You won’t many more comprehensive board restructures than the one Babcock & Brown unveiled this morning, but which suits play where doesn’t really matter too much when you’re dealing with $50 billion in debt and a crisis of investor confidence.

That’s certainly what the market thought as Babcock shares plunged another 91c to a record low of $2.54 after a very disappointing half year result was released.

The board and auditor Mark O’Sullivan somehow came up with a profit of $175 million. The non-cash impairment charge was only $386 million and trading losses of $55 million just added to the smell.

The write-downs should have been much greater, given that Babcock is now claiming it has real estate assets of $4.63 billion and infrastructure assets of $4.9 billion on its books, giving it net assets of $2.5 billion.

With the shares at $2.54, the market values Babcock at less than $800 million, so a mark to market accounting approach would have delivered write-downs of more than $2 billion, not less than $400 million.

CEO Phil Green has agreed to step down from the gig which has paid him almost $50 million over the past four years. Given that Ray Williams extracted a $5 million severance package from HIH Insurance on his way out the door, it will be interesting to see what Phil’s payout will be as Babcock goes into workout mode.

The banks will no doubt be happy that well-known fix-it merchant Pat Handley, the former Westpac finance director, has stepped up to join the board as head of the audit and risk committee. He should be made chairman forthwith.

Founder Jim Babcock has stood down as executive chairman but, incredibly, the Babcock boys have installed Elizabeth Nosworthy as acting chair, when she’s already up to her eye-balls in disasters after the Commander Communications collapse.

The worst feature of the board restructure is that both Jim Babcock and Phil Green are proposing to hang around like bad smells as non-executive directors. They should resign to give new CEO Mike Larkin, the former Lend Lease executive who is currently Babcock finance director, a blank canvas to work with.

After all, if fellow executive directors Jim Fantaci and Martin Rey have quit the board, shouldn’t the two key architects of Babcock’s problems leave the board as well?

Michael Sharpe, chairman of the audit committee, has also resigned due to ill-health, although there’s no sign that these same health issues have yet forced him to retire from the ASX board.

All up, this is a belated attempt to improve governance at Babcock when the key issue right now is the financial implosion from having too much debt in the middle of a global credit crisis.

The house of Babcock has been fatally wounded, but exactly what happens to the $72 billion in assets that it manages, much of which is sensitive community infrastructure such as roads, schools, ports and hospitals.

*Check out this account of yesterday’s James Hardie AGM where Jack Tilburn almost came to blows with another 80-something shareholder.

Peter Fray

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