BASIS POINT-BBP, lenders in talks to amend A$2.6 bln loan terms

MELBOURNE, May 13 (Reuters Basis Point) - Babcock & Brown
Power Ltd (BBP.AX) (BBP) is in talks with its lenders to amend
the terms on a A$2.6 billion ($2 billion) project finance loan
to give it breathing space to sell assets, banking sources
said.

The terms of the loan mean BBP needs to obtain a second
credit rating, from an agency such as Moody's or Standard &
Poor's, by June 3 or face a review event by its lenders, the
sources said. The loan is already rated BBB- by Fitch.

The power investment company, whose shares are currently on
a trading halt, had no comment when contacted by Reuters Basis
Point. UBS, which is BBP's financial adviser on potential asset
sales, was not available to comment.

"Under its current structure, and barring further asset
sales, BBP looks unlikely to get a second investment grade
rating by June," said Matthew Spence, infrastructure and
utilities analyst at Bank of America Merrill Lynch.

One possible resolution being discussed is to include
mechanisms in the loan structure which would allow any free
cash generated from BBP's assets to be used to pay down the
principal loan, banking sources said.

The sources cannot be identified due to the confidential
nature of the negotiations.

Holders of the loan include ANZ, BNP Paribas, Commonwealth
Bank, Dexia Bank, National Australia Bank, Natixis, Societe
Generale, UniCredit and WestLB.

BBP, which has seen its market value dive about 95 percent
in the past 12 months, has been looking to sell assets, or the
whole company, since October after receiving approaches.

It said on April 28 that the sale process is continuing.

Like its parent company Babcock & Brown (BNB.AX), BBP has
been punished by investors after the financial crisis saw
confidence its debt-funded investment model collapse .
($1=1.309 Australian Dollar)
(Reporting by Sharon Klyne; Editing by James Thornhill)