Babcock & Brown CEO, chairman resign

SYDNEY (Reuters) - Australian investment firm Babcock & Brown Ltd BNB.AX (BNB) announced on Thursday that its chief executive and chairman will step down as the company battles a collapse in its share price amid investor concerns over its future.

Babcock's shares have lost nearly 90 percent in value this year as worries about the viability of its debt-funded investment model intensified amid the global credit crunch.

The shares fell almost 30 percent on Thursday after the announcement of the management changes and other restructuring measures, such as the winding down of its corporate and structured finance division.

ABN AMRO analyst John Heagerty said the market had not taken much comfort in the revamp because it did not go as far as some had hoped.

"Perhaps the moves weren't as significant as people might have expected," he said.

By 0228 GMT, shares in BNB, which manages about A$72 billion in global infrastructure assets, were down 26 percent at A$2.55. The shares had stood at A$31.08 in November 2008.

Babcock & Brown, like bigger rival Macquarie Group Ltd (MQG.AX), buys assets such as ports and utilities and bundles them into listed and unlisted funds from which it earns management fees.

On Monday, BNB took a fresh blow when one of its managed funds, Babcock & Brown Power Ltd (BBP.AX), in which it holds about 10 percent, said it would take a A$452 million writedown ID:nSYD145282.

The writedown fed analyst speculation that the group had little choice but to look at a management buyout given market conditions would make it hard for Babcock to package its funds and find buyers at a decent price.

BNB said on Thursday that CEO Phil Green would be replaced by Chief Financial Officer Michael Larkin, while Chairman and founder Jim Babcock would be replaced by Elizabeth Nosworthy.

"There's a credibility issue that needs to be re-established, and that happens over time," said an analyst with a major broker who declined to be identified.

"They're definitely making the right steps in terms of sweeping board changes, recasting down return on equity and target gearing levels. But now comes the execution phase, and 2008 and 2009 is when that'll occur," he said.

BNB net profit after tax for the first half of the year fell 24 percent to A$150.9 million ($131 million). The group said it was not under financial pressure and was within its banking covenants.

It had warned earlier this month that first-half net profit would be 25-40 percent below a year earlier, and its full-year earnings would not beat last year's due to difficult market conditions.

On Wednesday, Macquarie Airports (MAP.AX), a fund managed by Macquarie, said it planned to reduce its stakes in two airports to cut debt and help finance a share buyback program of up to A$1 billion, in an attempt to restore investor confidence and boost its share price, which has fallen by almost one-third so far this year.

On Thursday, another fund under Macquarie management, Macquarie Infrastructure Group (MIG.AX), unveiled plans to buy back up to 10 percent of its securities on issue, and said it would sell its 50 percent stake in an Australian tollroad.

(Additional reporting by Sonali Paul; editing by James Thornhill and Jonathan Standing)