfer is proposing is to effectively fund a takeover of BCM by using the $175 million in cash that is already sitting inside the group. His bid would attribute no value to BCM's 57 per cent stake in eircom or the 100 per cent ownership of Israeli directories business Golden Pages.
BCM's assets were written down by $1.4 billion in 2008 to a value in the balance sheet of nil. Topfer's scheme of arrangement would require board approval.
BCM said it was evaluating the proposal along with a number of others. In the meantime it has recommended shareholders support a plan to internalise the BCM management rights with the payment of $5 million to Babcock's bankers.
Another Babcock satellite that hit turbulence during the period leading up to the demise of Babcock & Brown is suddenly on a smoother flight path.
Babcock & Brown Air (BBA), the world's fourth largest aviation leasing business, overnight declared a quarterly cash distribution of US20 cents a share. BBA has distributed $US73 million in cash and share repurchases over the past year.
The management rights to BBA are up for sale along with everything else in the Babcock group and it is highly likely that the existing Babcock & Brown staff managing the company will put in a bid.
Shares in BBA have risen about 50 per cent in the past month to $US4.50. But the stock is down 80 per cent on the 2007 IPO price of $US23 a share.
One possible explanation for the recent surge in the value of BBA is that the sale of the management rights and the right to service and maintain the companies might unlock some value by ridding the business of onerous management agreements.
Another green shoot popped up in Singapore the other day when Babcock & Brown Global Investments (BBGI) sold its music assets for $US48 million to Pegasus Capital Advisors. The portfolio of music assets includes rights to the song "I'm too sexy" by Right Said Fred.
The funds from this deal were used to extinguish all BBGI's debt. BBGI said it expected to pay a dividend for the half year to June 30. That news helped share price of the stock on the Singapore stock exchange spike up about 50 per cent to S15 cents a share.
Meanwhile, other Babcock & Brown satellites are distancing themselves from the Babcock name as fast as they can.
Babcock & Brown Wind, which terminated its management agreement with Babcock & Brown in December, plans to change its name to Infigen Energy.
Babcock & Brown Japan Property Trust today finalised its severing of links with Babcock & Brown through the sale of the responsible entity to former Babcock staff and the internalisation of the management of the fund.
Eight more Babcock management agreements remain to be sold including BBA and BBGI. The other listed funds are Babcock and Brown Power, Babcock & Brown Infrastructure and Babcock & Brown Residential Land Partners. There are also three wholesale infrastructure funds in Europe, North America and Asia.
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