Babcock to Receive Offers for European Wind Assets

June 16 (Bloomberg) -- Babcock & Brown Ltd. 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 percent stock slump last week.
Babcock, Australia's second-biggest securities firm, 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 five, gaining 1.9 percent to A$5.35 at 12:56 p.m. in Sydney, giving the company a market value of A$1.78 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.
`All About Confidence'
``Banking is all about confidence and they need to demonstrate to the market that they are on top of the situation,'' said Canavan. ``The banks won't be panicking too much as yet and will be happy to see Babcock conduct a number of asset sales.''
A successful sale could trigger a rebound in the shares, which trade at less than three times earnings after falling 80 percent this year, said ABN Amro Holdings NV analyst John Heagerty in a June 12 note. Failure may increase the risk of banks demanding early repayment of the debt.
Babcock & Brown Wind Partners, which owns wind farms in Asia, the U.S. and Europe, slipped 2.6 percent to A$1.50.
Babcock Wind, one of 13 listed Babcock funds, spent A$1.78 billion on acquisitions and new projects in last year's second half, boosting generation capacity about 67 percent.
Babcock Wind said in February it's the world's fifth- biggest wind energy company in terms of installed capacity. Its parent Babcock in December 2005 bought Enersis in Portugal for 490 million euros ($754 million) before selling half of it to the wind fund.

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