Greed and hubris bring down Babcock & Brown

[depakid]

Source: The Australian

FRIDAY the 13th will be marked in the corporate history books as the day the house of Babcock & Brown finally imploded.

After years of "smart" deals aimed at generating billions of dollars to bankroll the massive salaries of the high-flying executives that ran the company, the demise was sudden and sharp. It took a decision by a group of subordinated noteholders in New Zealand to vote against a special resolution that finally triggered the appointment of voluntary administrators to the group.

But unlike most voluntary administrations, which generally result in the banks putting the company into receivership, it will be business as usual at B&B for its senior management team who have been given a mandate by its banks to sell the assets of the group over three years and repay its debts.

Nevertheless, the administrators now have the power to explore various options, such as requisitioning a meeting to sack the directors. The administrators also have the power to investigate B&B and its operational business, Babcock & Brown International (BBIPL), which houses all the assets. The collapse of Babcock has been nothing short of gobsmacking. After listing in 2004 at $5 a share, with virtually no assets, it took less than three years to soar to $34.78 a share, putting it on a market cap of $10 billion, with assets under management reaching $70 billion globally, and debt across the empire totalling more than $40billion.

From the outset, B&B was dubbed "mini-me", a Macquarie Bank impersonator, and Phil Green and Jim Babcock, the co-founders and ever the opportunists, milked the comparison for all it was worth. The tale of this rags to riches, back to not quite rags for the founders, has been well documented....



Read more: http://www.theaustralian.news.com.au/business/story/0,28124,25183582-643,00.html

[Tab]

1. At this point, I'm just waiting for McDonald's to go under

Them, or Disney.

It seems like every major firm - certainly every major FINANCIAL firm - that I've ever heard of is biting the dust.

[truthisfreedom]

2. Disney, maybe. McDonalds, never. They're fast food.

It's considered "cheap" by the masses, and the masses love cheap when they're on a budget.

Nobody has time to cook anymore.