TROUBLED AUSTRALIAN investment firm Babcock Brown (BB), which controls Eircom through a listed satellite fund, has requested that its shares remain suspended from trading as talks continue with its lenders in a last- ditch attempt to avoid bankruptcy.

The firm is still waiting for a “final response” from its lenders on a rescue deal, BB said in a statement issued on Monday. The firm is discussing intricate debt- for-equity swaps with a syndicate of 25 banks in what is believed to be a final attempt to stave off collapse. Its shares have been suspended since January 7th and will not resume trading until lenders respond to its proposed survival plan. This is expected to occur during the week of January 26th.

BB, which used cheap debt to buy properties, ports and power stations, is battling to avoid collapse as the global credit crisis raises borrowing costs and erodes asset values. It said last week that impairment charges mean the company’s liabilities substantially outweigh assets due to the reclassification of non-core assets on the balance sheet as available for sale.

BB owns about 8 per cent of Babcock Brown Capital Management (BCM), a satellite fund that is the majority shareholder in Eircom.

An Eircom spokesman declined to comment on the possible implications of the collapse of BB.

In November 2008, BCM announced that it had entered into an agreement with BB to terminate an existing management agreement relating to Eircom. This involves payment of A$32.5 million (€16.3 million) up front and a possible A$17.5 million if Eircom changes ownership by April 30th, 2010.

These terms are subject to the approval of BCM shareholders at a general meeting to be held next month. – (Additional reporting: Bloomberg)