B&B Wind wants to sever all family ties

Sydney Morning Herald
Thursday 27/11/2008 Page: 27

COMPLETE independence from Babcock and Brown beckons for its ASX-listed wind energy offshoot, B&B Wind Partners, after a push by investors for the fund to sever the final remaining links between the two companies. Having agreed last week to loosen the ties through which B&B runs B&B Wind and employs the fund's senior executives, the renewable energy company is now seeking complete control over its own management. It is also planning to change its name to put even more distance between it and its debt-stricken mothership, which is facing the prospect of receivership.

The new proposals, presented to B&B on Monday, come less than a week after a joint announcement by the two companies on an initial plan to reduce the bigger group's governance, management and fee-charging hold on B&B Wind. But the changes did not go far enough for many of the fund's investors, including 10 per cent shareholder Kairos which voiced its concerns in a letter on Friday that B&B Wind needed autonomy from its one-time parent as well as a new name. That produced an immediate response from B&B Wind's recently empowered independent directors at yesterday's annual meeting of the fund.

A new plan could see the existing management agreements with B&B terminated and its senior executives taken directly onto its payroll. The fund is also looking to buy more wind assets, thought to be both existing generators and development projects, from B&B which has put several on the market as it desperately seeks to reduce its $3.1 billion of corporate debt. B&B Wind's lead independent director, Tony Battle, said B&B had expressed its willingness to negotiate over the revised plan and that these talks would go on irrespective of what happens to the asset management group.

"The intention would be, under all scenarios, we would assume that negotiations would continue," he said. Mr Battle's comments came as security holders gave overwhelming support to the board's move to raise the current on market buyback of 10 per cent of shares to 30 per cent, in an effort to boost the value of its stock. Yesterday's declarations resulted in B&B Wind's shares rising by nearly 17 per cent - or 10.5c - to 73.5c. However, that is against the backdrop of a fall from $1.60 over the past three months.