Babcock & Brown sells wind energy assets in Enersis to repay debt

17 November 2008

Australian alternative asset manager Babcock & Brown Ltd is reported to be selling assets in its Enersis wind energy business in Portugal to repay debt. Reports suggested that the value is estimated at around €1.15 billion ($1.4 billion), and that the sale is to a group of investors led by Magnum Capital.

In a statement to the Australian Stock Exchange, Babcock & Brown said it sold its 50 per cent stake in Enersis, which it co-owns with its wind energy fund, for net proceeds of A$285.8 million ($182 million).

Babcock has lost more than half its value since 6 November, when an analyst from ABN Amro predicted that the company might breach loan agreement on account of the global credit crisis, which has in turn made selling assets more difficult. The amount it has received from the sale would be utilised to pay A$9.6 billion of debt, and does not include the A$400 million Babcock & Brown committed to paying its bankers in June.

Earlier this month, two Australian companies – Allco Finance Group Ltd and ABC Learning Centres Ltd – were placed under the control of outside managers. Babcock is now running against other global sellers of distressed assets to avoid a similar fate.

In December 2005, Babcock had bought the Enersis project for €490 million, after which it sold half to its affiliate Babcock & Brown Wind Partners. The company has announced plans to exit its remaining stake in wind assets in Portugal, France, Greece and Germany.

In a separate statement, Babcock & Brown Wind Partners said that it would receive net cash proceeds of around A$274 million from the sale of its 50 per cent stake, where it has made a loss of A$11.7 million.