Subordinated debt default proposed by bankers to B&B

Lenders to Babcock & Brown are demanding the company suspend interest payments on around $600 million of subordinated debt, as well as ditch dividend payments, the Financial Review reported.

The newspaper reported the four major Australian banks and a small number of foreign banks were willing to tip in $200 million in extra funds as part of the refinancing.

It's not clear if any of this would repay part or all of the loan to B&B by one or two very reluctant foreign bank lenders, reported yesterday to be BOS and Société Générale; nor whether this would clear up the deposit of around €80 million frozen by another B&B lender, HvB.