BABCOCK & BROWN

BABCOCK & BROWN 

Sydney Melbourne Brisbane San Francisco San Diego New York Greenwich Dublin Madrid London Paris Luxembourg Milan Munich Johannesburg Kuala Lumpur Hong Kong Tokyo 

21 November, 2005 

ASX Announcement 

Babcock & Brown Subordinated Notes Margin Determined and Offer Opens 

International investment and advisory firm Babcock & Brown today announced that 

the bookbuild for the offer (Offer) of Babcock & Brown Subordinated Notes (BBSN) 

has been successfully completed. The margin has been set at 2.20% per annum 

until the first reset date, being 15 November 2010 (Margin). The Offer is now open 

to Australian investors. 

Supplementary prospectus lodged 

Further details of the Offer are contained in the prospectus lodged with the 

Australian Securities and Investments Commission (ASIC) on 9 November 2005, 

and the supplementary prospectus lodged with ASIC today (together with the 

Prospectus – see attached). The supplementary prospectus contains further detail 

on the Margin and the successful completion of the bookbuild. 

Interest rate 

As detailed in the Prospectus, BBSN will pay floating rate, semi-annual, 

cumulative interest until the first reset date. The interest rate will be the sum of the 

market rate plus the Margin of 2.20% per annum until the first reset date. The 

interest rate for the first interest period will be at least 7.8583% per annum, 

payable on 15 May 2006. 

Offer now open 

The Offer is now open to Australian investors. 

The general offer is scheduled to close at 5.00pm on 14 December 2005 and the 

broker firm offer is scheduled to close at 10.00am on 19 December 2005 (if the 

Offer does not close earlier). 

The Offer will be made in, or accompanied by, a copy of the Prospectus. Any 

member of the general public or broker firm applicants wishing to acquire BBSN 

will need to complete the application form that will be in or will accompany the 

Prospectus. Interested investors should read the Prospectus in its entirety before 

deciding whether to acquire BBSN. 

Request a Prospectus 

Interested investors and broker firm applicants are encouraged to request a copy 

of the Prospectus by calling the BBSN InfoLine on 1800 818 562 (Monday to 

Friday – 8.30am to 5.30pm) or by visiting www.babcockbrown.com. 

Babcock & Brown Limited A.B.N. 53 108 614 955 

Level 39, The Chifley Tower 2 Chifley Square Sydney NSW 2000 

Telephone 02 9229 1800 Fax 02 9231 5619

2 

B A B C O C K & B R O W N 

For further information please contact: 

Kelly Hibbins 

Babcock & Brown 

+61 2 92291800 

BBSN InfoLine on 1800 818 562 

(Monday to Friday – 8.30am to 5.30pm) 

About Babcock & Brown 

Babcock & Brown is a global investment and advisory firm with longstanding 

capabilities in structured finance and the creation, syndication and management of 

asset and cash flow-based investments. Babcock & Brown was founded in 1977 

and is listed on the Australian Stock Exchange. 

Babcock & Brown operates from 18 offices across Australia, the United States, 

Europe, Asia and Africa and has in excess of 600 employees worldwide. Babcock 

& Brown has five operating divisions including real estate, infrastructure and 

project finance, operating leasing, structured finance and corporate finance. The 

company has established a specialist funds and asset management platform 

across the operating divisions that has resulted in the establishment of a number 

of focused investment vehicles in areas including real estate and infrastructure. 

For further information please see our website: www.babcockbrown.com 

Babcock & Brown Limited A.B.N. 53 108 614 955 

Level 39, The Chifley Tower 2 Chifley Square Sydney NSW 2000 

Telephone 02 9229 1800 Fax 02 9231 5619

Prospectus & supplementary prospectus 

For the issue of Babcock & Brown Subordinated 

Notes (BBSN) at an issue price of $100 each to 

raise up to $250 million with the ability to accept 

oversubscriptions for up to $50 million 

Applications must be for a minimum of 50 BBSN 

($5,000) 

Issuer 

Babcock & Brown Limited (ABN 53 108 614 955) 

Guarantor 

Babcock & Brown International Pty Limited 

(ABN 76 108 617 483) 

Lead Manager & Bookrunner 

Senior Co-Manager 

Grange Securities Limited 

Co-Managers 

Bell Potter Securities Limited 

Commonwealth Securities Limited 

Ord Minnett Limited 

Tricom Equities Limited 

UBS Private Clients Australia 

Limited 

Arranger 

Babcock & Brown Asset Holdings 

Pty Limited (ABN 58 002 332 345, 

AFSL Number 247385)

Important information 

About this Prospectus 

This Prospectus is issued by Babcock & Brown 

Limited (Babcock & Brown) and is an invitation 

to apply for Babcock & Brown Subordinated 

Notes (BBSN), at an issue price of $100 each to 

raise up to $250 million with the ability to accept 

oversubscriptions for up to $50 million (Offer). 

This Prospectus is dated 9 November 2005 and 

was lodged with the Australian Securities and 

Investments Commission (ASIC) on that date. 

ASIC and Australian Stock Exchange Limited 

(ASX) take no responsibility for the content 

of this Prospectus nor for the merits of the 

investment to which this Prospectus relates. 

Babcock & Brown Asset Holdings Pty Limited 

(ABN 58 002 332 345, AFSL Number 247385) 

(Arranger) is offering to arrange for the issue 

of BBSN by Babcock & Brown under this 

Prospectus. The issue of BBSN is made under a 

deed between Babcock & Brown and the Arranger 

that constitutes an ‘intermediary authorisation’ 

for the purposes of section 911A(2)(b) of the 

Corporations Act. As part of the Arranger’s 

obligations under the intermediary authorisation 

and the Corporations Act, it is required to give 

you a financial services guide before you decide 

to apply for BBSN. Appendix C contains a copy 

of the Arranger’s Financial Services Guide. 

BBSN are classified as unsecured notes for the 

purposes of section 283BH of the Corporations Act. 

Exposure Period 

The Corporations Act prohibits the processing of 

Applications during the seven day period after the 

date of lodgement of the Prospectus with ASIC 

(Exposure Period). The Exposure Period may 

be extended by ASIC by up to a further seven 

days. The purpose of the Exposure Period 

is to allow market participants to examine 

the Prospectus prior to the Opening Date. 

Applications received during the Exposure 

Period will not be processed until after the 

Exposure Period. No preference will be given to 

Applications received during the Exposure Period. 

The Prospectus will be made generally available 

during the Exposure Period at 

www.babcockbrown.com 

Prospectus availability 

Potential investors resident in Australia can obtain 

a printed copy of this Prospectus free of charge 

during the Offer Period by calling the BBSN 

InfoLine on 1800 818 562 (Monday 

to Friday — 8.30am to 5.30pm). 

This Prospectus will also be available to 

Australian residents in electronic form at 

www.babcockbrown.com. If you access an 

electronic copy of this Prospectus you should 

ensure that you download and read the entire 

Prospectus. 

Applications for BBSN 

Applications for BBSN pursuant to this Prospectus 

may only be made by Australian residents 

(or, at Babcock & Brown’s discretion, foreign 

Institutional Investors, subject to compliance with 

relevant foreign laws) during the Offer Period on 

an Application Form attached to this Prospectus 

(including an electronic copy of this 

BABCOCK & BROWN SUBORDINATED NOTES 

Prospectus). The Corporations Act prohibits any 

person from passing the Application Form on to 

another person unless it is attached to a hard copy 

of this Prospectus or the complete and unaltered 

electronic version of this Prospectus. 

There is no facility for Applications to be 

submitted electronically except where it may be 

provided by a Retail Broker. 

For information on who is eligible to apply for 

BBSN under the Offer and how to make an 

Application, see Section 3. 

Investment advice 

This Prospectus does not provide investment 

advice — you should seek your own professional 

investment advice. The Offer does not take into 

account your investment objectives, financial 

situation and particular needs (including financial 

and tax issues) as an investor. 

It is important that you read the entire Prospectus 

before deciding to apply for BBSN. In particular, 

in considering the prospects of the Babcock & 

Brown Group, it is important that you consider 

the risk factors that could affect the financial 

performance and position of the Group. You 

should carefully consider these factors in light of 

your particular investment objectives, financial 

situation and particular needs (including financial 

and tax issues) and seek professional advice from 

your financial advisor or other professional advisor 

before deciding whether to apply for BBSN. For 

investment risks relevant to the Group and the 

Offer, see Section 6. 

Foreign jurisdictions 

As at the date of this Prospectus, no action has 

been taken to register or qualify BBSN or the 

Offer or otherwise to permit a public offering of 

BBSN outside Australia. 

The distribution of this Prospectus (including 

an electronic copy) outside Australia may be 

restricted by law. If you come into possession of 

this Prospectus outside Australia, you should take 

advice on, and observe, any such restrictions. 

Any failure to comply with such restrictions may 

violate securities laws. This Prospectus does not 

constitute an offer or invitation in any place in 

which, or to any person to whom, it would not 

be lawful to make such an offer or invitation. 

In particular, BBSN have not been, and will not 

be, registered under the US Securities Act or the 

securities laws of any state of the United States, 

and may not be offered or sold in the United 

States or to, or for the account or benefit of, any 

US Person, except pursuant to an exemption 

from, or in a transaction not subject to the 

registration requirements of, the US Securities Act 

and applicable United States securities laws. 

A public offering of BBSN to New Zealand 

investors may only be made pursuant to an 

investment statement which has been lodged with 

the appropriate authority. 

Notwithstanding the above, Babcock & Brown 

and the Lead Manager & Bookrunner reserve 

the right to offer BBSN under the Institutional 

Offer to any Institutional Investor outside 

Australia, where to do so would not be in breach 

of the securities law requirements of the relevant 

jurisdiction. 

For further details of the foreign selling restrictions 

that apply to BBSN, see Section 8.17. 

ASX quotation 

Babcock & Brown will apply to ASX within 

seven days after the date of this Prospectus for 

BBSN to be quoted on ASX. If ASX does not 

grant permission for BBSN to be quoted within 

three months (or any longer period permitted by 

law) after the date of this Prospectus, BBSN will 

not be issued and all Application payments will be 

refunded (without interest) as soon as practicable. 

Prospectus expiry 

This Prospectus expires on the date which is 13 

months after the date of this Prospectus (Expiry 

Date). No BBSN will be issued on the basis of 

this Prospectus later than the Expiry Date. 

Defined words and expressions 

Some words and expressions used in this 

Prospectus have defined meanings, which are in 

the glossary in Appendix A. Certain definitions 

specific to BBSN are in clause 14.2 of the Terms 

in Appendix B. 

A reference to time in this Prospectus is to Sydney 

time unless otherwise stated. A reference to $, A$, 

AUD and cents is to Australian currency unless 

otherwise stated. 

Disclaimer 

You should rely only on information contained in 

this Prospectus. 

No person is authorised to give any information, 

or to make any representation, in connection with 

the Offer described in this Prospectus that is not 

contained in this Prospectus. Any information 

or representation that is not in this Prospectus 

may not be relied on as having been authorised 

by Babcock & Brown or any other person in 

connection with the Offer. Except as required by 

law, and only to the extent so required, neither 

Babcock & Brown nor any other person warrants 

or guarantees the future performance of Babcock 

& Brown or any return on any investment made 

pursuant to this Prospectus. 

The pro-forma financial information provided in 

this Prospectus is for information purposes only 

and is not a forecast of operating results to be 

expected in future periods. 

About the Trustee 

The Trustee has had no involvement in the 

preparation of any part of this Prospectus, other 

than particular references to the Trustee and the 

Trust Deed. The Trustee expressly disclaims 

and takes no responsibility for any other part of 

this Prospectus. It makes no statement in this 

Prospectus and has not authorised or caused the 

issue of this Prospectus. The Trustee does not 

guarantee the success of BBSN or payment of 

any interest or principal on BBSN. 

Enquiries 

If, after reading this Prospectus, you have any 

questions in relation to the Offer, please contact 

the BBSN InfoLine on 1800 818 562 

(Monday to Friday — 8.30am to 5.30pm).

SUPPLEMENTARY PROSPECTUS 

Issuer 

Babcock & Brown Limited (ABN 53 108 614 955) 

Important information 

This Supplementary Prospectus relates to the prospectus 

lodged by Babcock & Brown with ASIC on 9 November 

2005 in connection with the offer of BBSN (Prospectus). 

This Supplementary Prospectus supplements, and should be 

read together with, the Prospectus. Words and expressions used 

in this Supplementary Prospectus have the meanings given to 

them in the Prospectus. 

This Supplementary Prospectus is dated 21 November 

2005. A copy of this Supplementary Prospectus was lodged 

with ASIC on that date. Neither ASIC nor ASX take any 

responsibility for the contents of this Supplementary Prospectus. 

The Prospectus and this Supplementary Prospectus do not 

provide investment advice—you should seek your own 

professional investment advice. The Offer does not take 

into account your investment objectives, financial situation 

and particular needs (including financial and tax issues) 

as an investor. 

Margin determined 

Following the successful completion of the Bookbuild on 

18 November 2005 (as described in Section 3.10.1 of the 

Prospectus), Babcock & Brown has determined the Margin 

to be 2.20% per annum until the first Reset Date. This is 

within the indicative range set out in the Prospectus of 2.00% 

– 2.30% per annum. 

Interest Rate for the first Interest Period 

As detailed in Section 2 of the Prospectus, the Interest Rate 

on BBSN is the Market Rate plus the Margin. Until the first 

Reset Date, the Market Rate is the Bank Bill Swap Rate and 

will be determined semi-annually. For the first Interest Period 

the Interest Rate will be the Margin plus the greater of the 

Bank Bill Swap Rate on the last day of the Bookbuild and the 

Bank Bill Swap Rate on the Settlement Date. 

Accordingly, based on the Bank Bill Swap Rate of 5.6583% 

on 18 November 2005, the Interest Rate for the first Interest 

Period will be no less than 7.8583% per annum. 

ASX quotation 

As foreshadowed in Section 8.19 of the Prospectus, Babcock 

& Brown has applied for BBSN to be quoted on ASX under 

the ASX code, “BNBG”. 

Directors’ consent to lodgement 

Each of the Directors has given and has not withdrawn their 

consent to the issue of this Supplementary Prospectus, and to 

its lodgement with ASIC. 

Signed for and on behalf of Babcock & Brown by: 

Phillip Green 

Director 

BABCOCK & BROWN SUBORDINATED NOTES 1

tABLe of CoNteNts 

Important notices 

inside front cover 

Key dates 3 

Investment highlights 4 

Chairman’s letter 6 

How to apply for BBSN 7 

1. Key terms of BBSN 9 

2. Answers to key questions 15 

3. Details of the Offer 27 

4. Information about Babcock & Brown 33 

5. Summary financial information 41 

6. Risk factors 49 

7. Tax Letter 59 

. Additional information 65 

Appendix A Glossary 83 

Appendix B Terms 91 

Appendix C Arranger’s Financial Services Guide 109 

Application Forms 113 

Corporate directory 

inside back cover 

2 BABCOCK & BROWN SUBORDINATED NOTES

Key DAtes 

Key dates for the Offer 

Date 

Announcement of Offer and Prospectus lodged with ASIC 9 November 2005 

Bookbuild 17–18 November 2005 

Margin announced and Opening Date 21 November 2005 

General Offer Closing Date 5.00pm 14 December 2005 

Broker Firm Offer Closing Date 10.00am 19 December 2005 

Settlement Date 20 December 2005 

Issue Date 21 December 2005 

BBSN begin trading on ASX (deferred settlement basis) 22 December 2005 

Holding Statements despatched by 28 December 2005 

BBSN begin trading on ASX (normal settlement basis) 29 December 2005 

Key dates for BBSN 

Record Date for first Interest Payment 7.00pm on 8 May 2006 

First Interest Payment Date 15 May 2006 

First Reset Date 15 November 2010 

Maturity Date 15 November 2015 

Dates may change 

These dates (excluding the key dates for BBSN) are indicative only and are subject to change. Babcock & Brown has the right, 

subject to agreement with the Lead Manager & Bookrunner, to extend the Offer, close the Offer early without notice, or to 

withdraw the Offer at any time before BBSN are issued. Accordingly, if you wish to apply for BBSN, you are encouraged to 

submit your Application Form as soon as possible after the Opening Date. If the Offer is extended, the subsequent dates above 

(excluding the key dates for BBSN) will also be extended. 

Quotation of BBSN 

Babcock & Brown will apply to ASX within seven days after the date of this Prospectus for BBSN to be quoted on ASX. 

Quotation of BBSN is not guaranteed. If ASX does not grant permission for BBSN to be quoted within three months after 

the date of this Prospectus (or any longer period permitted by law), BBSN will not be issued and all Application payments 

will be refunded (without interest) as soon as practicable. 

Making an Application 

No Application for BBSN will be processed (and no BBSN will be issued) until after the expiry of the Exposure Period. 

Applications will only be accepted during the Offer Period. During the Offer Period, you can obtain a copy of this 

Prospectus and Application Form at www.babcockbrown.com or by arranging for a copy to be sent to you by calling 

the BBSN InfoLine on 100 1 562. For information on who is eligible to apply for BBSN under the Offer and how 

to make an Application, see Section 3. 


INVestmeNt HIGHLIGHts 

BBSN are unsecured, subordinated, cumulative, resettable notes issued by Babcock & Brown. 

They are debt obligations of Babcock & Brown. 

Investment highlights of BBSN include: 

Interest Payments: 

BBSN pay floating rate, semi–annual, cumulative Interest until the first Reset 

Date. The Interest Rate will be the sum of the Market Rate plus a Margin 

(determined through the Bookbuild and within the indicative range of 2.00% 

to 2.30%). The Interest Rate for the first Interest Period will be the Margin 

plus the higher of the Market Rate on the last day of the Bookbuild and the 

Market Rate on the Settlement Date. The Interest Rate (including the basis of 

calculating such Interest Rate) and Interest Payment Dates may be changed by 

Babcock & Brown on a Reset Date. 

Interest Payment 

Dates: 

15 May and 15 November unless changed at a Reset Date, subject to deferral 

rights, with penalty interest accruing on Outstanding Interest. 

Dividend Stopper: 

If Babcock & Brown defers payment of Interest, it will be prevented from 

declaring and paying any dividend or making any return of capital or other 

payment to its shareholders. 

Exchange, Repayment 

and Resale: 

BBSN may be Exchanged, Repaid or Resold in certain circumstances. 

Maturity Date: 

15 November 2015, however, Holders may provide an Exit Notice in certain 

circumstances, including prior to a Reset Date or the Maturity Date or in 

response to notice of a Change in Control Event or a Trigger Event. Where 

an Exit Notice is given in these circumstances the relevant BBSN may generally 

be Exchanged, Repaid or Resold. 


Guarantee: 

BBSN have the benefit of a BBIPL subordinated Guarantee. BBIPL is the main 

operating entity of the Babcock & Brown Group. 

Risks: 

BBSN are subordinated and unsecured, and an investment in them involves 

risks. See Section 6 for further information. 

ASX quotation: 

Application will be made to ASX within seven days after the date of this 

Prospectus for BBSN to be quoted on ASX. 

No fees: 

No fees are payable by Holders in respect of the Application, issue, Exchange, 

Repayment or Resale of BBSN. 

This Prospectus should be read carefully and in its entirety. If you are unclear in relation to any matter or uncertain 

if BBSN is a suitable investment, you should consult your stockbroker, accountant or other financial advisor. 

BBSN in the Babcock & Brown Group structure 

BBSN Holders 

Gross Offer 

proceeds 

BBSN 


100% 

ownership 

Ordinary 

Shareholders 

Net Offer proceeds 

(BBIPL Loan) 

71% 

ownership 

BBIPL 

29% 

ownership 

US Executive 

Stakeholders 

Operating 

companies 


CHAIrmAN’s Letter 

9 November 2005 

Dear investor 

On behalf of the Directors of Babcock & Brown Limited (Babcock & Brown) I am pleased to present to you the first public 

debt raising of Babcock & Brown — Babcock & Brown Subordinated Notes (BBSN). BBSN are unsecured, subordinated, 

cumulative, resettable notes issued by Babcock & Brown, and guaranteed on a subordinated basis by Babcock & Brown 

International Pty Limited. 

