Bloomberg reported that Babcock & Brown Limited, the worst performing stock on the MSCI Asia Pacific Index this year, will accelerate job cuts and separate its businesses to avoid defaulting on AUD 3.1 billion of debt.

As per report, Babcock & Brown plans to reduce headcount by almost two thirds to 600 by 2010 while it renegotiates debt agreements with bankers. Babcock has lost 99% of its market value in 2008 as it fights to avoid the fate of Allco Finance Group Limited, a Sydney based manager of infrastructure funds that collapsed this month.

Mr John Heagerty analyst at ABN Amro Holding NV predicts Babcock may breach loan agreements because the credit crisis has made it harder to sell assets. He added that "They are trying to do everything they can to keep the banks on board, because without their acquiescence it's all over. The restructure will come to naught unless they can sell assets, and in this market you won't get anything approaching book value for at least the next 6 months.''

Meanwhile, Babcock & Brown Infrastructure Group, a fund managed by Babcock & Brown, said that it is examining the potential sale of as much as 49% of Australia's second biggest coal export harbor after drawing interest from potential bidders.