Phil Green, the architect behind Babcock & Brown's rapid growth, has formally severed ties with the embattled infrastructure funds house, triggering a renewed share sell-off and raising concerns that fresh tensions are re-emerging among some of its bankers.
Mr Green, who just over three weeks ago succumbed to pressure to
quit as chief executive following a collapse in Babcock's shares
and poor performance among its satellite funds, yesterday quit the
board.
Babcock chairman Elizabeth Nosworthy said the decision to quit had
been Mr Green's after he had found the transition to a
non-executive role difficult.
"As the last month went on and he confronted the reality of having to sit at the board table with a new management team serving up strategy and not being part of that, he's really come to the view that's not the right role for him," Ms Nosworthy told BusinessDay.
The decision marks the latest blow for Babcock, which last month detailed a dramatic restructure including selling off assets, slashing a quarter of its staff and stopping dividends to pay down debt.
New chief executive Michael Larkin, who was Babcock's chief financial officer, will oversee a cultural shake-up including transforming Babcock into a low-growth manager of infrastructure assets rather than a deal maker.
Investors yesterday knocked down Babcock 16.8% to a new low of $1.58, a fraction of their June 2007 peak of $34.63.
A banker to Babcock said the loss of confidence among investors in the company had raised some concerns and was being "closely monitored".
But Ms Nosworthy said relations with its 25-member bank consortium remain strong, with the company well supported.
"Nothing has changed," she said. "We are in complete compliance with all our banking covenants. All our relationships with banks are good."
Mr Green was not available to comment yesterday but those close to the former chief executive said the former tax accountant had been devastated by the unravelling of the company and the loss of shareholder support.
"He's built that business from nothing and he's very upset at
what's happened," said a person close to Mr Green. "He's taking it
personally."
Mr Green, a 24-year veteran of Babcock, spearheaded its growth
before and after it listed on the sharemarket in 2004.
Mr Green ranks as one of Babcock's single largest
shareholders.
His more than 4% stake in Babcock, at one stage worth more than
$500 million, was yesterday worth a little over $24 million.
In June, Babcock headed off a formal review of its $2.8 billion debt facility in exchange for accepting a higher interest bill.
Focus has now switched to Babcock founder and former chairman James Babcock retaining tenure as a non-executive director although Ms Nosworthy said he was adjusting to the new role.
Ms Nosworthy said Mr Green would continue to have a consultancy relationship with the company given his deep business contacts.
"I wouldn't like to see him outside the tent," she said. "It's important for us that he stays." An executive search company has been engaged to nominate a new independent director to replace Mr Green.