Babcock & Brown intends to issue up to $250 million of BBSN and may choose to issue a further $50 million of 

oversubscriptions (Offer). 

The success of Babcock & Brown since its initial public offer (IPO) in October 2004 has presented a growing number of 

business and investment opportunities to Babcock & Brown in all five of its business areas and across its global platform. The 

number of transactions and our rate of success have exceeded expectations. This has resulted in Babcock & Brown reporting 

significantly higher profits than were envisaged at the time of the IPO and fully employing the funds raised under the IPO. 

As indicated at the time of the IPO, it was Babcock & Brown’s intention to appropriately leverage its balance sheet to underpin 

growth in its businesses. To this end we are currently renegotiating our corporate facilities, and are arranging standby finance 

to fund specific asset acquisitions. Commensurate with our growth, the Babcock & Brown Board considers that it is now well 

positioned to also approach the capital markets for debt funding. 

Given the pipeline of opportunities which exist in the short to medium term, Babcock & Brown has decided to raise up 

to $300 million under the Offer. The Offer proceeds will be used to generally invest in the various business and investment 

transactions which are available to Babcock & Brown. A number of specifically identified projects exist, including the equity 

investment in an unlisted aircraft fund, the equity investment in US freight railcar syndications, investment in wind turbines, 

funds to develop wind farms in the US and Australia and funds for the development of thermal power stations. 

Under the Terms of BBSN, investors have the right to request an exchange of BBSN into ordinary shares in 

Babcock & Brown in a number of circumstances, including at the reset and maturity dates. On receipt of a request to 

exchange, Babcock & Brown may generally choose whether to exchange, repay or resell the relevant BBSN. 

Babcock & Brown’s decision on whether to exchange, repay or resell the relevant BBSN will depend on a range of factors 

including Babcock & Brown’s equity and debt position at the time, the opportunities for expansion of our business and alternative 

financial accommodation available to Babcock & Brown at that time. In the event of exchange, Babcock & Brown ordinary shares 

will be issued to investors at a discount of 2.5% to the average market price on the terms set out in this Prospectus. 

Full details of this investment opportunity are set out in this Prospectus, which I urge you to read carefully. To apply for BBSN 

you will need to complete the Application Form attached to this Prospectus. If you have any questions about how to apply, 

please contact the BBSN InfoLine on 100 1 562. 

The Offer is expected to open on 21 November 2005. It is possible that the Closing Dates for the Offer may be changed, and 

therefore if you wish to apply for BBSN you should lodge your Application Form as soon as possible. 

On behalf of the Directors of Babcock & Brown, I invite you to consider this investment opportunity. 

Yours faithfully 

Jim Babcock 

Executive Chairman 

Babcock & Brown Limited 


HoW to APPLy for BBsN 

Read 

Consider and consult 

Complete 

Mail or deliver 

Read this Prospectus in full, paying particular attention to: 

• important information on the inside front cover; 

• answers to key questions about BBSN in Section 2; 

• investment risks that may be relevant to an investment in BBSN in Section 6; and 

• the Terms in Appendix B. 

Consider all risks and other information about BBSN in light of your particular investment 

objectives and circumstances. Consult with your stockbroker, accountant or other financial 

advisor if you are uncertain whether BBSN are a suitable investment for you. 

Complete the Application Form. Applications for BBSN may only be made on an Application 

Form attached to this Prospectus (including an electronic copy). If you are a Broker Firm Applicant, 

you should contact your Retail Broker for instructions on how to submit your Application Form 

and Application payment. 

If you are a General Applicant, your completed Application Form and Application payment must be 

received by the Registry no later than 5.00pm 14 December 2005. 

If you are a General Applicant, your completed Application Form and Application payment should be: 

mailed to: 

or hand delivered to: 

BBSN Offer 

BBSN Offer 

Link Market Services Limited 


Locked Bay A14 

Level 8, 580 George Street 

Sydney South NSW 1235 Sydney NSW 2000 

If you are a Broker Firm Applicant, your completed Application Form and Application payment 

must be received by your Retail Broker in time for them to arrange settlement on your behalf by 

10.00am on 19 December 2005. 

It is possible that the Offer will close early, so you should lodge your Application as soon as possible. 

For further details on how to apply for BBSN, see Section 3 and the guide to completing Application 

Forms in this Prospectus. If you have any further questions on how to apply for BBSN, call the 

BBSN InfoLine on 100 1 562. 


This page has been left blank intentionally. 

 

BABCOCK & BROWN SUBORDINATED NOTES

1. Key terms of BBSN 



This Section sets out a summary of the key terms of BBSN. The Terms are set out in full in Appendix B. This information 

is a summary only and should be read in conjunction with other information contained in this Prospectus. There are particular 

risks attaching to an investment in BBSN. A summary of these risks is set out in Section 6, whilst answers to key questions 

about BBSN are set out in Section 2. 

A Holder may request that BBSN be Exchanged in certain circumstances. There are other general risks associated with investing 

in the Babcock & Brown Group. A summary of these risks is also set out in Section 6. 

General 

Issuer 

Security 

Offer 

Maturity Date 

ASX quotation 

Babcock & Brown Limited, a company listed on ASX. 

Babcock & Brown Subordinated Notes (BBSN) are unsecured, subordinated, cumulative, resettable 

notes. BBSN may be Exchanged, Repaid or Resold in certain circumstances. 

2.5 million BBSN at an issue price of $100 per BBSN to raise $250 million, with the ability to 

accept oversubscriptions for up to $50 million. 

15 November 2015. On the Maturity Date, all outstanding BBSN must be either Repaid, 

or, if a Holder requests an Exchange and Babcock & Brown agrees, then Exchanged. 

Application will be made to ASX for quotation of BBSN within seven days after the lodgement 

of this Prospectus. If quoted, it is expected that BBSN will trade under the ASX code ‘BNBG’. 

Interest Payments 


The Interest Rate for each Interest Period from the Settlement Date until the first Reset Date 

is calculated as: Interest Rate = (Market Rate + Margin) 

Where: 

• the Market Rate is the Bank Bill Swap Rate applying on the first Business Day of the 

Interest Period. 

• the Margin will be determined by a Bookbuild. 

Each of the Market Rate and Margin may be changed by Babcock & Brown on a Reset Date. 

Interest Rate for the The Interest Rate for the first Interest Period will be the sum of the Margin and the greater of: 

first Interest Period • the Market Rate on the last day of the Bookbuild; and 

• the Market Rate on the Settlement Date. 

Interest Payment Interest will be payable semi-annually in arrears on 15 May and 15 November (subject to any resetting 

Dates by Babcock & Brown on a Reset Date) with the first Interest Payment due on 15 May 2006. 

Babcock & Brown has certain rights to defer an Interest Payment. 

Deferral conditions 

The payment of any Interest Payment may be deferred by Babcock & Brown if Babcock & Brown is 

insolvent or such payment would cause it to become insolvent, such payment would cause Babcock 

& Brown to breach any legal obligation or the Directors determine that Babcock & Brown has 

insufficient cash to make the Interest Payment. 


Interest Payments (continued) 

Deferred Interest 

Restrictions on 


If an Interest Payment is deferred, interest will accrue on any Outstanding Interest on a daily basis 

at a rate equal to the Interest Rate plus 2.00% per annum. 

Any Deferred Interest that remains unpaid must be paid on the next Interest Payment Date upon 

which no Interest Payment deferral condition applies. 

If Babcock & Brown defers payment of interest, it will be prevented from: 

• declaring and paying any dividend or making any return of capital or other payment 

to its shareholders; 

• setting aside any amount of cash or any assets for that purpose; and 

• undertaking any arrangement, reconstruction or reorganisation, which would have a material 

adverse effect on the value of BBSN, 

until the Outstanding Interest is paid in full. 

Reset of terms 

Reset Date The first Reset Date is 15 November 2010. 

Reset of terms 

On each Reset Date, Babcock & Brown may change certain terms of BBSN including: 

• the next Reset Date, provided that each Reset Date will be no less than 12 months after the 

immediately preceding Reset Date and will also be an Interest Payment Date; 

• the Exchange Discount; 

• the Market Rate (including from a floating rate to a fixed rate); 

• the Margin; and 

• the Interest Payment Dates. 

Holder exit rights 

Exit request 


action upon receipt 

of an Exit Notice 

Holders may provide an Exit Notice in relation to: 

• a Reset Date; 

• a Trigger Event; 

• a Change in Control Event; or 

• the Maturity Date. 

By providing an Exit Notice, the Holder may request: 

• Exchange or Repayment (in relation to a Trigger Event); and 

• Exchange (in relation to all other events), 

of their BBSN on the Realisation Date. 

Upon receipt of an Exit Notice, Babcock & Brown must send the Holder a Repayment Notice 

specifying whether it will: 

• in relation to a Reset Date or a Change in Control Event, Exchange, Repay or Resell (or a 

combination of Exchange, Repay and Resell); 

• in relation to a Trigger Event: 

– to the extent Exchange is requested, Exchange, Repay or Resell (or a combination of 

Exchange, Repay and Resell); 

– to the extent Repayment is requested, Repay or Resell (or a combination of Repay 

and Resell); and 

• in relation to the Maturity Date, Exchange or Repay (or a combination of Exchange and Repay), 

BBSN the subject of the Exit Notice. 

If a Holder does not provide an Exit Notice prior to the Maturity Date, their BBSN will be Repaid 

on the Maturity Date. 



Holder exit rights (continued) 

Exchange into 

Ordinary Shares 


Resale 

In the event of Exchange, the number of Ordinary Shares delivered to a Holder for each BBSN the 

subject of an Exchange will be calculated as: 

Number of Ordinary Shares for each BBSN Exchanged = (Repayment Amount)/(VWAP x (1 - ED)) 

Where: 

ED means the Exchange Discount of 2.5% (or as changed by Babcock & Brown on a Reset Date); 

Repayment Amount means the Face Value plus any Outstanding Interest as at the Realisation 

Date that will not be separately paid in cash as interest on the Realisation Date; and 

VWAP means, subject to any adjustments discussed in Appendix B, the average of the daily volume 

weighted average sale prices (rounded to the nearest full cent) of Ordinary Shares sold on ASX 

during the 20 Business Days immediately before the Realisation Date. 

If Babcock & Brown has elected to Resell the BBSN, then it must ensure that the Holder is paid an 

amount at least equal to the Repayment Amount on the Realisation Date (subject to withholding 

of any tax). 

Babcock & Brown exit rights 

Repayment, 

Exchange and 

Resale 

Babcock & Brown may Repay all or some BBSN on a Reset Date. 

Babcock & Brown may Repay all BBSN: 

• on occurrence of a Change in Law Event; 

• on occurrence of a Change in Control Event; 

• on occurrence of a Delisting Event; or 

• if the aggregate Face Value of BBSN on issue is less than $50 million. 

Babcock & Brown may Exchange, Repay or Resell (or a combination of Exchange, Repay and 

Resell) BBSN to the extent a Holder requests Exchange pursuant to delivery of an Exit Notice, 

although Resale may not occur on the Maturity Date. Babcock & Brown may Repay or Resell 

(or a combination of Repay and Resell) BBSN to the extent a Holder requests Repayment 

pursuant to an Exit Notice. 

Guarantee 

Guarantor 

Guarantee 

No restrictions 

Babcock & Brown International Pty Limited (BBIPL). 

BBIPL guarantees any amounts which become due and payable by Babcock & Brown on BBSN. 

Claims under the Guarantee are subordinated to the claims of all creditors of BBIPL (other than 

creditors whose claims are expressed to rank after or equally with the claims of Holders under the 

Guarantee), but in priority to the claims of BBIPL shareholders. 

The Trust Deed does not restrict BBIPL from entering into any transaction or from acquiring and 

disposing of assets, entering into any borrowing, guarantee or indemnity and creating and issuing 

further guarantees, loans or other equity or debt securities including securities or other indebtedness 

ranking ahead of claims of Holders under the Guarantee, other than entering into any encumbrance in 

its favour from Babcock & Brown, while the moneys owing under the Guarantee are still outstanding. 

Impact on Deferred As the payment of interest is subject to deferral conditions, the Guarantee does not ensure that interest 

Interest will be paid in all circumstances. For a more detailed description of the Guarantee, see Section 8.4. 

Further BBIPL 

Guarantee 

subordination 

documents 

BBIPL may require the Trustee to execute on behalf of itself and all Holders such documents as 

BBIPL considers necessary or desirable for the purposes of the subordination of the Guarantee to 

any indebtedness or guarantee of BBIPL which ranks ahead of claims of Holders. 


Babcock & Brown’s transaction rights and subordination 

No restrictions 

Subordination on 

payments 

Winding Up 

Further 

subordination 

documents 

Babcock & Brown may enter into any transaction without restriction including acquiring and 

disposing of assets, entering into any borrowing, guarantee or indemnity and creating and issuing 

further BBSN or other equity or debt securities including securities or other indebtedness ranking 

ahead of the claims of Holders without the consent of Holders or the Trustee. 

BBSN are subordinated to the claims of all creditors of Babcock & Brown other than creditors 

whose claims are expressed to rank equally with or after the claims of the Trustee or a Holder under 

or in respect of its BBSN. Babcock & Brown may issue debt ranking ahead of BBSN in right of any 

payment including payment of interest and on a Winding Up. 

On a Winding Up, the rights of Holders are subordinated in right of payment to the claims of any 

creditors of Babcock & Brown from time to time other than claims stated to rank equally with, or 

after, the claims of Holders. 

Babcock & Brown may require the Trustee to execute, on behalf of all Holders, such documents 

as Babcock & Brown considers necessary or desirable for the purpose of the subordination 

of BBSN to any indebtedness of Babcock & Brown which ranks ahead of, or equal to, claims 

of Holders. 

Other key terms 

Voting rights 

No participation 

as members 

Holders will have no right to vote at general meetings of Babcock & Brown unless provided for 

by the Listing Rules or the Corporations Act. 

BBSN are debt securities of Babcock & Brown and accordingly have no rights or capacity to 

participate in issues to Shareholders. If a Holder becomes a Shareholder through Exchange it will 

enjoy the rights of Shareholders under the Constitution. 

This Prospectus should be read carefully and in its entirety. If you are unclear in relation to any matter or uncertain 

if BBSN is a suitable investment, you should consult your stockbroker, accountant or other financial advisor. 




2. answers to key questions 



This Section answers some key questions that prospective investors may have about BBSN. The answers to these key questions 

are intended as a guide only. Further details are provided in other Sections of this Prospectus, including the Terms set out in full 

in Appendix B. 

If you are unclear in relation to any matter or uncertain if BBSN are a suitable investment for you, you should consult your 

stockbroker, accountant or other financial advisor. 

You should read the whole of this Prospectus carefully. 

Topic Summary More information 

BBSN 

What are BBSN? • BBSN are unsecured, subordinated, cumulative, resettable notes issued Appendix B, 

by Babcock & Brown, which: Section 8.4 

– entitle Holders to receive floating rate, cumulative Interest semiannually 

in arrears (which may be deferred by Babcock & Brown 

in certain circumstances) up until the first Reset Date; 

– have particular terms which may be changed on a Reset Date; 

– have a Maturity Date of 15 November 2015 but may be Exchanged, 

Repaid or Resold earlier in certain circumstances; 

– are subordinated in right of payment of interest and principal to 

any debts of Babcock & Brown from time to time ranking ahead 

of BBSN; and 

– benefit from the subordinated Guarantee from BBIPL. 

Why is Babcock • BBSN are being issued to raise debt finance for use in the operating Section 3.2 

& Brown issuing businesses of the Babcock & Brown Group. 

BBSN? 

How many BBSN • The Offer is for the issue of up to 2.5 million BBSN at an issue price Section 3.3 

are being issued? of $100 each to raise up to $250 million, with the ability to accept 

oversubscriptions for up to $50 million. 

When can BBSN • Babcock & Brown may Repay all or some BBSN on a Reset Date. Appendix B 

be Exchanged, • Babcock & Brown may Repay all BBSN in any of the following clauses 4, 5 

Repaid or Resold? circumstances: 

– on occurrence of a Change in Law Event; 

– on occurrence of a Change in Control Event; 

– on occurrence of a Delisting Event; and 

– if the aggregate Face Value of BBSN on issue is less than $50 million. 

• At the election of Babcock & Brown, after it receives an Exit Notice 

from Holders, BBSN may be: 

– Exchanged, Repaid or Resold (or a combination of Exchanged, 

Repaid and Resold) to the extent the Holder has requested 

Exchange (other than at the Maturity Date, where Resale is not 

applicable); or 

– Repaid or Resold (or a combination of Repaid and Resold) 

to the extent the Holder has requested Repayment. 

• All outstanding BBSN must be Repaid by Babcock & Brown on 

the Maturity Date, or where the Holder has requested Exchange, 

Babcock & Brown can elect to Exchange or Repay. 



BBSN (continued) 

Can BBSN be • Babcock & Brown will apply to ASX for quotation of BBSN within Section 3.11 

traded on ASX? seven days after the lodgement of this Prospectus. 

• It is expected that BBSN will trade under ASX code ‘BNBG’. 

• Quotation on ASX is not guaranteed or automatic. If quotation is not 

granted within three months (or any longer period permitted by law), 

BBSN will not be issued and Application payments will be refunded. 

No interest will be payable on refunded Application payments. 

Risks 

What are the • An investment in BBSN involves risks. Further information on the risks Section 6 

risks of investing of investing in BBSN is contained in Section 6. 

in BBSN? 

Taxation implications 

What are • The taxation implications of holding or selling BBSN will depend on Section 7 

the taxation 

the individual circumstances of the Holder. A summary of some of 

implications 

the relevant taxation consequences for Holders is provided in the 

of investing Tax Letter from Greenwoods & Freehills contained in Section 7. 

in BBSN? • You should obtain your own taxation advice based on your individual 

circumstances before investing in BBSN. 

Interest 

How will the • The Interest Rate for each Interest Period is calculated as: Appendix B 

Interest Rate Interest Rate = (Market Rate + Margin) clause 2 

be calculated? 

Where: 

– The Market Rate is the Bank Bill Swap Rate applying on the first 

Business Day of the Interest Period (or as changed by Babcock & 

Brown on a Reset Date); and 

– The Margin applying until the first Reset Date will be determined 

by the Bookbuild and will be within the indicative range of 

2.00% to 2.30%. 

• The Interest Rate for the first Interest Period will be the sum of the 

Margin and the greater of: 

– the Market Rate on the last day of the Bookbuild; and 

– the Market Rate on the Settlement Date. 

• The Interest Rate for each Interest Period will be announced by 

Babcock & Brown to ASX each time it is determined. 

• Babcock & Brown may change the Interest Payment Dates, the Market 

Rate and the Margin and certain other terms on each Reset Date. 

• The first Reset Date is 15 November 2010. 




Interest (continued) 

How will the • The following table provides an example of how the Interest Rate 

Interest Rate 

will be calculated: 

be calculated? Market Rate 1 5.70% p.a. 

(continued) Plus the Margin 2 + 2.00% to 2.30% p.a. 

Interest Rate 

Notes: 

7.70% to 8.00% p.a. 

1. The Market Rate used in the above example is for illustrative 

purposes only. The actual Market Rate for the first Interest Period 

will be determined on the Settlement Date. 

2. The Margin until the first Reset Date will be determined 

through the Bookbuild. 

How will the • Based on the above Interest Rate calculation example, the table below sets Appendix B 

amount of out an example of how the amount of Interest payable will be calculated: clause 2 

Interest payable Interest Rate per above example 7.70% to 8.00% p.a. 

be calculated? Multiplied by the Face Value per BBSN x $100.00 

Multiplied by the number of days in the Interest Period x 183 days 1 

Divided by 365 days 

/ 365 days 

Interest payable $3.86 to 4.01 2 

Notes: 

1. Interest Periods will contain approximately 183 days until 

the first Reset Date. The first Interest Period will be shorter 

than the normal Interest Period. 

