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Babcock & Brown Power to Take Charge, Shares Tumble

Australian investment firm Babcock & Brown Power flagged a review of its business on Monday and said it would take a A$452 million ($393 million) writedown, knocking its shares down over 40 percent.

In its latest attempt to deal with investor concerns over its refinancing of A$3.7 billion in debt, it said UBS would review its business. It also sold its Tamar power station project in Australia for A$100 million, adding to two earlier similar sales.

"UBS will consider various expressions of interest that have been received from third parties, as well as other value enhancing structural alternatives," the company said.

Babcock & Brown Power's shares last traded at A$0.29, down 32 percent from Friday's close. Last November the shares stood at A$3.34.

BBP said it would take a writedown in fiscal 2008 mostly tied to its acquisition of the Alinta retail energy business in Australia, due largely to higher debt costs.

It reaffirmed it expected earnings before interest, tax, depreciation and amortization in a range of A$330-A$340 million and said financial covenants under its corporate banking facility remain well covered after it had raised A$770 million from asset sales.

It said it would book a loss of A$42 million on the Tamar power station sale.

BBP has already said it would not pay a distribution in the second half to help conserve cash, and has cut its planned payout for 2009 so it would be fully covered by operating cashflows rather than borrowing.