Babcock Infrastructure Halts Shares on Powerco Doubts

By Angela Macdonald-Smith

Feb. 24 (Bloomberg) -- Babcock & Brown Infrastructure Group, which in November agreed to sell 50 percent of Powerco Ltd.’s New Zealand operations to cut debt, halted its shares from trading, citing uncertainty over completion of the sale.

The company is “working to resolve the issues but is not yet in a position to provide details of any outcomes,” Sydney- based Babcock Infrastructure, known as BBI, said today in a statement to the Australian stock exchange. A conclusion is expected by 10 a.m. Sydney time on Feb. 26, it said.

BBI, whose shares have slumped 89 percent in the past six months, agreed to sell half of Powerco’s New Zealand operations to funds held by investment manager QIC in a transaction that valued the business at NZ$2.05 billion ($1 billion), including debt. The company said in August it may sell as much as half of three of its main businesses, Powerco, WestNet Rail and BBI Euroports to cut borrowing and provide funds for investment.

Babcock Infrastructure closed yesterday at 6.8 Australian cents, down 0.2 percent.

QIC is “actively working with BBI to reach an agreement to complete the transaction as soon as possible,” the Brisbane, Queensland-based investment company said in an e-mail.

Ross Israel, head of global infrastructure at QIC, which has A$70 billion ($45 billion) under management, wasn’t available for further comment. Helen Liossis, a spokeswoman at BBI, couldn’t be reached for comment.

The sale is due to be completed this quarter, subject to regulatory approvals, BBI said in November. It forecast net proceeds from the divestment of about NZ$400 million.

Funding Needs

The proceeds would cover BBI’s immediate funding requirements, including a A$100 million bridging loan maturing in March and about A$150 million due on the purchase of an additional stake in WestNet Rail Group, Credit Suisse Group said in a Nov. 5 report.

Powerco is New Zealand’s second-biggest electricity and gas distributor, with more than 400,000 customers across more than 39,000 square kilometers of New Zealand’s North Island.

BBI will defer the release of first-half results, due tomorrow, until after the trading halt is lifted, it said in a separate statement to the Australian stock exchange today.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net