2. Any fraction of a cent is disregarded when calculating Interest 

on a Holder’s aggregate holding of BBSN. 

What is the Bank • The Bank Bill Swap Rate is a benchmark interest rate used in the Appendix B 

Bill Swap Rate? Australian money market by major Australian banks when they lend clause 14.2 

cash to each other. 

• The six month Bank Bill Swap Rate has been as low as 4.0183% 

and as high as 7.7880% per annum during the last 10 years. 

• Babcock & Brown may decide not to use the six month Bank Bill 

Swap Rate in calculations of the Interest Rate from a Reset Date. 

When will Interest • For the period until the first Reset Date, Interest will be payable Appendix B 

on BBSN be semi-annually in arrears on 15 May and 15 November of each year. clause 2.2 

payable? • For the first Interest Period, Interest will accrue from (and including) the 

Settlement Date, with the first Interest Payment Date on 15 May 2006. 

• Babcock & Brown may defer Interest Payments in certain circumstances. 

• Babcock & Brown is able to change the Interest Payment Dates, 

Market Rate and Margin on any Reset Date. Holders may request 

Exchange in respect of a Reset Date. 

How will Interest • Interest will be paid directly into an account at a financial institution Appendix B 

be paid? (which has a facility for direct credit of amounts denominated in clause 2.11 

Australian currency) that you nominate. All Interest will be paid in 

Australian dollars (less withholding for any tax). 

• To be entitled to an Interest Payment, you must be recorded as the 

Holder on the relevant Record Date, which is seven days (or such 

other date as may be required by ASX) before the relevant Interest 

Payment Date. 



Interest (continued) 

Will Interest always • Babcock & Brown may defer Interest Payments on any Interest Payment Appendix B 

be paid? Date if any of the following deferral conditions apply: clause 2.3 

– Babcock & Brown is insolvent or the Interest Payment would cause 

Babcock & Brown to become insolvent; or 

– the Interest Payment would cause Babcock & Brown to breach any Sections 3.2.1, 6.1.2, 8.8 

legal obligation; or 

– the Directors determine that Babcock & Brown does not have 

sufficient cash to make the Interest Payment. 

• The expected primary source of funds to meet Interest Payments is 

interest payments received by Babcock & Brown under the BBIPL 

Loan. In certain circumstances BBIPL may be prevented from making 

such interest payments. 

• Babcock & Brown will notify you if it determines that an Interest 

Payment will be deferred. 

What happens if • Interest on BBSN is cumulative. Interest will accrue on any deferred Appendix B 

Interest Payments interest on a daily basis from and including the relevant Interest Payment clause 2.4 

are deferred? 

Date up to, but excluding, the date of payment of the Outstanding 

Interest at the then applicable Interest Rate plus 2.00% per annum. 

Interest on deferred interest compounds on the next Interest 

Payment Date. 

• If Babcock & Brown defers an Interest Payment, it will be prevented from: 

– declaring or paying any dividend or making any return of capital or 

other payment to its shareholders; 

– setting aside any amount of cash or any assets for that purpose; or 

– undertaking any arrangement, reconstruction or reorganisation, 

which would have a material adverse effect on the value of 

BBSN, 

until the Outstanding Interest is paid in full. 

Resetting the terms 

What may Babcock • The first Reset Date is 15 November 2010. Appendix B 

& Brown do on a • Babcock & Brown may send you a Reset Notice at least 50 Business clauses 3, 5.1(a) 

Reset Date? 

Days (but not more than six months) before that Reset Date. 

The Reset Notice may establish for the following period: 

– the next Reset Date (provided that each Reset Date will be no 

less than 12 months after the immediately preceding Reset Date 

and will also be an Interest Payment Date); 

– the Exchange Discount; 

– the Market Rate (including changing the floating rate to 

a fixed rate); 

– the Margin; and 

– the Interest Payment Dates. 

• Babcock & Brown may also Repay some or all BBSN on a Reset Date. 




Resetting the terms (continued) 

Will I be notified if • Yes, by a Reset Notice. Appendix B 

Babcock & Brown • If Babcock & Brown does not send you a Reset Notice, the existing clause 3.2 

intends to change terms will apply and the next Reset Date will be such that the period 

any terms on a to the next Reset Date is the same as the period that has passed from 

Reset Date? 

the immediately preceding Reset Date (or the Issue Date for the first 

Reset Date) until the relevant Reset Date (provided that no Reset 

Date may be later than the Maturity Date). 

What can I do if I • You can request Exchange by delivering an Exit Notice to Appendix B 

do not like the Babcock & Brown. clause 4.1 

terms established • You can sell your BBSN holding on ASX. 

by a Reset Notice? 

Exit request 

When can I request • A Holder may request Exchange by delivering an Exit Notice to Appendix B 

Exchange? Babcock & Brown in the following circumstances: clause 4 

– at least 35 (but no more than 50) Business Days before a Reset Date 

(or where a Reset Notice is provided 50 Business Days before a 

Reset Date, no later than 15 Business Days after the date of such 

Reset Notice); 

– after the occurrence of a Trigger Event or a Change in Control 

Event, no later than 15 Business Days after the date of notice of 

the occurrence of that event; and 

– at least 35 (but no more than 50) Business Days before the 

Maturity Date. 

What happens if I • If you provide an Exit Notice to Babcock & Brown, Babcock & Brown Appendix B 

give an Exit Notice? must give you a Repayment Notice no later than 25 Business Days clauses 4.3, 5.1 

prior to the Realisation Date, specifying whether it will: 

– Exchange, Repay or Resell (or any combination of Exchange, 

Repay and Resell) to the extent you have requested Exchange; and 

– Repay or Resell (or a combination of Repay and Resell) to the 

extent you have requested Repayment, 

BBSN the subject of the Exit Notice (except that in relation to 

the Maturity Date, Babcock & Brown may not Resell BBSN). 

• If you do not provide an Exit Notice prior to the Maturity Date, 

your BBSN will be Repaid. 



Exchange 

What happens if • If BBSN are repaid by the delivery of Ordinary Shares, the number of Appendix B 

my BBSN are Ordinary Shares to which you are entitled for each BBSN is calculated clause 6 

Exchanged? 

as the Exchange Ratio: 

Exchange Ratio = Repayment Amount 

VWAP x (1 - ED) 

Where: 

– VWAP means, subject to any adjustments described in Appendix B, 

the average of the daily volume weighted average sale prices 

(rounded to the nearest full cent) of Ordinary Shares sold on ASX 

during the 20 Business Days immediately before the Realisation Date. 

– Repayment Amount means the Face Value plus any Outstanding 

Interest as at the Realisation Date that will not be separately paid in 

cash as interest on the Realisation Date. 

– ED means the Exchange Discount of 2.5% (or as changed by 

Babcock & Brown on a Reset Date). 

When will I receive • If you provided an Exit Notice requesting Exchange following the Appendix B 

my Ordinary Shares occurrence of a Trigger Event or a Change in Control Event, and clauses 6, 14.2 

upon Exchange? Babcock & Brown has decided to Exchange your BBSN, you will 

receive your Ordinary Shares on or around the date which is 60 days 

from the date Babcock & Brown notified you of the occurrence 

of that event. 

• If you provided an Exit Notice prior to the Reset Date and Babcock 

& Brown has decided to Exchange your BBSN, you will receive your 

Ordinary Shares on or around the Reset Date immediately following 

the receipt of the Exit Notice by Babcock & Brown. 

Trigger Events 

What is a Trigger • An occurrence of any of the following: Appendix B 

Event? – Babcock & Brown resolves in general meeting to be Wound Up; clause 14.2 

– a provisional liquidator is appointed to Babcock & Brown; 

– a court makes an order to Wind Up Babcock & Brown; 

– an administrator is appointed to Babcock & Brown; 

– Babcock & Brown executes a deed of company arrangement; 

– a receiver or receiver and manager is appointed over the assets 

or the undertaking of Babcock & Brown; 

– an Interest Payment is not paid for more than 20 Business Days other 

than in accordance with the deferral provisions in the Terms; or 

– a Delisting Event occurs. 

Will I know if a • Yes, Babcock & Brown must give notice to Holders that a Trigger Appendix B 

Trigger Event Event has occurred as soon as reasonably practicable after it becomes clause 4.2(a) 

occurs? 

aware of such an event. 




Trigger Events (continued) 

What are the • A Holder may request Exchange or Repayment of all their BBSN by Appendix B 

consequences of providing an Exit Notice to Babcock & Brown. Babcock & Brown clauses 2.6, 4.2 

a Trigger Event? must then: 

– Exchange, Repay or Resell (or any combination of Exchange, Repay 

and Resell) to the extent the Holder has requested Exchange; and 

– Repay or Resell (or a combination of Repay and Resell) to the 

extent the Holder has requested Repayment 

the relevant BBSN the subject of that Exit Notice. 

• Babcock & Brown is restricted from doing a number of things, 

such as paying a dividend. 

Repayment 

Can I request • Yes. Holders may request Repayment on the occurrence Appendix B 

Repayment? of a Trigger Event. clause 4.2 

Can Babcock & • No. Unless you provide an Exit Notice requesting Exchange, Babcock & Appendix B 

Brown require me Brown cannot deliver Ordinary Shares to you in satisfaction of your BBSN. clauses 4.3, 5, 6.2 

to accept Ordinary • The number of Ordinary Shares you will receive upon Exchange is 

Shares? 

calculated by the Exchange Ratio set out in the Terms. 

Can I request early • No, unless a Trigger Event occurs. If you wish to realise an investment Appendix B 

Repayment of in BBSN prior to a Maturity Date, you may sell them on ASX at the clause 4 

BBSN? 

prevailing market price, or seek Exchange on a Reset Date. 

What are Babcock • Babcock & Brown may Repay your BBSN under the Appendix B 

& Brown’s exit following circumstances: clauses 4.3, 5 

rights? 

– Reset Date: Babcock & Brown may Repay some or all of your 

BBSN on a Reset Date by giving a Repayment Notice to you no 

later than 25 Business Days (but no more than three months) 

prior to a Reset Date; 

– On occurrence of a Change in Law Event, Change in Control 

Event or a Delisting Event: Babcock & Brown may Repay all of 

your BBSN by giving a Repayment Notice to you no later than 

10 Business Days after the date on which Babcock & Brown gave 

you notice of the occurrence of the Change in Law Event, Change 

in Control Event, or Delisting Event; 

– Where the aggregate Face Value of BBSN on issue is less 

than $50 million: Babcock & Brown may Repay all of your 

BBSN by giving a Repayment Notice to you no later than 10 

Business Days after the date on which Babcock & Brown gave 

you notice of such an event occurring; and 

– Maturity Date: Babcock & Brown must Repay all outstanding 

BBSN (not the subject of an Exit Notice) on the Maturity Date 

(15 November 2015). 

• Babcock & Brown may Exchange, Repay or Resell (or a combination 

of Exchange Repay and Resell) BBSN the subject of an Exit Notice 

issued by a Holder requesting Exchange (except that, in relation to the 

Maturity Date, Babcock & Brown may only Exchange or Repay BBSN). 



Repayment (continued) 

What are Babcock • Babcock & Brown may Repay or Resell (or a combination of Repay Appendix B 

& Brown’s exit and Resell) BBSN the subject of an Exit Notice issued by a Holder clauses 4.3, 5 

rights? (continued) requesting Repayment. 

What is the • The Repayment Amount is the Face Value plus any Outstanding Interest Appendix B 

Repayment at the Realisation Date that will not be separately paid in cash as interest clause 14.2 

Amount? 

on the Realisation Date. 

When will I • If Babcock & Brown elects to Repay BBSN in cash, you will receive Appendix B 

receive my cash equal to the Repayment Amount (less withholding for any tax) clauses 7, 14.2 

cash upon 

on the Realisation Date, which may be any of the following: 

Repayment? 

– the Reset Date, if Repayment occurs in respect of a Reset Date 

pursuant to an Exit Notice or Repayment Notice; 

– 25 Business Days after Babcock & Brown gives a Repayment Notice 

following a Change in Law Event, Change in Control Event or 

Delisting Event; 

– 25 Business Days after Babcock & Brown gives a Repayment Notice 

where the aggregate Face Value of BBSN on issue is less 

than $50 million; 

– 60 Business Days after Babcock & Brown gives notice of the 

occurrence of a Trigger Event or a Change in Control Event 

(in relation to a Trigger Event, only if the Holder has provided 

an Exit Notice in response to the occurrence of the event); and 

– the Maturity Date. 

Events 

What is a Change • A Change in Law Event occurs, if in the opinion of the Directors Appendix B 

in Law Event? (having obtained an opinion from reputable legal counsel), there is more clause 14.2 

than an insubstantial risk that any member of Babcock & Brown Group 

(or the members or unitholders of, or any class of persons (other than 

creditors in their capacity as such) holding an interest in, that entity): 

– will be exposed to additional costs or the imposition of additional 

requirements which the Directors determine at their sole discretion 

to be unacceptable, as a result of the occurrence of an event on or 

after the Issue Date, including: 

• the introduction, enactment, amendment, change, repeal, 

replacement or revocation of any law or regulation affecting 

securities, including ASX Listing Rules or the announcement 

(including on a prospective basis) of any of the foregoing by 

a Governmental Agency or ASX; or 

• any pronouncement, action or decision of a Governmental 

Agency or ASX interpreting or applying any such law or 

regulation or ASX Listing Rules; or 

– will be exposed to more than a de minimus increase in its costs 

(having regard to relevant deductions) in relation to BBSN as a 

result of increased taxes as a result of changes or clarifications of 

the law or pronouncements or any judicial or administrative 

action on or after the Issue Date. 




Events (continued) 

What is a • A Delisting Event is each of the following: Appendix B 

Delisting Event? – Babcock & Brown ceases to be listed on ASX; and clause 14.2 

– Ordinary Shares are suspended from trading on ASX for a period 

of 20 consecutive Business Days. 

What is a Change • A Change in Control Event is each of the following: Appendix B 

in Control Event? – a takeover bid to acquire all of the Ordinary Shares and the offer clause 14.2 

under the takeover bid is, or becomes, unconditional and: 

• the bidder has acquired at any time during the offer period a 

relevant interest in more than 50% of the Ordinary Shares on 

issue; or 

• the Directors unanimously recommend acceptance of the offer 

under the takeover bid, and acceptance of that offer would result 

in the bidder having a relevant interest in 100% of the Ordinary 

Shares on issue; and 

– a court approves a proposed scheme of arrangement which, when 

implemented, will result in a person having a relevant interest in 

100% of the Ordinary Shares on issue. 

Restrictions 

Are there any • Yes. For example, for so long as there is any Outstanding Interest or a Appendix B 

restrictions on Trigger Event subsists, Babcock & Brown cannot: clauses 2.6, 3, 10, 

Babcock & Brown? – declare or pay any dividend or make any return of capital or other 12.2, 13 

payment to its shareholders; 

– set aside any amounts of cash or any assets for anything referred 

to above; or 

– undertake any arrangement, reconstruction or reorganisation between 

itself and its members or any class of them, or between itself and its 

creditors or any class of them, which would have a material adverse 

effect on the value of BBSN. 

• Babcock & Brown cannot change provisions of the Terms, other 

than in respect of matters subject to a Reset Notice and in the limited 

circumstances under clause 13 of the Terms. 

• However, Babcock & Brown may enter into any transaction without 

restriction including acquiring and disposing of assets, entering into any 

borrowing, guarantee or indemnity and creating and issuing further 

BBSN or other equity or debt securities including securities or other 

indebtedness ranking ahead of the claims of Holders without the 

consent of Holders or the Trustee. 

Guarantee 

What is guaranteed • Under the Guarantee, BBIPL guarantees on a subordinated basis the Section 8.4 

by BBIPL? 

payment of any amounts which become due and payable on BBSN. 

• As the payment of interest is subject to deferral conditions, the Guarantee 

does not ensure that interest will be paid in all circumstances. 



Guarantee (continued) 

Where do • Claims under the Guarantee: Section 8.4 

claims under the – are subordinated to the claims of all creditors of BBIPL (other than 

Guarantee rank? 

creditors whose claims are expressed to rank after, or equally with, 

the claims of Holders under the Guarantee); and 

– will rank in priority to the claims of holders of shares in BBIPL. 

Can the Guarantee • Yes. The Guarantee, like other terms of the Trust Deed, may be Section 8.4 

be altered? 

amended by the Trustee, the Guarantor and Babcock & Brown in 

the limited circumstances set out in the Trust Deed. 

Ranking 

In a Winding Up, • In the event of a Winding Up, Holders will be entitled to receive a Appendix B 

what will I receive repayment of the Face Value and any Outstanding Interest on BBSN, clause 12.3 

from Babcock 

after all creditors whose claims rank ahead of those of Holders have 

& Brown? 

been paid in full, but before any distribution is made to Shareholders. 

Are Interest • Yes. BBSN are subordinated to other debts of Babcock & Brown from Appendix B 

Payments time to time which by their terms rank ahead of the claims of Holders clause 12.3 

subordinated too? in right of any payments, including Interest Payments and on a 

Winding Up. 

What will I receive • On a Winding Up of Babcock & Brown, the Guarantee can be called Section 8.4 

from BBIPL on a upon to meet any shortfall in amounts due under BBSN although 

Winding Up of the Winding Up of Babcock & Brown: 

Babcock & Brown? – may result in action taken in respect of BBIPL which would 

mean that no payment may be made under the Guarantee until 

all creditors of BBIPL which rank ahead of Holders are paid in 

full; and 

– is an event of default under the agreement with the lenders under 

the Existing Corporate Facility and no payment may be made 

under the Guarantee until such senior lenders are paid in full. 

• On a Winding Up of BBIPL, any payment under the Guarantee will be 

made after all creditors whose claims rank before those of Holders have 

been paid in full but before distribution is made to BBIPL shareholders. 

• The Guarantee is subordinated to other debts and liabilities of BBIPL. 

In particular, payment by BBIPL, on a Winding Up of Babcock & 

Brown may be prevented by such arrangements. 

Voting rights 

Do BBSN have • Holders do not have rights to vote at general meetings of Appendix B 

voting rights? Babcock & Brown unless provided for by the Listing Rules clauses 12.6, 13 

or the Corporations Act. 

• Certain amendments to the Terms and Trust Deed may not be made 

unless put to a vote of the Holders. 




Fees and payments 

What do • $100 per BBSN. Section 3.7.1 

BBSN cost? • No further payments are required. 

• A minimum of 50 BBSN must be applied for. Therefore the minimum 

investment is $5,000. 

Is brokerage • No brokerage or stamp duty is payable by General Applicants or Section 3.7.3 

or stamp duty 

Broker Firm Applicants on the issue of BBSN. Under current law, 

payable? 

stamp duty will not be payable on the subsequent transfer of BBSN 

while BBSN are quoted on ASX. Holders may have to pay brokerage 

on any subsequent transfer of their BBSN following quotation on ASX. 

Does Babcock & • No. 

Brown receive a 

fee from Holders? 

Communication 

When will • Half-yearly with Babcock & Brown half-yearly financial accounts Appendix B 

Babcock & Brown (if you so request). clauses 2.3, 3, 4.2, 

communicate • Once a year with Babcock & Brown full year financial accounts 4.3, 5.1, 12.10 

with you? 

(if you so request). 

• If an Interest Payment is deferred. 

• If any of the following events occur: 

– a Trigger Event; 

– a Change in Control Event; 

– Change in Law Event; 

– Delisting Event; or 

– the aggregate Face Value of BBSN on issue falls below $50 million. 

• If Babcock & Brown makes any changes to certain terms to be effective 

from a Reset Date. 

• On receipt of an Exit Notice from a Holder, Babcock & Brown will 

give you a Repayment Notice indicating what will happen to BBSN 

that are the subject of the Exit Notice. 

