Babcock & Brown, the third-worst performer in the global benchmark index, lost a third of its value in Sydney trading as investors bet the fund manager won't be able to repay A$9.6 billion ($7.6 billion) of debt.
Babcock, which owns Eircom though its subsidiary Babcock & Brown Capital, plunged 34 per cent at the close of trade, cutting the firm's market value to A$364 million from A$8.9 billion at the start of the year.
The stock has tumbled 96 per cent in 2008, trailing only Fannie Mae and Freddie Mac among the MSCI World Index's biggest losers.
The seizure of global credit markets has cut Babcock's access to cheap loans as it seeks to pay back debts built up acquiring ports, power stations and airports.
The company last month fired Chief Executive Officer Phil Green and was forced by lenders to sell assets at a loss to reduce borrowings.
"The market's saying the equity value is virtually nil," said Matthew Kidman, who helps manage the equivalent of $350 million at Wilson Asset Management in Sydney. "Babcock has effectively collapsed already. The lenders are controlling the asset-sale process."
Sydney-based Babcock & Brown had A$9.6 billion of interest bearing debt at June 30th, according to an August 21st filing to the Australian stock exchange. The borrowings have an average maturity of 4.3 years, the company said.
Babcock & Brown stock fell 53 cents to A$1.05 at the close. Babcock & Brown Infrastructure Group, owner of the Australia's second-largest coal export harbour at Dalrymple Bay, slumped 14 per cent to 27.5 cents.
Bloomberg