Redbank power play revives Babcock memories

It’s the corporate version of the Neverending Story except that this is no fairytale.

The ghost of Babcock & Brown, thought to have been banished four years ago, continues to haunt the dark recesses of the stock market, these days in the guise of Redbank Energy.

Once known as Babcock & Brown Power before morphing into Alinta Energy, the bulk of the company’s assets were snaffled by private equity group Texas Pacific Group two years ago after it launched a raid on the company’s debt.

On the verge of tipping over, Alinta shareholders were thrown a few cents for a company once valued at billions of dollars. They were also left a single power station;  a coal fired base load facility called Redbank near Singleton in the NSW Hunter Valley now controlled by a few small hedge funds.

True to form, the company’s financial woes have continued.  Earlier this year a Singaporean group called Nexif – which owns hydro and coal fired stations throughout Asia – snapped up 10% of Redbank and offered a financial restructure.

When that was rebuffed, Nexif requested board representation. But at an extraordinary general meeting this morning, Redbank directors marshalled enough votes to defeat the motion.

A month ago, Redbank hotly denied internet reports it was on the verge of administration, reassuring investors that it was capable of meeting its debt commitments.

But in the past fortnight, BankWest and Bank of Scotland International have sold their loans to Bank of America Merrill Lynch. Between them, they accounted for 25% of the debt.

It was BankWest that forced the hand of then Alinta in 2010 when it cancelled a liquidity facility. That resulted in the banking syndicate agreeing to hold off for three years on exercising any rights over the company. That agreement expired on May 31 this year.

Its shares have gyrated over a 30% range since then as small investors, many of them victims of the Babcock years, once again have become pawns in game in which they find themselves powerless.