• If Babcock & Brown is exercising any of its rights to Repay BBSN. 

Enquiries 

Enquiries • If, after reading this Prospectus, you have any further questions on 

how to apply for BBSN, please contact your Retail Broker, or call 

the BBSN InfoLine on 1800 818 562. 


3. Details of the Offer 



3.1 Issuer of BBSN 

The issuer of BBSN is Babcock & Brown Limited, a company listed on ASX. 

The diagram below illustrates the position of BBSN in the Babcock & Brown Group structure. 

BBSN Holders 

Gross Offer 

proceeds 

BBSN 


100% 

ownership 

Ordinary 

Shareholders 

Net Offer proceeds 

(BBIPL Loan) 

71% 

ownership 

BBIPL 

29% 

ownership 

US Executive 

Stakeholders 

Operating 

companies 

3.2 Use of Offer proceeds 

The net proceeds of the Offer will be lent by Babcock 

& Brown to BBIPL under the BBIPL Loan on terms and 

conditions which are equivalent to the Terms in all material 

respects. Section 8.8 provides a summary of the BBIPL Loan. 

BBIPL is the holding company for the Babcock & Brown 

Group’s operations. BBIPL is owned by Babcock & Brown (71%) 

and the US Executive Stakeholders (29%). For a description 

of the relationship between Babcock & Brown and BBIPL 

under the BBIPL Constitution, see Section 8.6. 

BBIPL will use the principal of the BBIPL Loan to fund 

future investment activities of the Babcock & Brown Group. 

As described in Section 4 of this Prospectus, the Babcock & 

Brown Group’s business consists of identifying, structuring, 

arranging and investing in transactions globally across five 

business areas. Since the IPO in October 2004, the number 

of investment opportunities identified by Babcock & Brown 

has grown significantly. Accordingly the funds raised by the 

issue of BBSN will be generally used across the business 

to enable Babcock & Brown to participate in a pipeline of 

identified and expected future investments. It is the intention 

that the funds will be applied to short and medium term 

investment opportunities, such as: 

• an equity investment in an unlisted aircraft fund; 

• an equity investment in US freight railcar syndications; 

• investment in wind farm developments in the US, 

Australia and Europe; and 

• investment in other power generation assets both through 

development and by acquisition of completed assets. 

However, the funds may also be used to expand our funds 

management and advisory businesses. 

The raising of additional debt finance will not, however, 

change the fundamental Babcock & Brown Group philosophy 

of recycling its capital regularly. It is anticipated that the funds 

will be employed within the business as is our equity and senior 

bank debt. The investment profile of the Babcock & Brown 

Group is expected to vary over time and given the approximate 

10 year maturity of BBSN, it is anticipated that the application 

of the Offer proceeds will change several times within 

that period. 


3.2.1 Source of Interest Payments 

Babcock & Brown’s assets include A Class Shares in BBIPL 

and the BBIPL Loan. The BBIPL Loan is expected to be 

the primary source of funds by which Babcock & Brown 

will service the Interest on BBSN. BBIPL is obliged to pay 

Babcock & Brown interest on the BBIPL Loan equal to the 

obligation of Babcock & Brown to pay interest on BBSN 

and on the date such payment is due. It is expected that BBIPL 

will be able to make payments under the BBIPL Loan. 

In certain circumstances, BBIPL may be prevented, under 

arrangements with BBIPL’s senior lenders, from making 

interest payments to Babcock & Brown. For example, BBIPL 

will be prevented from making such payments without senior 

lender consent if: 

• there is a continuing default under the Existing Corporate 

Facility; 

• there is a substantial reduction in the shareholding of the 

Group by employees; 

• more than 10% of certain key management individuals 

leave the employment of the Group; 

• Ordinary Shares are delisted or the average Ordinary 

Share price declines by more than 25% in any quarter; 

• any individual acquires more than 20% of the issued 

Ordinary Shares; or 

• net profit after tax is less than A$100 million or there is 

an attachment against the assets of a member of the Group 

other than BBIPL for more than A$20 million. 

For a more detailed summary of the relevant restrictions 

under the Existing Corporate Facility, see Section 8.9. 

3.2.2 Source of Repayment 

BBSN are unsecured notes issued by Babcock & Brown and 

are Repayable on the Maturity Date and earlier in certain 

limited circumstances, as described in Sections 1 and 2 and in 

the Terms in Appendix B. 

The BBIPL Loan is expected to be the primary source of funds 

by which BBSN are Repayable. As the principal amount of the 

BBIPL Loan is equal to the net proceeds of the BBSN, 

Babcock & Brown will rely on dividends from BBIPL or 

intercompany loans to fund the balance. As noted above, the 

Offer proceeds are expected to be substantially employed in 

short to medium term investment opportunities for the Babcock 

& Brown Group. Accordingly, BBIPL is expected to be able 

to repay the BBIPL Loan from its cash flows and regular 

capital recycling and to pay dividends to Babcock & Brown. 

3.3 Structure of the Offer 

Babcock & Brown intends to issue up to 2.5 million BBSN at 

an issue price of $100 each to raise up to $250 million, with the 

ability to accept oversubscriptions for up to $50 million. There 

is no minimum amount to be raised by the Offer. 

The Offer comprises: 

• a General Offer, made to Australian resident retail 

investors; 

• a Broker Firm Offer, made to Australian resident clients of 

a Retail Broker who have received broker firm Allocations 

of BBSN from that Retail Broker; and 

• an Institutional Offer, made to certain Institutional Investors 

who are invited to bid for an Allocation by the Lead 

Manager & Bookrunner. 

In the event of failure to raise the full amount contemplated 

by the Offer, Babcock & Brown will rely on other funding 

sources (including undrawn senior debt facilities of BBIPL) 

to finance its activities. 

3.4 Who may apply? 

You may apply for BBSN if you are an Australian resident, 

through the General Offer, or a Broker Firm Applicant, 

through the Broker Firm Offer. 

Institutional Investors may also be invited by the Lead Manager 

& Bookrunner to bid for BBSN under the Bookbuild. No action 

has been, or will be, taken to register or qualify BBSN or 

otherwise permit a public offering of BBSN in any jurisdiction 

outside Australia. BBSN may, at Babcock & Brown’s discretion, 

be offered to Institutional Investors in a jurisdiction outside 

Australia where such an offer is made in accordance with the 

laws in that jurisdiction. 

For information on the Allocation policy, see Section 3.10. 

The Offer constituted by this Prospectus in electronic form 

is available only to persons receiving this Prospectus in 

electronic form in Australia. 

3.5 When can you apply? 

If you are a General Applicant, you can apply during the 

General Offer Period, which is expected to begin on 

21 November 2005 and close at 5.00pm on 14 December 

2005. Application Forms and accompanying Applications 

payments must be received by the Registry by the General 

Offer Closing Date. 



If you are a Broker Firm Applicant, you can apply during the 

Broker Firm Offer Period, which is expected to begin on 

21 November 2005 and close at 10.00am on 19 December 

2005. Application Forms and accompanying Application 

payments must be received by Retail Brokers in accordance 

with arrangements made between them and their clients. 

Babcock & Brown, in consultation with the Lead Manager 

& Bookrunner, may extend the Offer, close the Offer early 

without notice, or withdraw the Offer at any time before 

BBSN are issued (or accept late applications either generally 

or in particular cases). If you wish to apply for BBSN you are 

encouraged to submit your Application Form and Application 

payments as soon as possible after the Opening Date. If the 

Closing Dates are varied, subsequent dates may also be varied 

accordingly. 

3.6 How can you apply? 

3.6.1 General Offer 

If you are an Australian resident retail investor, and want to 

apply for BBSN through the General Offer, you must 

complete the Application Form accompanying this Prospectus 

in accordance with the instructions on the Application Form. 

You may obtain a printed copy of this Prospectus by 

contacting the BBSN InfoLine on 1800 818 562 or an 

electronic copy at www.babcockbrown.com 

3.6.2 Broker Firm Offer 

If you have received a firm Allocation of BBSN from a 

Retail Broker, you should contact that Retail Broker for 

information about how to submit an Application Form and 

Application payment. 

Application payments must be made payable to the Retail 

Broker and the completed Application Form and Application 

payments must be delivered to the Retail Broker directly 

(not to the Registry or Babcock & Brown). 

Any other requirements can be explained to Broker Firm 

Applicants in further detail by their Retail Broker. Retail 

Brokers act as the agent of Broker Firm Applicants in relation 

to the Broker Firm Offer. Babcock & Brown and the Lead 

Manager & Bookrunner are not responsible for any act or 

omission of a Retail Broker in relation to an Application. 

There is no facility for Applications to be submitted electronically 

except where it may be provided by a Retail Broker. 

3.7 How do you pay for BBSN? 

3.7.1 Minimum Application amount 

The Application price of each BBSN is $100, also referred to as 

the Issue Price. Applications must be for a minimum of 50 BBSN 

($5,000). If your Application is for more than 50 BBSN, you 

must apply in incremental multiples of 10 BBSN — that is, for 

incremental multiples of at least $1,000. 

Babcock & Brown and the Lead Manager & Bookrunner 

reserve the right to reject any Application, or to Allocate any 

General Applicant a lesser number of BBSN than applied for, 

including less than the minimum of 50 BBSN ($5,000) or no 

BBSN at all. 

3.7.2 Application payments 

General Applicants must submit to the Registry their completed 

Application Form accompanied by a cheque(s) and/or money 

order(s) (or both) in Australian dollars drawn on an Australian 

branch of a financial institution. Cheques must be crossed “not 

negotiable” and made payable to “Babcock & Brown Limited 

— BBSN Offer Account”. Cash payments will not be accepted. 

Broker Firm Applicants must submit their Application payments 

in accordance with arrangements made with their Retail Broker. 

All Application payments received before BBSN are issued will 

be held by Babcock & Brown on trust in an account established 

solely for the purpose of depositing Application payments 

received. Any interest that accrues on the Application payments 

will be, and will remain, the property of Babcock & Brown. 

3.7.3 Brokerage and stamp duty 

You do not have to pay brokerage or stamp duty on your 

Application. Under current law, you will not have to pay 

stamp duty if you transfer BBSN on ASX at a later date, but 

you may be required to pay brokerage. 

3.7.4 Refunds 

If the Offer does not proceed for any reason, all applicants will 

have their Application payments refunded to them (without 

interest) as soon as practicable and BBSN will not be issued. 

In relation to the General Offer, where no Allocation is made, 

or the value of BBSN Allocated is less than the value for 

which an Application is made, surplus Application payments 

will be returned (without interest) as soon as possible. 


3.8 How do you complete Application Forms? 

There is a guide on how to complete the Application Forms in 

the back of this Prospectus. 

3.8.1 Provision of Tax File Number and/or Australian 

Business Number 

If you are an Australian tax resident Holder, the Registry will 

provide you with a form when your Holding Statement is 

despatched to you that will request your Tax File Number 

(TFN) and/or Australian Business Number (ABN). You do 

not have to provide your TFN or ABN. However, Babcock & 

Brown may be required to withhold Australian tax at the 

maximum highest marginal tax rate (currently 48.5% including 

the Medicare Levy) on the amount of any Interest Payments 

unless one of the following is provided: 

• TFN; 

• TFN exemption details (if applicable); or 

• ABN (if BBSN are held in the course of an enterprise 

carried on by a Holder). 

3.8.2 Acknowledgment and privacy statement 

By returning an Application Form, you acknowledge that you 

have received and read this Prospectus in its entirety. 

The information about you included on an Application Form 

is used for the purposes of processing the Application and, if it 

is successful, to administer your BBSN holding (and Ordinary 

Shares if they are issued on Exchange). For information about 

the acknowledgments and privacy statement in relation to 

personal information that you provide by completing an 

Application Form, see Section 8.18. 

3.9 Where do you send completed 

Application Forms? 

If you are a General Applicant, your completed Application 

Form and Application payment should be: 

• mailed to: 

BBSN Offer 


Locked Bay A14 

Sydney South NSW 1235 

• or hand delivered to: 

BBSN Offer 



Sydney NSW 2000 

Broker Firm Applicants should return their completed 

Application Forms and Application payments in accordance 

with arrangements made between them and their Retail Broker. 

3.10 Allocation policy 

Babcock & Brown intends to issue up to 2.5 million BBSN 

to raise up to $250 million. If there is sufficient demand, 

Babcock & Brown, in consultation with the Lead Manager & 

Bookrunner, will consider accepting oversubscriptions for up 

to 0.5 million BBSN to raise up to an additional $50 million. 

The Allocation policy for Retail Brokers will be determined 

under the Bookbuild, see Section 3.10.1. Babcock & Brown 

and the Lead Manager & Bookrunner have the right to 

nominate the persons to whom BBSN will be Allocated, 

including in respect of firm Allocations to Retail Brokers 

and Institutional Investors. 

The arrangements between Babcock & Brown and the Lead 

Manager & Bookrunner in relation to how the Offer is to be 

managed are set out in the Offer Management Agreement 

which is summarised in Section 8.7. 

3.10.1 Bookbuild 

The Bookbuild is a process conducted by the Lead Manager 

& Bookrunner after this Prospectus is lodged with ASIC 

and prior to the Opening Date. In this process, Institutional 

Investors, Senior Co-Managers, Co-Managers and other 

brokers, are invited to lodge bids for BBSN with an indicative 

Margin range of 2.00% to 2.30% per annum. 

On the basis of those bids, Babcock & Brown and the Lead 

Manager & Bookrunner will determine the Margin until the 

first Reset Date and firm Allocations to Retail Brokers and 

Institutional Investors. 

The Bookbuild will be conducted under the terms and 

conditions agreed by Babcock & Brown and the Lead Manager 

& Bookrunner under the Offer Management Agreement. Firm 

Allocations under the Bookbuild will be issued to successful 

Applicants under the terms and conditions of this Prospectus. 

3.10.2 Settlement underwriting 

On, and subject to, the successful completion of the Bookbuild, 

the Lead Manager & Bookrunner has agreed in the Offer 

Management Agreement to settlement underwrite the number 

of BBSN Allocated to Institutional Investors and Retail Brokers 

through the Bookbuild. Under the Offer Management 

Agreement, as part of this settlement underwriting, the Lead 

Manager & Bookrunner will pay to Babcock & Brown, or 



procure payment to Babcock & Brown of, the net proceeds 

raised from Institutional Investors and Retail Brokers from 

firm Allocations under the Bookbuild. 

The Offer Management Agreement may be terminated by 

the Lead Manager & Bookrunner in certain circumstances. If 

it does terminate, Institutional Investors and Retail Brokers 

who participated in the Bookbuild can withdraw their firm 

Allocations. 

A summary of the Offer Management Agreement is set out in 

Section 8.7. 

3.10.3 Allocations 

3.11 ASX quotation, trading and 

Holding Statements 

3.11.1 ASX quotation 

Babcock & Brown will apply to ASX for the quotation of BBSN on 

ASX within seven days after the date of this Prospectus. Quotation 

is not guaranteed. If such application is not made, or if ASX does 

not grant permission for BBSN to be quoted within three months 

after the date of this Prospectus (or any longer period permitted by 

law), BBSN will not be issued and Application payments will be 

refunded, without interest, as soon as practicable. 

It is expected that BBSN will be quoted under the ASX code ‘BNBG’. 

General Offer 

Broker Firm Offer 

Institutional Offer 

Allocations to General Applicants 

will be at the discretion of Babcock 

& Brown and the Lead Manager 

& Bookrunner. Babcock & 

Brown and the Lead Manager & 

Bookrunner reserve the right (at 

their discretion) to: 

– allocate all BBSN for which an 

Application is made; 

– reject any Application; or 

– allocate to any General 

Applicant a lesser number of 

BBSN than that applied for, 

including less than the minimum 

Application of 50 BBSN. 

Allocations to Broker Firm 

Applicants by a Retail Broker will 

be at the discretion of that Retail 

Broker. That Allocation will be 

subject to the terms and conditions 

of the Bookbuild and the offer 

made to that Retail Broker by the 

Lead Manager & Bookrunner. 

Allocations to Institutional Investors 

will be at the discretion of Babcock 

& Brown and the Lead Manager & 

Bookrunner subject to the terms and 

conditions of the Bookbuild. 

3.11.2 Trading 

It is expected that BBSN will begin trading on ASX on a deferred 

settlement basis on 22 December 2005. Trading is expected to 

continue on that basis until 29 December 2005 when it is expected 

that trading of BBSN will begin on a normal settlement basis. 

Deferred settlement will occur as a consequence of trading which 

takes place before Holding Statements are sent out to Holders. 

You are responsible for confirming your holding prior to trading 

BBSN. If you sell your BBSN before you receive your Holding 

Statement, you do so at your own risk. You may call your Retail 

Broker or the BBSN InfoLine on 1800 818 562 after the Issue 

Date, expected to be 21 December 2005, to enquire about your 

Allocation. 

3.11.3 Holding Statements 

Babcock & Brown will apply for BBSN to participate in CHESS. No 

certificates will be issued for BBSN. Babcock & Brown expects that 

Holding Statements will be despatched to Holders by 28 December 

2005, setting out the number of BBSN issued to each successful 

applicant. 

3.12 Enquiries 

You can call the BBSN InfoLine on 1800 818 562 (Monday to 

Friday — 8.30am to 5.30pm) if you: 

– have further enquiries about how to apply for BBSN; 

– require assistance to complete your Application Form; or 

– require additional copies of this Prospectus and its Application 

Forms. 

If you are unclear in relation to any matter or are uncertain 

if BBSN are a suitable investment, you should contact your 

stockbroker, accountant, other financial advisor. If you 

are in any doubt what action you should take, you should 

immediately contact your Retail Broker. 


4. information about babcock & brown 



4.1 Overview 

Babcock & Brown is a global investment and advisory group 

with longstanding capabilities in structured finance and the 

creation, syndication and management of asset and cash flow 

based investments. Babcock & Brown was formed in 1977 as 

an advisor and arranger of US leveraged leases. In the ensuing 

28 years, Babcock & Brown has consistently built upon its 

expertise in asset based finance to expand its activities both 

functionally and geographically into areas where these core 

strengths continue to provide the Group with a competitive 

advantage. 

Babcock & Brown operates from 18 offices worldwide, 

anchored by administrative hub-offices in Sydney, San Francisco, 

New York, Munich and London. Babcock & Brown listed on 

ASX in October 2004. As at 4 November 2005 Babcock & 

Brown Group had an equity capitalisation of approximately 

$5.8 billion. 1 While it is headquartered in Australia, Babcock 

& Brown remains a global concern with over two-thirds of 

its revenue derived from markets outside of Australia. 

Global locations 

One of the most significant aspects of Babcock & Brown’s 

recent development has been its evolution from being purely 

an advisor and arranger to also being a fund manager and 

principal in the transactions in which it is involved. Often 

this has been in conjunction with co-investors or on behalf 

of investment vehicles it has established. Experience has 

demonstrated that combining Babcock & Brown’s knowledge 

of certain asset classes and industries with its financial structuring 

expertise can lead to attractive returns for Babcock & Brown 

and its investor clients. 

While parts of Babcock & Brown (primarily in Australia) 

have utilised the Group’s capital since the early 1990s, this 

expansion into investment-related activities only began in 

earnest on a firm-wide basis after Bayerische Hypo- und 

Vereinsbank AG (HVB), Germany’s second largest bank, 

invested in Babcock & Brown in early 2000. Prior to listing, 

Babcock & Brown also raised third party funds from private 

investors to finance its principal investment transactions. 

These investment-related activities have been profitable for 

both itself and its investors. Growth in these activities has 

accelerated since the 2004 IPO of Babcock & Brown. 

4.2 Business operations 

Babcock & Brown has five business groups: 

• Real Estate; 

• Operating Leasing; 

• Corporate Finance; 

• Structured Finance; and 

• Infrastructure and Project Finance. 

A specialised asset and funds management platform sits across 

these five business groups. 

