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Tuesday, September 18, 2007

babcock and Brown Reorganisation

Australian investment bank Babcock & Brown (B&B) has announced a reorganisation of its assets. Babcock & Brown Wind Partners (ASX:BBW) will acquire control of more than 750 turbines in the US and Portugal from B&B for around $600 million. CEO, Miles George, said the transaction will reduce the impact of regional wind variability on its performance. The deal resulted in BBW upgrading forecast payouts to security holders by 16% to $0.145 per security in 2008 and $0.155 per security in 2009.

Anything that can stabilise the returns from a company has to commended. but was it worth 600 Million. In my opinion I can't justify the cost. But investors appear to have taken to it.

This company is heavy in debt and would be much better using the money to get the Debt to Equity ratio down to a managable level.

The only good thing I can see about this company is the dividend yeild is at 7.9% but this won't hold if they keep spending money.

Good luck.

2 comments:

Kurt & Allyson said...

reasons i see babcock & brown making money are:
* ppl are betting on some form of carbon trading coming in, meaning b&b will have plenty of credits to sell, boosting profits with no additional spend.
* investors like the idea of buying green (it's viewed highly ethical)

Kurt & Allyson said...

reasons babcock & brown share price is going up:
* ppl are betting on some form of carbon trading coming in, meaning b&b will have plenty of credits to sell for no extra outlay.
* investors like the idea of buying green (it's viewed highly ethical)