B&B Power faces funding shortfall

Reuters Basis Point reported that a syndicate of banks cut the loan sought by energy company Babcock & Brown Power to $2.7 billion from the $3.1 billion earlier flagged, banking sources said on Thursday.

The remaining $400 million will come from its parent Babcock & Brown Ltd's $2.8 billion-equivalent three-year revolving credit facility signed in April, Basis Point reported.

Babcock & Brown Power said in a statement to the ASX that it expected to secure the funding in early June.

Investors may be assuming B&B Power will make up the shortfall through an equity raising, or that Babcock & Brown will have to. Alternatively, B&B Power may have to cut its distributions, a theory fanned by some sell-side analysts and picked up in a report in The Australian. Shares in B&B Power fell 21 per cent to $1.49 yesterday while shares in Babcock & Brown fell seven per cent to $13.28.

Reuters named the 11 lead arrangers of the loan as ANZ, BNP Paribas, BOS International Australia, Commonwealth Bank of Australia, Dexia Bank, nabCapital, Natixis, Societe Generale, Suncorp-Metway, UniCredit Group and WestLB.