Notes: 1. Shares in Babcock & Brown and shares held in BBIPL (other than by Babcock & Brown) have materially equivalent rights and 

hence are aggregated for the purposes of the Group equity capitalisation figure. 

San Francisco 

San Diego 

Greenwich 

New York 

London 

Dublin Luxembourg 

Paris Munich 

Milan 

Madrid 

Tokyo 

Hong Kong 

Kuala Lumpur 

Johannesburg 

Melbourne 

Brisbane 

Sydney 


4.2.1 Real Estate 

The Real Estate group is predominantly focused on principal 

investment transactions and investment management activities 

in real estate. The group also undertakes advisory assignments 

where these involve large-scale assets, complex financings or are 

relationship driven. 

Babcock & Brown’s activities in this area encompass: 

• Advisory — acquisition and financial advisory, debt/equity 

arrangement, structuring and tenant advisory; 

• Investment Management — private investment syndication 

and management and the creation of listed and unlisted 

funds; and 

• Principal Investment — participation in development 

projects and standing investments by way of joint ventures, 

mezzanine debt provision, equity investment and as an 

underwriter of projects and securities. 

In early 2005, Babcock & Brown listed the Babcock & Brown 

Japan Property Trust (BJT) providing investors access to the 

Japanese property market. In mid-2005 Babcock & Brown 

entered into a joint venture with General Property Trust with 

a mandate to invest over $5 billion by 31 December 2006. 

Babcock & Brown is currently undertaking real estate operations 

in Australia, Japan, New Zealand, the United Kingdom, Germany, 

Spain, Italy, France, Czech Republic and the United States. 

4.2.2 Operating Leasing 

Babcock & Brown’s Operating Leasing group manages a 

portfolio of assets (valued at 30 June 2005) of more than 

$6.1 billion within four business units: 

• Babcock & Brown Aircraft Management (BBAM) — aircraft; 

• Babcock & Brown Rail Management (BBRM) — railcars; 

• Eurorail — locomotives and railcars; and 

• Babcock & Brown Electronics Management (BBEM) 

— semiconductor manufacturing equipment. 

Within each of its operating leasing businesses, Babcock & 

Brown seeks to acquire portfolios of assets that can be placed 

with appropriate long term investors, while maintaining 

an ongoing management role. The assets are typically held 

under investment structures designed by Babcock & Brown 

to optimise financial returns which are shared between all 

investors. This approach enables Babcock & Brown to utilise 

its investment selection and structuring expertise to build and 

optimise its operating leasing portfolios, while minimising 

reliance on its financial resources. As a result, Babcock & 

Brown is able to effectively compete with better capitalised 

competitors. 

The net revenues of the Operating Leasing group are generated 

by a large number of relatively low-value transactions. The group 

earns revenue from asset acquisition and syndication fees, 

ongoing management fees, equipment trading, performance 

based remarketing, and exit fees. Management, remarketing 

and exit fees have grown together with the size of the leased 

asset portfolios and, due to the long term nature of most 

management contracts, provide an element of highly reliable 

ongoing revenue. 

4.2.3 Corporate Finance 

The Corporate Finance group originates, structures and 

participates in equity or debt investments in both publicly 

listed and private enterprises primarily in areas not covered 

by Babcock & Brown’s other business groups. The group 

seeks to take an active role in working with management and 

other key stakeholders to realise value in these transactions. 

The current focus of the group is to secure investments 

for Babcock & Brown Capital Limited (Babcock & Brown 

Capital), Babcock & Brown Direct Investment Fund Limited 

(BBDIF) and Babcock & Brown Global Partners (BBGP). 

The Corporate Finance group is actively seeking to expand 

its mergers and acquisitions and equity advisory business. The 

primary objective of the mergers and acquisitions and equity 

advisory business will be to service Babcock & Brown and its 

related entities, but it will take on third party mandates, usually 

only in conjunction with an investment transaction, or for the 

purposes of building or cementing a relationship with a 

valued partner. 

While the Corporate Finance group has historically been 

characterised by opportunistic activity, the management of 

Babcock & Brown Capital ($501 million equity) and BBDIF 

will underpin the revenues of the group with annuity 

style income from management, advisory and transaction 

fees. On 12 July 2005, Babcock & Brown announced the 

successful closing of a further co-investment fund, BBGP. 

This fund raised €371 million (approximately $587 million). 

Under BBGP’s management agreement, Babcock & Brown is 

identified as the fund’s preferred corporate finance advisor. 



4.2.4 Structured Finance 

The Structured Finance group principally comprises three 

business units: 

• Special Products — involving development of specialised 

structured finance products; 

• Finance Leasing — specialising in lessor and lessee 

advisory, ‘big ticket’ finance lease arrangement, debt 

placement for lease advisory clients and restructuring 

advisory; and 

• Capital Markets — provision of hedging services and 

derivatives securitisation and the development of structured 

finance products involving capital market instruments. 

The Structured Finance group’s activities have historically been 

mostly advisory in nature. In 2005, the group has increasingly 

focused on the underwriting, restructuring and/or distribution 

of investment transactions. The expertise and knowledge gained 

through servicing clients also plays an extensive role in assisting 

in the structuring and execution of transactions in other parts 

of Babcock & Brown, providing a key competitive advantage 

in many of the firm’s other activities. 

The Structured Finance group is well established and operates 

on a global basis with key centres in Australia, the United States 

and Europe. 

4.2.5 Infrastructure and Project Finance 

Babcock & Brown has a highly regarded infrastructure and 

project finance business operating across a diversified range 

of sectors, including renewable energy, power, transportation, 

public private partnerships (PPPs) and energy distribution 

and transmission. Over the past 20 years since Babcock & 

Brown commenced operations in the infrastructure sector, 

it has developed a substantial portfolio of infrastructure and 

project finance assets for itself and its managed funds. As at 

30 June 2005 funds and assets under management were more 

than $6.1 billion. 

The Infrastructure & Project Finance group utilises Babcock & 

Brown’s structured finance expertise in its principal investmentrelated 

activities. In its role as originator and investor in 

development projects, the group focuses on generating attractive 

development returns and developing long term investment 

management roles in relation to assets or vehicles acquired or 

originated. This increasingly provides Babcock & Brown with 

new transactions and/or clients. 

The Infrastructure & Project Finance group has a mix of 

financial advisory, principal finance and funds management 

activities. The scope of its roles within these activities include: 

• Advisory — merger and acquisition advisory, project 

finance advisory, corporate advisory and debt/equity 

arrangement; 

• Investment Management — private investment 

syndication and management of listed funds; and 

• Principal Investment — project development, greenfield 

development, equity investment and senior and mezzanine 

debt provision. 

This business is well established in the United States, Australia 

and Europe and has recently expanded into Asia. 

4.3 Specialised funds and asset 

management platform 

The specialised funds and asset management platform has 

expanded rapidly since Babcock & Brown listed in October 

2004. Aided by new capital sources, Babcock & Brown has 

created a number of specialist investment vehicles. 

Babcock & Brown generates various income streams on its 

managed funds including management, performance and in 

some cases transaction related fees. 

4.3.1 Babcock & Brown Capital 

Babcock & Brown Capital is listed on ASX and aims to make 

significant/controlling investments in a concentrated portfolio 

with a flexible investment horizon. It has the ability to identify 

and execute investment opportunities worldwide utilising the 

Babcock & Brown network. Funds under management at 

30 June 2005 were $501 million. There is a further call of 

$500 million due on 4 February 2006, although this call can 

be deferred for up to six months at the discretion of the board 

of Babcock & Brown Capital. 

On 10 October 2005, Babcock & Brown Capital and 

its associates acquired a strategic shareholding in Irish 

telecommunications operator Eircom Group plc (Eircom), 

representing approximately 12.5% of the issued ordinary share 

capital of Eircom. 

4.3.2 Babcock & Brown Infrastructure Group 

Babcock & Brown Infrastructure Group (BBI) is a leading 

ASX-listed infrastructure fund with a diversified international 

portfolio of quality infrastructure assets including energy 


distribution, bulk terminal and power generation. At 30 June 

2005, BBI had assets under management of $4.5 billion 

including Powerco, a leading gas and electricity transmission 

company in New Zealand, Dalrymple Bay Coal Terminal in 

Australia and International Energy Group in the UK, which 

holds gas transportation assets. 

4.3.3 Babcock & Brown Environmental 

Investments Limited 

Babcock & Brown Environmental Investments Limited (BEI) 

invests in high quality environmentally friendly businesses and 

seeks to secure first-mover advantage in renewable energy 

markets initially in Australia and potentially overseas. At present 

BEI owns a 50% interest in Natural Fuels Australia Pty Limited, 

a waste-to-energy and fertiliser facility servicing the Sydney 

basin and a refining operation based in Wagga Wagga, NSW. 

BEI has commenced building a biodiesel plant in Darwin. 

Following a restructure of the Group, which was approved by 

shareholders on 24 June 2005, and completed on 5 July 2005, 

assets under management increased to approximately 

$100 million. BEI is listed on ASX. 

4.3.4 Babcock & Brown Japan Property Trust 

Babcock & Brown Japan Trust (BJT) has been established 

to invest in the real estate market in Japan. It presently has a 

portfolio of eight office properties and four retail properties 

with a value of approximately ¥47.3 billion ($563 million) 

as at 30 June 2005. BJT is listed on ASX. 

4.3.5 Babcock & Brown Wind Partners 

Babcock & Brown Wind Partners (formerly Global Wind 

Partners) listed on ASX on 28 October 2005 with a market 

capitalisation at the listing price of $692 million. Babcock & 

Brown Wind Partners is a specialist wind energy fund focused 

on the growing global wind energy generation industry. 

Currently Babcock & Brown Wind Partners has an economic 

interest in 15 wind farms across Australia, USA and Spain with 

a total installed capacity of 671.6 MW. 

4.3.6 BGP Investment Sarl 

In February 2005, Babcock & Brown and GPT announced 

a $1 billion strategic joint venture (GPT JV). The joint 

venture was formed to pursue real estate investment, trading 

and development opportunities worldwide and will seek to 

establish a listed and wholesale real estate funds management 

business in Australia. 

The joint venture property vehicle, BGP Investment Sarl, holds 

interests in assets at a total aggregate market value estimated 

at 30 June 2005 to be $1.1 billion which includes low rise 

medium density residential apartment portfolios located 

across western Germany and a shopping centre in Prague, 

Czech Republic. On 24 October 2005 the GPT JV announced 

additional acquisitions with a net value of $1.2 billion (valued 

at the acquisition cost). These acquisitions included European 

and US assets and increased the total assets currently owned 

by the GPT JV to $2.3 billion. The joint venture vehicle will 

have initial borrowings of 65% of total assets and it is intended 

that ultimate borrowings will not exceed 75% of total assets. 

4.3.7 UK retail property syndicates 

The Group manages two closed retail property syndicates 

in the UK. 

Foundation Property Fund raised £8.7 million 

(approximately $20.6 million) from retail investors and closed 

in May 2004. The fund’s strategy is to invest in UK real estate 

assets in the office, retail and industrial sectors. The fund can 

borrow up to 80% of the portfolio’s gross asset value. The 

fund’s 10% return profile seeks to provide a balance between 

income and capital. 

Viking Fund raised £5.2 million (approximately $12.3 million) 

from retail investors and closed in July 2005. The fund can 

borrow up to 90% of the portfolio’s gross asset value. The fund 

is able to invest into any property sector and can also invest in 

corporate entities, debt instruments secured against property 

or any other real estate-related investment. It can invest in both 

the UK and the EU countries of Europe. The fund’s 15% return 

profile focuses primarily on providing capital return to investors. 

4.3.8 Babcock & Brown Direct Investment Fund 

Babcock & Brown Direct Investment Fund (BBDIF) has been 

structured to deliver superannuation funds and other institutional 

investors the ability to invest in a portfolio of direct debt and 

equity investment opportunities sourced out of Babcock & 

Brown’s global principal investment activities, with primary 

emphasis on Australian and New Zealand based investments. 

BBDIF can also source opportunities from third parties. Funds 

under management at 30 June 2005 were $66.4 million. 

4.3.9 Public Private Partnerships 

Babcock & Brown acts as a developer of and investor in 

projects originated under the UK government’s private 

finance initiative (PFI) and other similar PPP regimes. 



Babcock & Brown has, as at 30 June 2005, reached financial 

close on 15 projects with a gross value of approximately 

£425 million (approximately $1,006 million). 

Included in the PFI/PPP projects are four NHS LIFT projects. 

The NHS LIFT projects recently secured by Babcock & Brown 

offer a long term partnership with UK government bodies and 

provide geographical exclusivity to supply certain types of health 

care accommodation for 20 years and thus offer the prospect of 

a pipeline of transactions beyond the initial schemes developed 

under each program. Babcock & Brown is involved in four 

NHS LIFT projects covering 12 local government areas. 

4.3.10 Everest Babcock & Brown Alternative 

Investments Group 

Everest Babcock & Brown Alternative Investments Group (EBB) 

is a stapled structure comprising Everest Babcock & Brown 

Alternative Investment Trust and Everest Babcock & Brown 

Alternative Investment Management Limited. EBB provides 

investors with combined exposure to a diversified portfolio of 

international absolute return funds and a 30% interest in Everest 

Capital Limited, a growing funds management business. EBB’s 

investment objective is the generation of strong, risk adjusted, 

absolute investment returns over the long term in all market 

conditions. EBB listed on ASX in April 2005, raising 

$300 million from its initial public offering. 

4.3.11 Babcock & Brown Global Partners 

On 12 July 2005, Babcock & Brown announced the successful 

closing of its unlisted €371 million (approximately $587 million) 

co-investment fund Babcock & Brown Global Partners (BBGP). 

BBGP has been established to invest exclusively in transactions 

originated and structured by Babcock & Brown on a global basis. 

BBGP has the right to participate in equity opportunities that 

Babcock & Brown is seeking to syndicate to third party investors. 

It is envisaged that the fund will ultimately have a diversified 

portfolio of global investments. 

The majority of the capital was committed by high net worth 

individuals and other private investors from Europe. BBGP 

targets investors that have the ability to generate transactions 

and work proactively alongside Babcock & Brown. 

4.4 Board of Directors 

The current Board of Directors comprises four independent 

Non-Executive Directors and four Executive Directors. Details 

of each of the Director’s positions and their biographies are 

provided below. 

James Babcock, Executive Chairman and Chairman 

of the Nomination & Governance Committee. Jim 

co-founded Babcock & Brown in 1977. Prior to founding 

Babcock & Brown, Jim practised corporate and tax law. Jim 

is a graduate of Harvard College and Harvard Law School 

where he was a member and officer of the law review. He is 

based in our San Francisco office. 

James Fantaci, Executive Director. Jim has geographic 

responsibility for North America and coordinates the Group’s 

Operating Leasing activities worldwide. He joined Babcock 

& Brown in 1982. Prior to joining Babcock & Brown, Jim 

was Senior Vice President of the New York office of Matrix 

Leasing International and prior to that he served as Assistant 

Treasurer of the Bank of New York. Jim attended the New 

School for Social Research and graduated from Brooklyn 

College with a Degree in Economics. He is based in our New 

York office. 

Phillip Green, Executive Director. Phil is Managing 

Director of Babcock & Brown and joined the Babcock & 

Brown Group in 1984. Prior to joining Babcock & Brown, 

Phil worked as a senior manager with Arthur Andersen 

where he specialised in taxation. Phil is also Chairman of 

Babcock & Brown Infrastructure Limited, Babcock & Brown 

Environmental Investments Limited and of the responsible 

entity of MTM Entertainment Trust and is a Director of 

Babcock & Brown Japan Property Management Limited, 

a responsible entity for Babcock & Brown Japan Property 

Trust, Everest Babcock & Brown Alternative Investments, 

Abacus Group Holdings and Thakral Holdings Limited. Phil 

holds Bachelor of Commerce and Bachelor of Laws degrees 

from the University of New South Wales. He qualified as a 

Chartered Accountant in 1981 and was admitted as a solicitor 

in NSW in 1978. He is based in our Sydney office. 

Ian Martin, Non-Executive Director and Chairman of 

the Remuneration Committee. Ian has over 20 years 

experience in investment management and investment 

banking. He is a former CEO of the BT Financial Group and 

Global Head of Investment Management and Member of the 

Management Committee of Bankers Trust Corporation 

(a global investment bank which was acquired by Deutsche 

Bank in 1999). Early in his career he also spent eight years as 


an economist with the Australian Treasury, Canberra. He was 

inaugural Chairman of the Investment and Financial Services 

Association. Ian holds an Honours Degree in Economics from 

the University of Adelaide and an Advanced Diploma from the 

Australian Institute of Company Directors. Ian is also a Director 

of Argo Investments Limited, GPT Group and St Vincent’s and 

Mater Health Sydney Limited. 

Elizabeth Nosworthy AO, Non-Executive Director and 

Deputy Chairman. Elizabeth was a partner in an Australian 

national law firm before pursuing a career as a full-time nonexecutive 

director. She has held a range of directorships in both 

the private and the public sectors. Elizabeth is currently 

Chairman of Commander Communications Limited and 

Stanwell Corporation Limited, and a director of the GPT 

Group and Ventracor Limited. She is an Adjunct Professor of 

Law at the University of Queensland and a Council Member 

of the National Gallery of Australia. Elizabeth is an Officer of 

the Order of Australia (AO) and a Fellow of the Australian 

Institute of Company Directors. Elizabeth has a Bachelor of 

Arts and a Bachelor of Laws from the University of Queensland 

and a Masters of Laws from the London School of Economics. 

Michael Sharpe AO, Non-Executive Director and 

Chairman of the Audit and Risk Management 

Committee. Michael is a director of ASX. During his career 

he has served as Chairman of the International Accounting 

Standards Committee; President of the Institute of Chartered 

Accountants in Australia; Senior Audit Partner of the firm now 

known as PricewaterhouseCoopers; a trustee of many of the 

largest superannuation funds in Australia, including State Super 

(NSW) and Military Super; Chairman of many companies 

and an advisor to Government, including appointment as 

Independent Auditor of the Australian National Audit Office, 

the NSW Premier’s Accounting Advisory Panel and a member 

of the Takeovers Panel. Michael is also an Officer of the Order 

of Australia (AO), Fellow Chartered Accountant and Fellow 

of the Australian Institute of Company Directors. He holds a 

Bachelor of Economics Degree and an Honorary Doctorate 

in Economics from the University of Sydney. 

Dieter Rampl, Non-Executive Director. Dieter is the 

Chairman of the Board of Managing Directors of HVB, 

Germany’s second largest bank. Dieter became Chairman 

of HVB in 2003, having been a member of its Board since 

1995. Dieter’s career in the German banking industry spans 

almost 40 years and has included senior roles with Bayerische 

Vereinsbank and BHF-Bank in Germany and the United 

States. Dieter is based in the Munich office of HVB. 

Martin Rey, Executive Director. Martin has geographic 

responsibility for continental Europe and coordinates a variety 

of European business activities. He joined Babcock & Brown 

in 2003. Prior to joining Babcock & Brown, Martin held a 

variety of senior management positions at HVB, most recently 

Executive Divisional Board Member, Corporate Banking. 

Martin earned a law degree at Rheinische Friedrich- 

Wilhelms University in Bonn and studied business at the 

University of Hagen. He is based in the Munich office. 




5. summary financial information 



5.1 Introduction 

This Section contains historical and historical pro-forma 

financial information and interest coverage information on 

Babcock & Brown. 

5.1.1 Historical and pro-forma historical financial 

information 

5.1.1.1 Actual and pro-forma historical financial 

information 

The actual and pro-forma historical financial information 

in this Section comprises: 

• the summary actual consolidated income statement of 

Babcock & Brown for the period from 6 October 2004 

to 31 December 2004; and 

• the summary pro-forma consolidated income statement 

of Babcock & Brown for the 12 months ended 

31 December 2004. 

Babcock & Brown listed on ASX on 6 October 2004. 

