Thursday, 8 October 2009

UK port operator to be sold for "nominal proceeds"

PD Ports-owner Babcock & Brown Infrastructure (BBI) has revealed plans to sell the UK ports group for as little as A$1 (US$0.90) to Canadian institutional investor Brookfield Asset Management.
Australia-based BBI, which over the past few years rapidly built up a port portfolio in the UK, Australia and Europe, earlier this month rejected a refinancing proposal from the Royal Bank of Scotland.
Under the terms of the proposed Brookfield deal, the Canadian company will become a “cornerstone investor” in BBI, pumping US$1.1bn into the firm, and owning 35-40% of its stock, whilst also gaining a 49.9% stake in Darymple Bay Coal Terminal and 100% of PD Ports.
BBI has debts totalling nearly A$8.9bn, with an A$300m payment due in February, which it previously thought it might be able to meet through the sale of assets, including PD Ports.
However, in announcing the Brookfield deal, BBI said: “As the asset sale processes progressed, it became apparent that while it is possible that asset sales could deliver the cash proceeds required to meet the February 2010 debt maturity, they would also likely result in BBI breaching its forward-looking interest cover ratios.
“In these circumstances, all of BBI’s remaining corporate debt facilities would become immediately due and payable, unless renegotiated.”
If the deal is voted in by BBI shareholders, the new PD Ports owner will immediately repay £100m of its £300m debt.

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