Push to take the wind out of B&B

Sydney Morning Herald
Monday 24/11/2008 Page: 21

A MAJOR shareholder of the debt-distressed wind energy offshoot of Babcock and Brown is pushing for a complete separation of the fund from its onetime mothership because of the "contagion effect" caused by the group's dire financial troubles. The Kairos Fund, which owns more than 10 per cent of the alternative energy provider and developer, is pushing for B&B Wind to change its name and divorce itself totally from B&B. With B&B facing severe financial difficulties that could lead to its collapse, Kairos said the group's troubles and those of its other listed power and infrastructure funds required "urgent action" to try to ring-fence BBW from any further fallout.

Kairos, which first bought into BBW in May 2006 and is a Cayman Islands-based vehicle of a British investment company, is pushing the wind company's shareholders to consider three major measures to cut its remaining ties with B&B: buying out the management contract by which B&B runs the wind fund - Kairos claims a precedent has been set by a recently orchestrated deal between Babcock and Brown Capital and B&B; a new name with no mention of B&B in the title; and taking on the existing B&B managers, including the chief executive and finance director, as direct employees reporting to an independent BBW board.

The proposals were contained in a letter sent to BBW's security holders late on Friday and were attached to a forthcoming vote by investors on the appointment of Graham Kelly as the fund's new independent chairman. They represent a significant step further than a new management agreement outlined between BBW and B&B on Friday giving the fund more say in its own operations but with its mothership retaining a major role in the wind business.