Prior to the IPO, and the restructure of the Babcock & 

Brown Group that occurred immediately prior to the IPO, 

the Babcock & Brown Group operated as a US partnership. 

Accordingly, the Group’s actual results for 2004 are the 

results for the period 6 October 2004 to 31 December 2004. 

To provide more meaningful financial information about 

the performance of the underlying business over a 12 month 

period, a pro-forma income statement for the 12 months 

ended 31 December 2004 has been provided. The proforma 

income statement for the 12 months to 

31 December 2004 is based on the assumption that the 

restructure of the Group occurred on 1 January 2004. 

Further detail on the assumptions underlying the proforma 

results are set out in Section 5.3. The pro-forma 

results for the 12 months to 31 December 2004 were not 

reviewed or audited; and 


Babcock & Brown for the six months ended 30 June 2005. 

5.1.1.2 Actual and Pro-forma balance sheet 

The actual and pro-forma balance sheet information comprises: 

• the actual consolidated balance sheet of Babcock & Brown 

as at 30 June 2005; and 

• the pro-forma consolidated balance sheet of Babcock & 

Brown as at 30 June 2005 reflecting the expected impact of 

the Offer assuming the Offer was completed as at 30 June 

2005 and $250 million of BBSN were issued. 

5.1.2 Interest coverage analysis 

The interest coverage analysis provided in this Section comprises: 

• the actual interest coverage ratio of Babcock & Brown for 

the six months ended 30 June 2005; 

42 BABCOCK & BROWN SUBORDINATED NOTES 

• a pro-forma interest coverage ratio of Babcock & Brown 

for the six months ended 30 June 2005 assuming that the 

Existing Corporate Facility was fully drawn to $550 million 

for the six months ended 30 June 2005; 


for the six months ended 30 June 2005 assuming that the 


for the six months ended 30 June 2005 and $250 million of 

BBSN were issued on 1 January 2005; and 


for the six months ended 30 June 2005 assuming the 


for the six months ended 30 June 2005 and $300 million of 

BBSN were issued on 1 January 2005. 

5.2 Basis of preparation of financial information 

The financial information is presented in an abbreviated 

form and does not contain all the disclosures that are usually 

provided in an annual report prepared in accordance with the 

Corporations Act. 

The actual historical financial information has been extracted 

from general purpose financial accounts which have been 

subject to review or audit and lodged with ASIC and ASX. 

The pro-forma historical balance sheet was derived from 

financial information which has been subject to review or 

audit, after adjusting for pro-forma adjustments. 

The consolidated pro-forma income statement of Babcock & 

Brown for the year ended 31 December 2004 and the actual 

consolidated income statement of Babcock & Brown for the 

period from 6 October 2004 to 31 December 2004 have been 

prepared using Australian Generally Accepted Accounting 

Principles (AGAAP). The Group converted to Australian 

equivalents to International Financial Reporting Standards 

(AIFRS) with effect from 1 January 2005 and accordingly the 

actual consolidated income statement of Babcock & Brown for 

the six months ended 30 June 2005 and the actual consolidated 

balance sheet of Babcock & Brown as at 30 June 2005 are 

reported under AIFRS. The qualitative differences between 

AGAAP and AIFRS reporting in relation to the income 

statements are set out in Section 5.8. 

Babcock & Brown’s consolidated half-year financial statements 

for the six months ended 30 June 2005 (Half-Year Financial 

Statements), which have been subject to review by Babcock 

& Brown’s Auditor, contain more detailed financial information 

about Babcock & Brown as at 30 June 2005. The Half-Year 

Financial Statements have been lodged with ASIC and the part 

of that document entitled, “Financial Statements” (including the 

notes and director’s declaration — being pages 22 to 58 

inclusive) is incorporated by reference into this Prospectus. 

A copy of that part of the Half-Year Financial Statements

can be obtained free of charge by any person who requests it 

during the Offer Period, by contacting the BBSN InfoLine 

on 1800 818 562. 

5.3 Consolidated income statement and 

consolidated balance sheet 

The financial information below comprises: 


Babcock & Brown for the period from 6 October 2004 

to 31 December 2004. These are the actual statutory 

results for 2004 as Babcock & Brown was incorporated on 

2 April 2004, and only traded with effect from 6 October 

2004, the date of listing on ASX; 

• the summary historical pro-forma consolidated income 

statement of Babcock & Brown for the 12 months ended 

31 December 2004; 


Babcock & Brown for the six months ended 30 June 

2005; 

• the actual consolidated balance sheet of Babcock & Brown 

as at 30 June 2005; and 

• the pro-forma consolidated balance sheet of Babcock & 

Brown as at 30 June 2005 reflecting the expected impact of 

the Offer assuming the Offer was completed as at 30 June 

2005 and $250 million of BBSN were issued. 

Consolidated income statement 

AGAAP AGAAP AIFRS 

6 Oct 04 12 months 6 months 

to ended ended 

31 Dec 04 31 Dec 04 30 Jun 05 

$’000 Actual 1 Pro-forma 2 Actual 3 

Revenues from continuing operations 562,305 667,186 509,765 

Expenses from continuing operations, amortisation and restructure costs 

excluding finance costs and bonus expense (414,071) (334,900) (214,830) 

Finance costs 4 (15,346) (63,905) (48,753) 

Share of net profits of associates 9,831 18,870 27,725 

Bonus expense (including amortisation of share options and bonus deferred rights) (98,474) (148,245) (126,743) 

Profit from continuing operations before income tax expense 44,245 139,006 147,164 

Income tax expense (18,821) (29,305) 

Net profit 25,424 117,859 

Minority interest excluding BBIPL (8,282) (7,705) 

Net profit attributable to the Babcock & Brown Group, including BBIPL 17,142 110,154 

BBIPL minority interest (4,890) (31,927) 

Net profit attributable to members of Babcock & Brown 12,252 78,227 

Notes: 1. The financial information for this period is based on the following exchange rates per A$ – US$0.7366; €0.5922; £0.4020; ¥79.5880, 

being the average rates applying in the period. 

2. The pro-forma result for the 12 months ended 31 December 2004 is only provided to the level of operating profit before tax. 

The principal assumptions on which the pro-forma result has been calculated are: that the restructure of the Group immediately prior 

to IPO occurred with effect from 1 January 2004, that those entities transferred into and out of the Group prior to the restructure 

were transferred in and out with effect from 1 January 2004 on the same basis as actually occurred, that the IPO proceeds were 

received at 1 January 2004, that the actual compensation arrangements during the period were reversed and bonus compensation was 

paid consistent with principles set out in Note 3 of Appendix A of the IPO Prospectus, that the functional currency was Australian 

dollars and that the accounts were compiled under AGAAP not USGAAP. The assumptions are consistent with those made in 

preparing the pro-forma results for the years ended 31 December 2001, 2002 and 2003 which were included in Appendix A of the IPO 

Prospectus, and are set out in more detail in Notes 2, 3 and 4 of Appendix A of the IPO Prospectus. As the Group was not a taxpayer for 

the whole of the 12 months ended 31 December 2004 no pro-forma tax expense has been calculated. No minority interest is calculated 

as the Group was restructured from a US partnership during the period. 

3. The financial information for this period is based on the following exchange rates per A$ – US$0.7750; €0.5978; £0.4106; ¥81.6566, 

being the average rates applying in the period. 

4. Includes finance costs attributable to non-recourse debt as well as the Existing Corporate Facility. Finance costs attributable 

to the Existing Corporate Facility during the six month period ended 30 June 2005 were $4.6 million. 



Consolidated balance sheet 

AIFRS 

AIFRS Pro-forma Pro-forma 

$’000 30 Jun 05 adjustments 30 Jun 05 

Assets 

Cash and cash equivalents 308,711 250,000 1 558,711 

Fees receivable from financing transactions 58,190 58,190 

Other receivables 203,112 203,112 

Notes receivable 447,967 447,967 

Financial assets held for trading 7,633 7,633 

Financial assets available-for-sale 78,118 78,118 

Other financial assets 14,392 14,392 

Investments accounted for using the equity method 553,276 553,276 

Finance leases 166,145 166,145 

Transportation equipment 314,953 314,953 

Real estate held for sale 134,934 134,934 

Real estate held as investment property 87,951 87,951 

Semiconductor equipment 22,205 22,205 

Property and equipment 16,987 16,987 

Assets under development 331,327 331,327 

Other assets 52,853 52,853 

Deferred tax assets 148,870 148,870 

Intangible assets 4,684 4,684 

Total assets 2,952,308 250,000 3,202,308 

Liabilities 

Accounts payable and accrued liabilities 214,049 214,049 

Deposits held 81,063 81,063 

Deferred income 85,860 85,860 

Interest bearing liabilities 2 : 

– Transportation equipment notes payable 458,762 458,762 

– Real estate notes payable 265,718 265,718 

– Other notes payable 3 778,686 250,000 4 1,028,686 

Liabilities payable to pre-IPO owners 34,868 34,868 

Current tax liabilities 46,330 46,330 

Deferred tax liabilities 87,263 87,263 

Other liabilities 41,805 41,805 

Total liabilities 2,094,404 250,000 2,344,404 

Net assets 857,904 857,904 


Consolidated balance sheet (continued) 

AIFRS 

AIFRS Pro-forma Pro-forma 

$’000 30 Jun 05 adjustments 30 Jun 05 

Equity 

Contributed equity 482,628 482,628 

Reserves (7,302) (7,302) 

Retained earnings 78,457 78,457 

Parent entity interest in equity 553,783 553,783 

Minority interest 304,121 304,121 

Total equity 857,904 857,904 

Gearing ratio 5 7.2% 7.2% 

Notes: 1. Assumes $250 million BBSN issued on 30 June 2005, and that the gross proceeds of the Offer are held as cash. 

2. Interest bearing liabilities, with the exception of the Existing Corporate Facility ($66 million drawn as at balance date), 

are recourse only to the assets of certain special purpose vehicles in the Babcock & Brown Group and are described in this 

Section 5 as ‘non-recourse’. 

3. Other notes payable includes the Existing Corporate Facility. 

4. BBSN liability recorded as other notes payable. 

5. Existing Corporate Facility divided by net assets plus Existing Corporate Facility less intangibles. 

5.4 Interest coverage analysis 

The interest coverage ratio of Babcock & Brown and the effect on interest coverage under the following three scenarios for the 

six months ended 30 June 2005 is as follows: 

Interest Coverage Ratio 1 Interest Coverage Ratio 2,3 

Actual: Existing Corporate Facility as at 30 June 2005 32.6 times 

Scenario 1: Existing Corporate Facility on the assumption it is fully drawn 

for the six months ended 30 June 2005 

8.9 times 


for the six months ended 30 June 2005 and $250 million BBSN issue on 1 January 2005 

6.1 times 


for the six months ended 30 June 2005 and $300 million BBSN issue 

(assuming over-subscription of $50 million) on 1 January 2005 

5.8 times 

Notes: 1. The interest coverage ratios have been calculated as profit from continuing operations before income tax expense divided by interest 

expense excluding interest on non-recourse debt. In the calculation of the interest coverage ratios an assumed Margin of 215 bps has 

been adopted. 

2. Assumes that interest is earned at the rate of 5.70% on the $250 million proceeds of the BBSN issue and on the proceeds of the 

additional draw down of the Existing Corporate Facility. Finance costs attributable to the Existing Corporate Facility during the 

period ended 30 June 2005 were $4.6 million. 

3. In calculating the interest coverage ratio it is assumed the senior debt is drawn in Australian dollars and is drawn on a fully funded 

basis rather than drawn for letters of credit. 

The interest coverage ratios have been calculated assuming that interest income of only 5.70% is earned on the funds drawn and 

that all facilities are fully drawn in AUD for the whole of the period. Between 1 January 2000 and 30 September 2005 Babcock & 

Brown has achieved average pre-tax IRRs in excess of 30% on its principal investments. Past performance is not necessarily a guide 

to future performance. 



5.5 Proposed additional indebtedness 

Since the IPO in October 2004, the number of business and 

investment opportunities available to Babcock & Brown globally 

across its five business areas has been greater than anticipated 

at the time of listing. This has resulted in Babcock & Brown 

reporting higher than expected profits, but also necessitating 

increased capital requirements. An increase in funding capacity 

will underpin growth across the business. 

In addition to the Existing Corporate Facility available to 

the Group as at 30 June 2005 the Babcock & Brown Group 

is considering arranging the following additional funding: 

• a six month standby acquisition facility of $300 million 

(Standby Acquisition Facility); and 

• an increase in the Existing Corporate Facility on 

materially equivalent terms as the Existing Corporate 

Facility, of up to $450 million (Additional Corporate 

Facility). 

Assuming the Existing Corporate Facility, the Additional 

Corporate Facility and the Standby Acquisition Facility were 

fully drawn for the six months ended 30 June 2005 and 

$250 million of BBSN were issued on 1 January 2005, and 

interest earned on all funds drawn down at 5.70%, the interest 

coverage ratio would be 3.6 times. 

The interest coverage ratios are sensitive to the assumed 

reinvestment rate. If the funds drawn under the Existing 

Corporate Facility, the Additional Corporate Facility, the 

Standby Acquisition Facility and the issue of $250 million of 

BBSN were invested at 10.00% (rather than 5.70%), the 

interest coverage ratio would be 3.9 times. Further, if the 

interest coverage ratios were calculated on this basis, and before 

bonus expense, the interest coverage ratio would be 6.4 

times. 

The terms of the Standby Acquisition Facility provide that it 

may be repaid from the proceeds of the Offer or from other 

funding sources available to Babcock & Brown, from the 

Additional Corporate Facility or from the sale of the assets 

acquired at the time it is drawn down. 

The drawn down amount of Babcock & Brown’s corporate 

debt facilities fluctuates significantly over time in accordance 

with capital outflows and inflows arising from normal business 

operations. Movements in the Group’s corporate debt facilities 

are consistent with Babcock & Brown’s practice of capital 

recycling. 

5.6 Sensitivity analysis 

The Group’s results are sensitive to various internal and external 

factors. A summary of the effects that variations in certain 

assumptions have on net profit before tax are presented below. 

Care should be taken in interpreting these results as the 

sensitivity to the individual variables are determined in 

isolation whereas, in reality, the movements could be interdependent. 

The effect of movements may offset each other or 

may be additive. Accordingly, the effect on the Group’s result 

presented for each sensitivity is not intended to indicate the 

total range of likely outcomes with respect to each sensitivity. 

The sensitivities represent the potential impact of the variables 

applied against the six month period ended 30 June 2005. 

Impact on 

half-year 

net profit 

Change in 

after tax 

assumption Change $m 

Interest rates 1 : Increase + 100bps - $1.4 

Decrease - 100bps + $1.4 

Foreign currency Increase + US 1¢ - $0.5 

AUD/USD: Decrease - US 1¢ + $0.5 

Foreign currency Increase + €1¢ - $0.5 

AUD/EUR: Decrease - €1¢ + $0.5 

Note: 1. Interest rate sensitivity is the impact on the Group’s 

results arising from the increased/decreased interest cost 

assuming that the Existing Corporate Facility is fully 

drawn and $250 million of BBSN issued. 

5.7 Management discussion and analysis 

of results of operations 

5.7.1 Group results 

The Babcock & Brown Group reported a 2005 half-year profit 

after tax of $110.2 million. This result represented 80% of the 

2005 full year IPO Prospectus forecast. The result was driven 

by strong contributions from the Real Estate and Corporate 

Finance divisions versus prospectus and solid levels of activity 

across other business units. 

The out performance against the IPO Prospectus forecast 

reflects the success in deploying and recycling new capital 

and converting opportunities that have emerged following 

Babcock & Brown’s ASX listing. 

The charts below set out the revenue composition of 

the Babcock & Brown Group for the half-year ending 

30 June 2005. 


• performance fees earned from BJT; 

• revenue from the transfer of real estate to the GPT JV; and 

• rent and partial profit from the sale of portfolios of 

residential property in Germany prior to the GPT JV. 

5.7.3 Operating Leasing group results 

The Operating Leasing group experienced solid activity 

levels across all leasing units as the fundamentals of the aircraft 

and rail sector remain strong. Over the six month period the 

Operating Leasing group completed transactions with a value 

in excess of $1.3 billion. 

The Electronics and Eurorail businesses continue to grow from 

a low base. Traditionally the Operating Leasing group results 

have been skewed to the second half of the year. 

5.7.4 Infrastructure and Project Finance group results 

The 2005 result was driven by: 

• revenue earned on financial close of wind farms in US 

and Europe; 

• investment income from operating wind farms in Australia 

and the US; 

• income from advisory mandates in Asia; and 

• advisory, management and performance fees from BBI. 

5.7.5 Structured Finance group results 

The result for the period included: 

• revenue from securitisation of life receivables; 

• revenue from advisory mandates to the aircraft and 

rail industry; and 

• investment income and advisory fees from structured 

finance products. 

5.7.6 Corporate Finance group results 

5.7.2 Real Estate group results 

In the half-year to 30 June 2005 the performance of the Real 

Estate group was driven by: 

• ongoing revenue from its core real estate businesses 

in Australia and the UK; 

• profit and performance fees from the sale of real estate 

to BJT; 

The out-performance of the Corporate Finance group was 

driven by: 

• net revenue from the partial sale of the interest in the 

management rights of EBB; 

• fees and profit associated with the merger of Forstaff with 

Chandler Macleod; and 

• advisory income and income from investment in funds 

management activities. 



5.7.7 Operating expenses 

The operating expenses for the period ended 30 June 2005 of 

$99.6 million are 55% of the full year 2005 prospectus forecast. 

The increase in the level of total operating expenses for the 

period was consistent with the growth of the business during 

the period. 

5.8 Australian equivalents to International 

Financial Reporting Standards 

Following the introduction of AIFRS with effect from 

1 January 2005, the significant qualitative differences from 

AGAAP arising out of application of AIFRS to the Group 

were as follows: 

• Goodwill — goodwill previously recognised under AGAAP 

for the restructure of the Babcock & Brown Group ceased 

to be recognised under AIFRS. Amortisation of goodwill 

ceased and was replaced by annual impairment testing. 

• Share based payments — under AGAAP there is 

no requirement to recognise an expense in respect of 

share based payments. Under AIFRS, where an equity 

instrument is granted to an employee, the value of that 

instrument must be determined at the date of the grant 

and that value must be expensed on a pro rata basis 

between the date of grant and the date the instrument 

fully vests with the employee. 

• Investment properties — under AGAAP, investment 

properties are typically carried at cost or market value 

with fair value adjustments reflected through the asset 

revaluation reserve. Under AIFRS, changes in the fair 

value of investment properties are reflected directly in 

the income statement. 

• Development properties — under AGAAP, revenue 

from the sale of development properties, both residential 

and non-residential, was recognised upon exchange of sales 

contracts when all conditions precedent have been or are 

likely to be met, in accordance with the proportion of the 

development completed, provided construction work 

in progress was, in accordance with Group policy, more 

than 70% complete. Under AIFRS the requirements for 

revenue recognition are stricter and hence all conditions 

are required to have been met prior to any revenue being 

recognised. 

• Non-current assets held for sale — AGAAP requires 

that all non-current assets with limited useful lives be 

depreciated over that useful life. AIFRS provides that 

where there is a clear intention to sell a non-current asset 

within 12 months and that non-current asset is designated 

as held for sale, no further depreciation should be 

provided. 

• Impairment testing — under AGAAP, the recoverable 

amount for all non-current assets carried at cost at each 

reporting date is assessed. When the carrying amount of 

a non-current asset is greater than its recoverable amount, 

the asset is written down to its recoverable amount. Under 

AIFRS, assets for which changes in fair value are not 

reflected in the income statement will need to be assessed 

for indications of impairment on at least an annual basis, 

and tested for impairment only when indications of 

impairment arise. 

• Financial instruments — under AGAAP, it is 

permissible to hold certain financial instruments at cost. 

