- The Washington Times - Friday, March 13, 2009

SYDNEY, AUSTRALIA (AP) - Debt-laden Australian investment firm Babcock & Brown Ltd. was placed into voluntary administration on Friday after shareholders rejected a proposed debt restructure.

Babcock, Australia’s second-largest investment bank, said in a statement that it had appointed David Lombe and Simon Cathro of Deloitte Touche Tohmatsu as voluntary administrators. Like bankruptcy protection in the U.S., voluntary administration in Australia can buy a company time to trade out of its financial difficulties.

The Babcock board decided to appoint administrators after investors in New Zealand rejected a proposed debt restructure on the basis that it favored banks over ordinary shareholders.

Babcock had agreed with its bankers on a restructure of its corporate debt and a revised business plan that would help reduce its debt burden.

The agreement provided for a 150 million Australian dollar ($98 million) short-term loan facility entered into in December 2008 and two other existing AU$2.8 billion ($1.8 billion) and $200 million debt facilities to continue. Repayment dates were to be changed.

Under the business plan, Babcock Chief Executive Michael Larkin and senior management were to sell company assets over two to three years to reduce debt.

Babcock shares in Australia have been in a trading halt since January.

Lombe told Australian Broadcasting Corp. radio on Friday that it was too early to say whether the company could avoid collapse.

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