BABCOCK BROWN, the Australian investment group that ultimately controls Eircom, has warned that first-half profits could drop by as much as 40 per cent.
The full year is also likely to be weaker due to large provisions on the value of its real estate and structured finance assets,it says.
The size of the forecast profits fall, which comes just over a week before publication of BB's interim figures, pushed BB's shares down 11.8 per cent to A$6 yesterday.
BB has been one of the Australian stock market's worst performers over the past year. The shares, which traded as high as A$32.45 in the second half of last year, have been punished on concerns about the group's business model and use of debt.
It has also been the subject of repeated bouts of short selling. In June, it renegotiated its banking facilities, agreeing to reduce its debt and pay a higher interest rate on borrowings.
It also managed to remove a clause in its banking agreements that triggered automatic discussions with its bankers when its market capitalisation fell below A$2.5 billion. The group is also conducting a review of its underperforming specialist funds.
- (Financial Times service)