Under AIFRS, broadly all financial instruments other than 

debt and investments held to maturity must be held at 

fair value. Fair value adjustments are made through equity 

when the underlying asset has been designated as available 

for sale and through the income statement for derivatives, 

trading assets and where the reporting entity elects to 

reflect the adjustment in this manner. 

• Hedging — under AGAAP, where a derivative is held 

to hedge a forecast transaction, gains and losses on those 

instruments are deferred and brought to account in the 

same period as the hedge transactions. Under AIFRS, 

derivatives may only be classified as hedges of forecast 

transactions where hedge designation, documentation 

and effectiveness tests can be met. If these tests are satisfied, 

then the hedging derivative is measured at fair value and 

gains and losses are reflected directly in equity until the 

hedged transaction occurs when they are released to the 

income statement. 


6. risk factors 



Before applying for BBSN, you should consider whether 

BBSN are a suitable investment for you. You should be aware 

that there are risks associated with an investment in BBSN 

generally, many of which are outside the control of Babcock 

& Brown and its Directors, including the risk factors set out 

in this Section and other matters mentioned in this Prospectus. 

As Holders have a right to request Ordinary Shares in certain 

circumstances, you should also be aware that there are risks 

associated with an investment in the Babcock & Brown Group 

generally, many of which are outside the control of the Directors, 

including the risk factors set out in this Section and other matters 

mentioned in this Prospectus. 

Before applying for BBSN you should read the entire Prospectus 

and carefully consider the following risk factors. You should 

consider your own investment objectives and financial 

circumstances, and should consider seeking appropriate 

professional advice before deciding whether to invest in BBSN. 

6.1 Risks associated with investing in BBSN 

Set out below are the general risks associated with an investment 

in BBSN. In particular these risks arise from the nature of BBSN 

and the Terms. 

6.1.1 Market price and liquidity 

The market price of BBSN will fluctuate due to various factors 

including general movements in interest rates, the Australian 

and international investment markets, international economic 

conditions, global geo-political events and hostilities, investor 

perceptions and other factors. You should be aware that the 

market price of BBSN may be more sensitive than that of 

Ordinary Shares to changes in interest rates. Increases in 

relevant interest rates and/or changes in the credit worthiness 

of Babcock & Brown may adversely affect the market price of 

BBSN and BBSN could trade on ASX at a price below their 

issue price of $100. Holders who wish to sell their BBSN on 

ASX may be unable to do so at an acceptable price, or at all, 

if insufficient liquidity exists in the market for BBSN. 

Ordinary Shares delivered at the request of a Holder will rank 

equally with existing Ordinary Shares. Accordingly, their value 

after being Exchanged will depend on the market price of 

Ordinary Shares. 

Holders who wish to sell their Ordinary Shares held as a result 

of Exchange may be unable to do so at an acceptable price, 

or at all, if insufficient liquidity exists in the market for 

Ordinary Shares. 

6.1.2 Non-payment of Interest Payments 

Interest Payments are expected to be made, however, Babcock 

& Brown may defer that obligation in certain circumstances, 

including in the event that the Directors determine that there 

is insufficient cash to make the Interest Payment. 

The expected primary source of funds to meet Interest Payments 

is interest payments received by Babcock & Brown from BBIPL 

under the BBIPL Loan. In certain circumstances, BBIPL may 

be prevented, under the terms of its Existing Corporate Facility, 

from making such interest payments. For example, BBIPL will 

be prevented from making such payments without senior 

lender consent if: 

• there is a continuing default under the Existing 

Corporate Facility; 

• there is a substantial reduction in the shareholding 

of the Group by employees; 

• more than 10% of certain key management individuals 

leave the employment of the Group; 

• Ordinary Shares are delisted or the average Ordinary 

Share price declines by more than 25% in any quarter; 

• any individual acquires more than 20% of the issued 

Ordinary Shares; or 

• net profit after tax is less than $100 million or there is 

an attachment against the assets of a member of the Group 

other than BBIPL for more than $20 million. 

The terms and conditions of the BBIPL Loan are equivalent to 

the Terms in all material respects except that the amount of the 

BBIPL Loan represents the net Offer proceeds. Investors should 

be aware that in the event that Babcock & Brown receives no 

interest payments from BBIPL, there may not be funds available 

to meet Interest Payments on BBSN. In these circumstances, 

any Outstanding Interest will itself attract interest at the applicable 

Interest Rate plus 2.00% per annum. 

6.1.3 Floating Interest Rate 

From the Settlement Date until the first Reset Date, the Interest 

Rate will be calculated for each Interest Period by reference 

to the Bank Bill Swap Rate, which is influenced by a number 

of factors and varies over time. The Interest Rate will fluctuate 

(both increasing and decreasing) over time with movement in 

the Bank Bill Swap Rate. 

The range for the Bank Bill Swap Rate over the last 10 years 

is set out in the chart below. The movement in the Bank 

Bill Swap Rate in the future may be greater or less than that 

shown in the graph. The graph should not be taken as an 

indication of future movements in the Bank Bill Swap Rate. 


HISTORICAL BANK BILL SWAP RATE 

8.0% 

7.0% 

6.0% 

5.0% 

4.0% 

3.0% 

Oct 95 Oct 96 Oct 97 Oct 98 Oct 99 Oct 00 Oct 01 Oct 02 Oct 03 Oct 04 Oct 05 

As the Interest Rate fluctuates, there is a risk that the rate may 

become less attractive when compared to the rates of return 

available on comparable securities in the market. 

6.1.4 Repayment by Babcock & Brown 

In certain circumstances, Babcock & Brown has the right to 

Repay all or some of BBSN held by a Holder on the Reset 

Date and other dates as determined in accordance with the Terms 

in Appendix B. The timing or occurrence of Repayment may 

not accord with the preference of individual Holders. As noted 

in Section 7, foreign Holders may have different income tax 

consequences in respect of gains if BBSN are Resold rather 

than Repaid or Exchanged. 

Ordinary Shares held as a result of Exchange will have the same 

rights as existing Ordinary Shares, which are different to the 

rights attaching to BBSN. 

6.1.5 Holder Exchange 

When a Holder requests Exchange, Babcock & Brown may 

generally Exchange or Repay or Resell (or any combination of 

Exchange, Repay or Resell) some or all BBSN that are the 

subject of the Exit Notice. 

The option that Babcock & Brown elects may not coincide with 

the Holder’s individual preference, and may be disadvantageous 

to Holders in light of market conditions or individual 

circumstances at the time. As noted in Section 7, if Babcock 

& Brown elects to Resell and a gain is made, this may have 

different consequences for a foreign Holder than Exchange 

or Repayment. 

If Babcock & Brown Exchanges BBSN upon request of the 

Holder, the number of Ordinary Shares a Holder receives on 

Exchange will depend on the price of Ordinary Shares during 

the relevant 20 Business Day period when the Exchange Ratio 

is calculated. Exchange may occur at an Ordinary Share price 

which is different to the price at which Ordinary Shares may 

be purchased or sold on ASX on or after the Realisation Date. 

Ordinary Shares held as a result of Exchange will have the same 

rights as existing Ordinary Shares, which are different to the 

rights attaching to BBSN. 

6.1.6 Subordination 

BBSN are subordinated in right of any payments to the claims 

of any creditors of Babcock & Brown from time to time other 

than claims which, by their terms, rank equally with, or after, the 

claims of Holders. If Babcock & Brown is Wound Up, Holders 

will only have the right to receive a return of their investment 

after all secured and unsecured creditors who rank higher than 

BBSN have been paid in full. 

In the event of a shortfall of funds on a Winding Up, there is a 

risk that Holders will not receive a full return of Face Value or 

any Outstanding Interest. 

The Guarantee is a subordinated guarantee and accordingly 

payments under it to Holders rank behind payments to any 

creditors of BBIPL from time to time other than those whose 

claims are stated to rank equally with, or after, the claims 

of Holders. 



6.1.7 Future fundraising by the Babcock & Brown 

Group 

The Babcock & Brown Group may enter into any transaction 

without restriction including acquiring and disposing of assets, 

entering into any borrowing, guarantee or indemnity and 

creating and issuing further BBSN or other equity or debt 

securities including securities or other indebtedness ranking 

ahead of the claims of Holders. Any such transactions may 

impact over time, either positively or negatively, on a Holder’s 

credit position in the event of a Winding Up. 

An investment in BBSN carries no right to participate in 

any future issue of securities (whether equity, hybrid, debt or 

otherwise) by Babcock & Brown. No prediction can be made 

as to the effect, if any, such future issues of financial securities 

by an entity in the Babcock & Brown Group may have on the 

market price or liquidity of BBSN. 

Babcock & Brown is negotiating with UBS for the provision 

by UBS of the Standby Acquisition Facility. Funding under 

this facility will be linked to the acquisition of certain specified 

assets. A summary of the proposed facility is contained in 

Section 8.11. In addition, BBIPL is currently renegotiating its 

Existing Corporate Facility which may result in an increase 

in funds which can be drawn down under that facility. 

If the negotiation of the Standby Acquisition Facility is 

concluded and that facility drawn down, then it will rank 

ahead of BBSN for payment and in a liquidation of Babcock 

& Brown. Payments under the Existing Corporate Facility 

rank ahead of payments under the Guarantee both in payment 

and in a liquidation of BBIPL. 

6.1.8 Ability to reset terms 

On any Reset Date, Babcock & Brown may change certain terms 

including the next Reset Date, Exchange Discount, Market Rate, 

Margin and Interest Payment Dates. There is a risk that the nature 

of change to the terms may be disadvantageous to Holders 

compared to the terms current at the time the Reset Notice 

is given. 

In the event that Holders are not satisfied with any changes 

proposed to be made to certain terms after the Reset Date, 

Holders may provide an Exit Notice to Babcock & Brown, 

or sell their BBSN on ASX. 

6.1.9 Taxation considerations 

A summary of the potential taxation implications for Holders 

is set out in the Tax Letter in Section 7. This letter is in general 

terms and is not intended to provide specific advice in relation 

to the circumstances of any particular investor. Accordingly, 

you should seek independent advice in relation to your own 

individual taxation circumstances. 

You should be aware that future changes in Australian taxation 

law including changes in interpretation or application of the law 

by the courts or taxation authorities in Australia, may affect the 

taxation treatment of an investment in BBSN, or the holding 

and disposal of BBSN or shares. An adverse change in law may 

provide grounds for Babcock & Brown to Repay BBSN. 

6.2 Risks relating to the Babcock & Brown 

Group 

6.2.1 Competition 

The financial services industry is intensely competitive and 

expected to remain so. The Babcock & Brown Group competes 

on the basis of a number of factors, including the quality of 

advice and service, innovation, reputation and price. Over time, 

the Babcock & Brown Group relies on the creation of new 

products and business lines within that environment. Many 

competitors are better capitalised, have a greater range of 

products and services, greater financial and marketing resources 

and larger customer bases than the Babcock & Brown Group. 

6.2.2 Loss of key personnel 

The Babcock & Brown Group’s performance is largely 

dependent on the talents and efforts of highly skilled individuals. 

The Group’s continued ability to compete effectively depends 

on the ability to retain and motivate existing employees as well 

as attracting new employees. 

The employment contracts and remuneration arrangements 

of key executives include mechanisms to encourage long term, 

continuous employment with Babcock & Brown. These contracts 

are designed to protect the Group against loss of such personnel 

by the inclusion of notice periods and non-compete clauses 

with penalties for breach. 

6.2.3 Large holdings by existing Shareholders and 

Employee Stakeholders 

The Employees and HVB have an economic interest of 

approximately 54.7% and 5.95%, respectively, in the Babcock 

& Brown Group. Employees own approximately 36.4% and 

HVB owns approximately 8.4%, respectively, of Babcock & 

Brown. Four of the Employee Stakeholders are on the Board 

and will have significant influence over the direction of the 


Group. The interests of these Employee Stakeholders may be 

different to those of other Shareholders. The Ordinary Shares 

may remain tightly held with limited liquidity on ASX. 

The size of the Employee Stakeholding significantly reduces the 

likelihood of a takeover of Babcock & Brown. All Employee 

Stakeholders who received or purchased Ordinary Shares in 

the IPO, or the Shareholder they nominated to hold those 

Ordinary Shares in the IPO, have entered into voluntary 

escrow arrangements in relation to those Ordinary Shares, and 

other arrangements which will assist with the management of 

an orderly market should they wish to sell down any of those 

shares post the escrow period. The US Executive Stakeholders 

who received or purchased B Class Shares in BBIPL, or the 

shareholder they nominated to hold their B Class Shares, have 

entered into equivalent escrow arrangements. However, if HVB, 

or Employee Stakeholders sold their Ordinary Shares, it may 

adversely impact the market price of Ordinary Shares. 

The following parcels of Ordinary Shares will be released 

from escrow at the following times: 

• 27,320,781 Ordinary Shares on the date of the release to 

ASX of the Preliminary Final Results for the year ending 

31 December 2005; 



31 December 2006; and 



31 December 2007. 

6.2.4 Employee misconduct 

The Babcock & Brown Group runs the risk that employee 

misconduct may occur. Misconduct by employees could involve 

the improper use or disclosure of confidential information 

resulting in regulatory sanctions and serious reputational or 

financial harm. Whilst the Babcock & Brown Group believes 

that its processes for preventing employee misconduct are 

adequate, it is not always possible to avoid employee misconduct 

and the precautions taken to detect and prevent this activity may 

not be effective in all cases. 

6.2.5 Reputation and adverse publicity 

The Babcock & Brown Group’s business relies to a large extent 

on relationships and a reputation for integrity and high-calibre 

professional services to attract and retain clients. As a result, if a 

client is not satisfied with the services provided or the Babcock 

& Brown Group is involved in litigation relating to a transaction 

in which it is involved, it may be more damaging to the Group 

than in other businesses. The Babcock & Brown Group may 

incur significant legal expenses in defending itself against any 

litigation arising in such cases and may also incur significant 

reputational and financial harm if litigation is successful. 

The Group’s business has, over a number of years, included 

providing advice to numerous clients on leasing and other 

transactions. Some of those transactions are now subject to 

litigation involving the Group’s clients (including some actions 

commenced by the US Internal Revenue Service), and others 

may be litigated in the future. The Group, as advisor, is typically 

not a party to the litigation, and is not exposed to the risk of 

material financial liability as a result of the litigation. However, 

as some of these actions involve alleged corporate tax shelters 

there is a higher than usual risk of potential adverse publicity 

surrounding the litigation, and this publicity may draw attention 

to the Group’s role in the relevant transactions. As with any 

negative publicity, there is the potential for damage to the 

Group’s reputation and to the goodwill of the business. 

While the Babcock & Brown Group has full ownership 

of the Babcock & Brown name it has allowed, on occasions, 

third parties to use the Babcock & Brown name in relation 

to certain activities, principally comprising joint venture 

activities in which the Group is involved. 

6.2.6 Liability for advice/arranging 

The Babcock & Brown Group’s business often involves providing 

advice and assisting in arranging transactions for third parties. 

In doing so the Group could be held liable for this advice in 

certain circumstances. In order to mitigate this risk, the Group 

seeks, wherever possible, to limit any potential liability to parties 

by way of contract to the fees paid on the transaction and 

generally includes express representations from the third party 

that the Group has not provided any tax advice. The Group also 

carries indemnity insurance to help defray this risk. 

6.2.7 Transaction reliance 

Historically, a large proportion of revenues have been earned 

from fees on transactions that are sometimes conditional upon 

successful completion of the client’s transaction. As a result, 

high activity levels in any period are not necessarily indicative 

of continued high levels of activity in the following or any 

other period. In addition, when an engagement is terminated, 

whether due to the cancellation of a transaction due to market 

reasons or otherwise, the Group may earn limited or no fees 

and may not be able to recoup the costs incurred prior to 

that termination. 



6.2.8 Market conditions 

Unfavourable financial or economic conditions may reduce 

the number and size of transactions on which the Babcock 

& Brown Group provides advisory services. Unfavourable 

market conditions could also affect the Group’s ability to 

engage in, or exit, principal investments as well as syndicate 

into key markets, correspondingly reducing revenues. 

6.2.9 Ability to access capital markets 

The Babcock & Brown Group depends on a variety of markets 

as principal sources of funding for many transactions, including 

principal investment. Inability to access debt markets on 

acceptable terms would significantly limit the ability of the 

Group to fund its activities. Further, an inability to procure 

debt funding for clients would limit the Group’s ability to 

offer financing offerings and therefore reduce advisory and 

arranging revenues. 

The Babcock & Brown Group also depends on a variety of 

equity investors to provide funding in transactions which are 

either not fully funded by the Group or which are arranged 

by the Group. Inability to access equity investors on acceptable 

terms would also significantly limit the Group’s activities. 

6.2.10 Investment risk 

The investment activities of the Babcock & Brown Group 

may be in relatively high risk, illiquid assets and the Group may 

lose some or all of the amounts invested. The Group may also 

be impacted by an inability to exit investments when desired, 

or to exit investments for full value, especially where assets 

acquired do not have an active secondary market (or that market 

is volatile) or for which there is only a limited number of 

investors. As a consequence, the value of an asset may ultimately 

be less than its apparent value. The success and profitability of 

the Babcock & Brown Group will, in part, depend upon the 

Group investing in assets which have the ability to increase in 

value over time and where such value can be realised for cash. 

6.2.11 Relationship with key financiers 

In order to finance the transactions in which it is involved 

as either principal or advisor/arranger the Babcock & Brown 

Group accesses a wide variety of forms of debt and equity 

capital and associated providers. These sources vary widely 

depending upon the transaction in question. 

6.2.12 Third party obligations 

The Babcock & Brown Group commonly invests alongside 

third parties in its investment transactions. The inability of 

co-investors to fulfil their obligations may result in the Group 

being required to contribute additional capital that it did 

not initially envisage or not completing transactions that it 

otherwise might have completed. 

The Babcock & Brown Group may also be exposed to credit or 

performance risk in respect of its investments and arrangements 

with other counterparties. For example, in PFI contracts, the 

Group generally seeks to contract out construction and 

maintenance of facilities to third parties at pre-determined 

prices. To the extent that these parties cannot fulfil their 

contractual obligations (for example due to insolvency) the 

Group may be required to source these services from other 

parties at some cost to itself. The Group, where possible, seeks 

to contract with reputable parties of acceptable credit standing 

to mitigate such risks. 

6.2.13 Industry issues 

The business of the Babcock & Brown Group has particular 

emphasis on the airline, real estate and infrastructure industries. 

General risks in relation to the airline industry include 

exceptional events such as terrorism. In addition there are 

other business risks such as fuel costs and factors that impact 

air travel and holiday activity. 

General risks in relation to the real estate investment activities 

include the ability to procure tenants, timing of rental payments, 

demand for property from investors, expenses in operating, 

refurbishing and maintaining properties, and timing of receiving 

sale proceeds. In addition, the supply of competing existing or 

new buildings may affect the ability to secure lease renewals, 

retain existing tenants or obtain new tenants. In certain 

circumstances, the Babcock & Brown Group works with 

developers and other third party suppliers where the Group 

may have exposure to problems which may impact its reputation 

and ability to transact in the market. 

In relation to infrastructure investment, general risks include the 

risk that projects will not be completed within budget, and the 

agreed timeframe, to the agreed specifications and, where 

applicable, be successfully integrated into existing infrastructure 

assets. The operations of infrastructure projects are exposed to 

unplanned interruptions caused by significant catastrophic events, 

such as cyclones, earthquake, landslide, flood, explosion, fire, 


terrorist attack, major plant breakdown, pipeline or electricity 

line rupture or other disaster. Operational disruption, as well 

as supply disruption, could adversely impact the cash flows 

available from these assets. 

Moreover, the provision or acquisition of infrastructure assets 

often involves an ongoing commitment to a governmental 

agency. The nature of these commitments exposes the owners 

of infrastructure assets to a higher level of regulatory control 

and risk than typically imposed on other businesses. Cashflows 

from these assets may also be disrupted by an adverse change 

in regulatory conditions or decisions. Public infrastructure 

activity can also be exposed to political risks associated with public 

perception of projects and resistance to certain elements of them. 

