Global asset manager Brookfield has, for the second time, swooped on a distressed Australian asset with Babcock and Brown Infrastructure today revealing details of a $1.8 billion recapitalisation.
Global asset manager Brookfield has, for the second time, swooped on a distressed Australian asset with Babcock and Brown Infrastructure today revealing details of a $1.8 billion recapitalisation.
BBI, which owns various assets of the old Alinta gas business, among other assets, today said it will raise $1.5 billion through the issue of new equity and a further $295 million from the sale of assets to Canada's Brookfield Asset Management Inc.
It is the second time in as many years Brookfield has come to the rescue of an Australian company, with the asset manager acquiring Perth's Multiplex Group in 2007 in a $4.2 billion takeover, one of the largest acquisitions that year.
The BBI equity raising will comprise a $625 million placement to Brookfield, increasing its stake in BBI to between 35 per cent and 39.9 per cent, depending on the take-up of a security purchase plan.
It is expected that Brookfield representatives will be appointed to the BBI board.
There will also be a $625 million fully underwritten institutional placement and a $250 million fully underwritten security purchase plan.
Brookfield is then expected to subscribe for $295 million in convertible notes and enter into other agreements with BBI leading to Brookfield holding a 49.9 per cent economic interest in the Dalrymple Bay coal terminal in Queensland.
Brookfield will also acquire 100 per cent of BBI's interests in the UK PD Ports business and provide management services to BBI's Australian Energy Transmission and Distribution and Cross Sound Cable assets.
The proceeds from the recapitalisation will be used to repay all BBI debt and simplify its capital structure.
The group will internalise its management and has proposed a new name of Prime Infrastructure.
At June 30, BBI had $8.86 billion in debt, including $1.2 billion in corporate debt facilities.
Of that, about $3 billion is due to mature in financial years 2010 and 2011, including $300 million due in February 2010.
"On completion of the recapitalisation, Prime Infrastructure will have the resources, capability and independence to fully realise its potential," BBI chief executive Jeff Kendrew said.
"It will be well-positioned, with a very high-quality asset portfolio comprising essential transportation and energy transmission and distribution businesses, and will offer strong and predictable cash flows together with opportunities for organic growth."
