Babcock & Brown Power (BBP) has tumbled more than 30%, not helped by anticipated production loses at Varanus Island in WA.
The owner of the Alinta retail energy business said it expected a short-term reduction in earnings, but said the losses wouldn’t be material.
The group said in a statement that while there will be some short-term reduction in earnings during the period of the disruption, the impact on either 2008 or 2009 earnings before interest, tax, depreciation and amortization isn't expected to be material.
About 30% of Alinta's portfolio of gas is supplied from Apache's Varanus field, where an explosion last week cut off one-third of the state's domestic gas supply. Last Friday, Apache said that the partial restoration of gas supplies could be many months away.
The Babcock & Brown satellite fund also advised that final settlement on the recently executed $2.7 billion debt refinancing facility is scheduled to be completed early next week.
The closure of the refinancing facility, BBP Finance Australia Propriety Limited, and the issue of draw-down notices earlier today, were the result of the assessment of the impact of the recent West Australian gas supply disruptions on its wholly owned subsidiary, Alinta.
BBP and Alinta have responded quickly to mitigate the impact of the loss of production from Varanus Island on the WA energy market and continue to work with various stakeholders to undertake the necessary steps for mitigation.
"The strategy adopted by BBP and Alinta is designed to ensure that the impact on consumers and the Alinta business is minimised," the company said.
"All stakeholders are working co-operatively in this process and BBP is pleased with the response of all parties and their related efforts to minimise any adverse impact for the industry."
Babcock Power revealed that it may be approximately two months before the supply of gas is restored, which accounts for 30% of Alinta’s gas portfolio.
BBP estimates that whilst there will be some short-term reduction in earnings during the period of the disruption, the impact on either 2008F or 2009F EBITDA is not expected to be material.
International ratings agency Fitch has assigned a ‘BBB-’ credit rating on the refinancing facility, which reflects the strong underlying fundamentals of the assets within the facility, the company said.
At 1135 AEST, shares in Babcock & Brown Power were down 40.5c or more than 30% at 90c.