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Babcock & Brown Infrastructure Group plans to raise $1.5 billion by recapitalization plan

By Amarendra Bhushan for CEOWORLD Magazine Updated:October 6, 2009

Struggling port, rail and pipeline investor Babcock & Brown Infrastructure (BBI) ( ASX:BBI) plans to raise A$1.75 billion ($1.5 billion) selling stock and some assets to repay debt.

BBI is expected to launch its equity raising on Wednesday, tapping the institutional market for $600 million and putting forward a $250 million share purchase plan (SPP) to its existing shareholders.

The company in August agreed to sever its relationship with its manager, failed investment firm Babcock & Brown Ltd., which is subject to approval by the group’s lenders.

Under the recapitalization plan, Brookfield will take a A$600 million stake in Babcock & Brown Infrastructure and buy some of the group’s key assets for a further A$300 million, the person said. The size of Brookfield’s equity stake in Babcock & Brown Infrastructure wasn’t known.

Babcock Infrastructure, which cut ties with asset manager Babcock & Brown Ltd. in August, said last month it probably won’t be able to repay some of its A$9.1 billion of debt through asset sales alone. The company halted its shares from trading Sept. 30 after a 52 percent slump this year, and said two days later it was in talks about a recapitalization.

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