While Babcock has said that reaching the review limit does not mean it would have to repay or speed up repayment of its around A$2.8 billion (US$2.6 billion) in debt, analysts said investors will be concerned about the future of the company.
"Babcock's business model depends on ready access to finance and if you are one of their banking syndicates now you certainly are not going to be thinking of advancing of any more money," said Tom Elliott, a fund manager with MM&E Capital. "For a finance house, suddenly all avenues of funding have largely been chopped off, which is bad for their business," he added.
Under its business model, Babcock buys infrastructure assets, such as ports and power plants, and bundles them into listed and unlisted funds to earn management fees. The model, also used by Macquarie Group, is heavily dependent on debt financing.
Babcock, whose initial public offer was sold at A$5.00 per share in October 2004, manages about A$72 billion in infrastructure and real estate assets across the world. In June 2007, Babcock was valued at A$11.6 billion, when the stock hit a life-high of A$34.78.
Its lenders had recently extended a A$2.8 billion facility in March to April 2011, but reserved a right to review the facility if the company's market capitalization fell below A$2.5 billion, or A$7.50 per share.