Prime ponders reorganisation

SYDNEY - Prime Infrastructure Group's independent directors say they are considering reorganising the company as Babcock & Brown Infrastructure to benefit from the financial strength of Australia's second-biggest investment bank.

Brisbane-based Prime, operator of Australia's second-largest coal-export terminal, is also considering raising as much as A$100 million ($108 million) through a share sale and share purchase plan, the company said. It halted its stock pending the share sale.

Prime, which is about 8.5 per cent-owned by Sydney-based Babcock & Brown, last year bought New Zealand electricity distributor Powerco in a controversial takeover.

Prime is proposing a A$600 million expansion of its Dalrymple Bay coal terminal in Queensland. Proceeds from the equity raising will be invested in the coal terminal and wind energy.

The proposed restructure "should enhance the fund's ability to source and secure new investment opportunities," Prime chairman David Hamill said. "The closer alignment provided by the proposed restructure should encourage Babcock & Brown, if necessary, to undertake greater balance sheet exposure to assist in the growth of the fund."

Prime shares, which trade on the exchange as so-called stapled securities, yesterday closed unchanged at A$1.49. Shares in Babcock & Brown rose 3c, or 0.3 per cent, to A$10.78 at 10:17 am (Sydney time).

The share sale involves a placement of securities at no less than A$1.38 apiece to raise between A$50 million and A$90 million, Prime said. Investors will bid for the stock today, it said. The share purchase plan will have the potential to raise as much as A$55 million and can be limited to A$10 million.

The reorganisation involves the conversion of Prime into a Babcock & Brown-managed and branded fund and changes to management and corporate governance, Prime said.

The independent directors plan to seek approval for the restructuring at a shareholder meeting within six to eight weeks.

- BLOOMBERG