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Babcock’s ties to the teetering trio

The stockmarket is continuing its recovery but there’s still plenty of action amongst the teetering trio of MFS, Centro and Allco with Babcock & Brown now getting dragged into some of the action.

Babcock & Brown Communities, the old Primelife which is our biggest listed retirement village company, today announced that two MFS associates had yesterday dumped 23 million shares yesterday at what looked like a fire sale price of 58c.

The overhang removed, BBC shares have today recovered 5c to 63.5c, but they remain well below the $1.15 price at which a whopping $475 million was raised last July.

BBC is a good example of the cascading nature of this crisis. Macquarie Bank must be relieved they ceased being a BBC substantial shareholder at prices north of $1 last November whilst Babcock & Brown itself is feeling the pain on its 85.7 million shares or 13.23%.

Interestingly, BBC secured a new $600 million debt facility from ANZ, CBA and NAB on December 19 – the same week that ABC Learning got the green light for a $1.4 billion package but Centro was denied a rollover.

The other Babcock vehicle which reportedly came under attack from short-selling hedge funds was the nation’s biggest listed energy generator – Babcock & Brown Power.

BBP released this reassuring statement yesterday and its shares today recovered 21c to $2.21. However, no one likes to see a stock halve in six months and that’s what BBP did when tumbling from its peaks of $3.70 last June to Wednesday’s close of $1.88 as the market fretted about its huge $3 billion-plus debt.

Then you’ve got Babcock’s house broker Tricom, the big margin lenders who are also said to be feeling some pain.

In other developments amongst the teetering trio, the new American Centro CEO Glenn Rufrano has impressed with yesterday’s calm press conference promoting the orderly sale of two wholesale property funds. Centro Properties is up 14c to 62c and Centro Retail gained 11.5c to 45.5c.

MFS remains a suspended basket case but MFS Diversified today revealed MFS had dumped 7 million shares at 55c on Tuesday. MFS Diversified shares fell 2c to 57c.

The Allco web has received the most press attention today with The Australian’s Bryan Frith attempting to explain the structure. I own shares in every listed Allco vehicle but still can’t comprehend how it all works.

Shares in Allco Finance Group recovered another 42c to $3.28 today but the hybrid securities trading as AHUGA dived another 4c to $20.

This would suggest the founders are stuffed but the business will soldier on. Maybe it’s time executive chairman David Coe followed the lead of Michael King at MFS and Andrew Scott at Centro and resigned.

If he didn’t have the readies to avert a margin call and his own shareholding isn’t solvent then he shouldn’t remain seated atop the Allco web.

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