Certain of the Babcock & Brown Group’s investments are in 

operating companies with significant development components. 

While the value of the assets may exceed the liabilities in these 

businesses, under normal operating conditions these businesses 

rely on cash flow to fund the development components. 

Therefore should cash flow be constrained this could have 

an adverse impact on the business and significantly impair 

the value of the investment. 

6.2.14 Performance fees 

The Babcock & Brown Group earns performance fees 

on a number of its managed funds. The future receipt of these 

performance fees will depend on a number of factors, including, 

but not limited to, the underlying performance of the funds’ 

assets in both an absolute and relative sense, and the market 

value of the securities of the managed funds. There can be no 

guarantee that the Group will earn these performance fees in 

the future. 

6.2.15 Regulatory environment 

The Babcock & Brown Group is subject to extensive regulation 

in multiple jurisdictions. The Group may be fined, prohibited 

from engaging in some business activities or subject to limitations 

or conditions on business activities. 

New laws or regulations or changes in the enforcement of 

existing laws or regulations applicable to clients may also 

adversely affect business performance. 

6.2.16 US Promoter Penalty Examination (PPE) 

Like many companies in the financial services industry, the 

Babcock & Brown Group is routinely subject to tax audits. 

At present, there is an ongoing examination being conducted 

by the United States Internal Revenue Service (IRS). The IRS 

is looking into the Group’s US affairs in relation to the years 

ended 31 December 1993 to 1999, with a view to determining 

whether the Group should have made certain filings and 

registrations required under US tax law in relation to corporate 

tax shelters that may have been used by the Group’s clients in 

that period. 

At present, the IRS is still gathering information and reviewing 

documents. The IRS has not commenced proceedings against 

the Group, nor has it issued an assessment to any member of 

the Babcock & Brown Group for liability under the relevant 

provisions. 

However, there is no time limit requiring the IRS to conclude 

the audit by a specific date. It is uncertain whether or not the 

IRS will ultimately make a claim against the Group as a result 

of its examination. If the IRS does make a claim, the amount is 

also highly uncertain, and could be within a wide range. Based 

on advice from its legal and financial advisors, the Group has 

made such provision as it considers appropriate in its financial 

statements in respect of this matter. 

6.2.17 Provision of warranties on sale of businesses 

When the Babcock & Brown Group disposes of assets it is 

sometimes required to provide warranties regarding the assets 

(and associated liabilities). These vary significantly in content 

and length required. 

6.2.18 Interest rates 

The Babcock & Brown Group, as a borrower of money, is 

potentially exposed to adverse interest rate movements that 

may increase the financial risk inherent in its business. While 

this risk may be reduced through interest rate hedging, such 

as interest rate swaps or other mechanisms, there is sometimes 

residual risk. 

An increase in interest rates could have both a positive and/or 

negative impact on the revenues of the Babcock & Brown 

Group. Interest rates do not operate in isolation from the 

broader economic environment. 



6.2.19 Inflation risk 

Depending on the anticipated cash flows from an investment, 

investment returns can be affected by changes in the rate of 

inflation in a particular jurisdiction or geographic region. 

6.2.20 Foreign exchange 

Over two-thirds of the Babcock & Brown Group’s earnings 

are generated in currencies other than the Australian dollar, 

exposing the Group to adverse foreign exchange movements. 

The Group has a policy of hedging known cashflows and 

investments made in non-self sustaining operations. Since the 

majority of the Group’s expenses are denominated in the same 

currencies as the associated revenues, only the net income after 

total compensation is generally exposed to currency fluctuations. 

6.2.21 Tax 

Any change to the current rate of company income tax in any 

of the jurisdictions where the Babcock & Brown Group operates 

may impact on financial performance, cash flows and investor 

returns. Any changes to the current rates of income tax applying 

to individuals and trusts will similarly impact on investor returns. 

6.2.22 Insurance 

The Babcock & Brown Group has insurance, including Errors 

and Omissions (Professional Indemnity) and Directors’ and 

Officers’ insurance, which it believes to be commensurate with 

industry standards, and adequate having regard to the business 

activities of the Group. However, there are risks that this will be 

insufficient to meet a very large claim or a number of large 

claims, that either the Group or one of its investments is unable to 

secure insurance to satisfactorily cover all anticipated risks or 

that the cost of insurance will increase beyond anticipated levels. 

6.2.23 Information technology 

The Babcock & Brown Group relies on various information 

systems, technology and software products to efficiently carry 

out its business. While the Group has put in place procedures 

and plans to ensure that data is retained and that these systems 

are maintained to meet the demands of the business, widespread 

system failures may negatively impact on the Group’s 

performance. 

6.2.24 Change in accounting, legal and tax regimes 

The Babcock & Brown Group operates in and across a variety 

of accounting, legal and tax regimes. Change in these regimes, 

whilst providing opportunities, could also limit the functionality 

of the financial structures that the Group has developed for 

clients, which could impact on business performance, particularly 

of the structured finance group. Further, any structured financial 

products utilised when principal investing may also be adversely 

impacted by changes in accounting, legal or tax regimes. 

6.2.25 Accounting standards and reported income 

The Group’s accounting policies and methods are fundamental 

to how it records and reports its financial position and results 

of operations. The Group’s management must exercise 

judgement in selecting and applying many of these accounting 

policies and methods so that not only do they comply with 

generally accepted accounting principles but that they also 

reflect the most appropriate manner in which to record and 

report the Group’s financial position and results of operations. 

Furthermore, management always make decisions after 

considering all external advice on the relevant matter. 

In some cases, management must select an accounting 

policy or method from two or more alternatives, any of 

which might be reasonable under the circumstances yet 

might result in the Babcock & Brown Group reporting 

materially different outcomes than would have been 

reported under a different alternative. 

With effect from 1 January 2005, Babcock & Brown has 

adopted AIFRS. 

6.2.26 Documentation risk 

The Babcock & Brown Group enters into a number 

of highly structured transactions that require detailed 

documentation. As a result, the risk of dispute over 

interpretation or enforceability of the documentation, 

or errors in preparation of the documentation, may be 

higher than for other investments. 


6.3 General economic factors that may affect 

your investment in BBSN and the Babcock & 

Brown Group 

6.3.1 Changes in economic, financial and insurance 

market conditions 

Movements in Australian and international stock markets, changes 

in interest rates, inflation and inflationary expectations and overall 

economic and political conditions, may affect the demand for 

and price of BBSN. Holders should be aware that there are risks 

associated with any investment in debt or equity securities and 

that the prices of securities can go down as well as up. 

The Group has an investment exposure to the property and 

infrastructure sectors. Unfavourable financial or economic 

conditions may reduce the quality and attractiveness of new 

property and infrastructure investment opportunities available to 

the Group, as well as reducing returns on existing investments. 

Market conditions may lead to increases in the pricing or 

availability of insurance products, which may affect the 

profitability of the Group. Acts of terrorism, war and events 

of force majeure may affect the investments owned by the 

Group, and insurance may not fully cover these risks. 

6.3.2 Changes in laws and government policy 

Changes in government legislation and policy, in particular 

changes to taxation laws, may affect the future earnings, asset 

values and the relative attractiveness of investing in BBSN. In 

addition, an investment in BBSN may involve tax considerations 

that may differ for each Holder. Each prospective investor is 

encouraged to seek professional tax advice in connection with 

any investment in BBSN. 

6.3.3 Stock market fluctuations 

The price of the securities on ASX may rise or fall due to 

numerous factors which may affect the market performance 

of BBSN or Ordinary Shares, including: 

• General economic conditions, including inflation rates and 

interest rates. 

• Variations in the local and global market for listed stocks. 

• Changes to government policy, legislation or regulation. 

• Inclusion or removal from major market indices. 

• The nature of competition in the markets in which the 

Babcock & Brown Group operates. 

• General operational and business risks. 

In particular, security prices are subject to wide fluctuations, 

which in many cases may reflect a diverse range of noncompany 

specific influences such as global hostilities and 

tensions, acts of terrorism and the general state of the economy. 

Such market fluctuations may materially adversely affect the 

market price of the Ordinary Shares. 

No assurances can be made that the market performance of 

BBSN or Ordinary Shares will not be adversely affected by any 

such market fluctuations or factors. None of Babcock & Brown, 

its Directors or any other person guarantees the market 

performance of BBSN or Ordinary Shares. 

6.4 Other risks 

The above risks should not be taken as exhaustive of the risks 

associated with an investment in BBSN and the Babcock & 

Brown Group. The risks above and other risks not specifically 

referred to may in the future materially adversely affect the 

value of an investment in BBSN and the Group’s financial 

position and performance. 




7. Tax Letter 


7. Tax Letter 

If you are considering applying for BBSN, it is important for 

you to understand the taxation consequences of investing in 

BBSN. You should read this Section before deciding whether 

to invest and discuss the taxation consequences with your tax 

advisor, accountant or other financial advisor. 



The Directors 


Level 39 

Chifley Tower 

2 Chifley Square 

SYDNEY NSW 2000 

Dear Directors 

Babcock & Brown Subordinated Notes (BBSN) 

Taxation implications for Holders 

We have been requested by Babcock & Brown Limited (Babcock & Brown) to prepare a 

taxation report for inclusion in the prospectus dated 9 November 2005 (Prospectus) in relation to 

the issue of BBSN. 

The information contained in this report is of a general nature only. It does not constitute tax 

advice and should not be relied upon as such. This report outlines the general Australian taxation 

implications for Australian residents and non-Australian residents who successfully subscribe for 

BBSN (each a Holder and non-resident Holder respectively) and who hold BBSN on capital 

account. We have not addressed the tax treatment for Holders and non-resident Holders who hold 

BBSN on revenue account or as trading stock. 

As the tax consequences to Holders will depend on their own facts, Holders should seek 

independent advice in relation to their particular circumstances. 

This report is based on the Australian income tax law in force and the practices of the Australian 

Taxation Office (ATO) applicable as at the date of this letter. Unless otherwise indicated, 

references to legislative provisions are to the Income Tax Assessment Act 1936 (Cth). 

We are not licensed to provide financial product advice under the Corporations Act 2001 (Cth). 

Taxation is only one of the matters that must be considered when making a decision on a financial 

product. Any investor should, before acting on this material, consider taking advice from a person 

who is licensed to provide financial product advice under the Corporations Act 2001 (Cth). 

Capitalised terms not elsewhere defined refer to terms in the Prospectus. All references to the Issuer 

are to Babcock & Brown. 

1 Australian residents 

1.1 Treatment of Interest Payments on the BBSN 

Interest Payments on the BBSN will constitute assessable income to Holders. 

Broadly speaking, Holders will be assessable on an Interest Payment in the income year in which it 

is received. 

MLC Centre Martin Place Sydney NSW 2000 Australia Telephone +61 2 9225 5955 Facsimile +61 2 9221 6516 

GPO Box 4982 Sydney NSW 1044 Australia www.gf.com.au 

Offices in SYDNEY MELBOURNE Greenwoods & Freehills Pty Limited ABN 60 003 146 852 

Liability limited by a scheme approved under Professional Standards Legislation 


In our opinion, the above basis for Holders returning assessable income from the BBSN should not 

be disturbed by the application of the “accruals” basis of taxation of “qualifying securities” 

prescribed by Division 16E of Part III. 

1.2 Treatment of disposal, Repayment, Exchange or Resale of BBSN 

In certain circumstances, BBSN may be Repaid for cash. The Issuer may also elect in certain cases 

to procure the sale of the BBSN to a third party for an amount such that the net proceeds of sale 

(together with other amounts payable by the Issuer) are at least equal to those that would have been 

payable had Repayment occurred (Resale). 

Alternatively, upon the receipt of an Exit Notice from the Holder, BBSN may be Exchanged for 

the ordinary shares of Babcock & Brown (Ordinary Shares). 

If, as expected, the BBSN are listed on the Australian Stock Exchange (ASX), Holders will be able 

to freely sell their BBSN at the prevailing market price. 

Sections 26BB and 70B should apply on the disposal of BBSN, as the BBSN should be regarded as 

a “traditional security”. 

The taxation consequences of these disposal alternatives are dealt with below. 

(a) 

Repayment or Resale 

If the Issuer Repays the BBSN for cash or Resells BBSN, a gain will arise equal to the excess of the 

Repayment Amount or sale proceeds (as applicable) over the cost of the BBSN to the Holder. 

Section 26BB will apply to treat this gain as assessable income to the Holder. 

Prima facie, a capital gain may also arise in the hands of the Holder. However, to the extent that any 

capital gain has been included in assessable income under section 26BB, the capital gain will be 

reduced by this amount. Where the amount included in assessable income exceeds the amount of 

the capital gain, the capital gain will be reduced to zero. 

The cost base or reduced cost base of BBSN respectively should include the Issue Price as well as 

the incidental costs (eg broker fees) associated with the acquisition and disposal of BBSN. 

Section 70B may apply to allow any loss incurred on the Repayment or Resale of BBSN as a 

deduction from the assessable income of a Holder. 

To the extent that a capital loss would also otherwise arise, the capital loss should be reduced by 

this amount. Where the deductible amount exceeds the amount of the capital loss, the capital loss 

should be reduced to zero. 

(b) 

Exchange for Ordinary Shares 

Where BBSN are Exchanged for Ordinary Shares, any taxable gain that arises on disposal of the 

BBSN will be disregarded. 

The Holder should adopt a cost base in the Ordinary Shares equal to the cost base of the BBSN at 

the time of Exchange. 

For the purpose of applying the capital gains tax (CGT) discount provisions to any later sale of 

Ordinary Shares, the acquisition date of the Ordinary Shares will be the date of Exchange. 

(c) 

Sale of BBSN on ASX 

A Holder may make a gain or loss on the sale of BBSN on the ASX. 

Similar to 1.2(a) above, section 26BB will apply to treat any gain as assessable income to the 

Holder. 

Section 70B may apply to allow any loss incurred on the disposal of BBSN as a deduction from the 

assessable income of a Holder. 


Liability limited by the Accountants’ Scheme, approved under the Professional Standards Act 1994 (NSW) 

Greenwoods & Freehills Pty Limited ABN 60 003 146 852 


To the extent that a capital loss would also otherwise arise, the capital loss should be reduced by 

this amount. Where the deductible amount exceeds the amount of the capital loss, the capital loss 

should be reduced to zero. 

1.3 Holding Ordinary Shares 

Where the Issuer elects to exchange BBSN for Ordinary Shares, Holders will be entitled to receive 

a variable number of Ordinary Shares. 

The income tax consequences of holding Ordinary Shares are broadly set out below. 

(a) 

Dividends from Ordinary Shares 

A Shareholder’s assessable income will generally include any dividends and the amount of any 

franking credits attached to dividends paid by Babcock & Brown. Where franking credits are 

included in a Shareholder’s assessable income, they will generally be entitled to a corresponding tax 

offset. 

To the extent that franking credits are attached to Babcock & Brown’s dividends, to be generally 

eligible for the franking credit and tax offset, the Shareholder must have held the shares “at risk” for 

at least 45 days (not including the date of acquisition or the date of disposal). This rule should not 

apply to an Shareholder if they are an individual whose tax offset entitlement (on all shares and 

interests in shares held) does not exceed $5,000 for the income year in which the franked dividend 

is paid. 

Where the Shareholder is an individual, a complying superannuation entity or a registered charity 

(in certain circumstances), they will generally be entitled to a refund to the extent that the franking 

credits attached to their dividends exceed their tax liability on all of their income for the income 

year. 

Where the Shareholder is a company, any franked dividends they receive will generally give rise to 

a franking credit in the Shareholder’s franking account. 

(b) 

Disposal of Ordinary Shares 

Upon a disposal of the Ordinary Shares, any resultant capital gain or loss should be calculated by 

reference to the cost base of the Ordinary Shares (see 1.2(b) above). 

If Ordinary Shares have been owned for at least 12 months prior to their sale, a Holder may be 

entitled to receive discount capital gains tax treatment in respect of any capital gain arising on the 

disposal of the Ordinary Shares. The discount percentage is 50% for Holders who are individuals or 

individual beneficiaries of a trust (where the trustee is a Holder), and is 33 1/3% for Holders who 

are complying superannuation entities. Companies do not qualify for discount capital gains tax 

treatment. 

Holders who dispose of their Ordinary Shares within 12 months of acquiring them will not receive 

discount CGT treatment. 

1.4 PAYG taxpayers 

Holders will derive their return by the receipt of BBSN Interest Payments or a Repayment 

Amount. 

Under the Pay As You Go (PAYG) regime, the Issuer must, subject to certain limited exceptions, 

withhold an amount from BBSN Interest Payments at the highest individual marginal rate plus the 

Medicare Levy (currently an aggregate of 48.5%) unless a Holder provides their TFN, ABN or 

relevant exemption notification. Holders will be entitled to claim a tax credit in their tax returns in 

respect of any tax which is withheld. 

Accordingly, it is recommended that Holders consider providing their TFN, ABN or exemption 

notification to the Issuer or their securities dealer to avoid the application of the PAYG provisions. 





2 Non-Australian residents 

2.1 Treatment of Interest Payments on the BBSN 

Interest Payments on the BBSN will not be assessable in the hands of non-resident Holders. 

In addition, on the basis that the issue of the BBSN satisfies the so-called “public offer test” 

pursuant to section 128F, non-resident Holders should not be liable for any Australian interest 

withholding tax in relation to the Interest Payments on the BBSN. 

2.2 Treatment of disposal, Repayment, Exchange or Resale of BBSN 

Any gain or loss arising on the Exchange of the BBSN for Ordinary Shares would be disregarded 

for non-resident Holders. 

In the event of Repayment, we consider that any excess would be regarded as akin to interest and 

treated in a similar manner to 2.1 above. 

In the event that a gain arises from the sale or Resale of the BBSN, subject to the availability of any 

relief provided under a double taxation agreement entered into between Australia and the 

jurisdiction in which the non-resident Holder is resident, such gain may be assessable in Australia if 

it is regarded as having a source in Australia. 

In this regard, the ATO appears to be of the view that the source of gains arising in relation to 

securities such as the BBSN would be where the contract giving rise to the disposal has been 

concluded. Accordingly, there may be a risk that the ATO could form the view that the source of 

any such gain would be in Australia. 

2.3 Holding Ordinary Shares 

Dividends that may be paid by Babcock & Brown to a non-resident Shareholder would not be 

assessable in the hands of the non-resident Shareholder. Rather, unfranked dividends paid by 

Babcock & Brown would be liable to Australian dividend withholding tax. The rate of Australian 

dividend withholding tax is generally 30%, but may be reduced in certain circumstances, 

particularly pursuant to a double taxation agreement entered into between Australia and the 

jurisdiction in which the non-resident shareholder is resident. Franked dividends paid by Babcock 

& Brown will not be liable to Australian dividend withholding tax. 

Unless the non-resident Shareholder holds at least 10%, by value, of the shares of Babcock & 

Brown, any capital gain or loss that may arise upon the subsequent disposal of the Ordinary Shares 

would be disregarded for Australian tax purposes. 

3 Goods and Services Tax (GST) 

Holders and non-resident Holders should not be liable to GST in relation to their holding or 

disposal of BBSN. 

Yours faithfully 

GREENWOODS & FREEHILLS PTY LIMITED 

per: 

Ernest Chang 

Director 





8. Additional information 



8.1 Reporting and disclosure obligations 

Babcock & Brown is a disclosing entity for the purposes of 

the Corporations Act. As a disclosing entity, it is subject to 

regular reporting and disclosure obligations. Broadly these 

obligations require that Babcock & Brown prepare both yearly 

and half-yearly financial statements, a report on the operations 

of Babcock & Brown during the relevant accounting period 

together with an audit or review report by its auditor. 

Copies of these and other documents lodged with ASIC 

may be obtained from or inspected at an ASIC office and 

on Babcock & Brown’s website at www.babcockbrown.com 

Babcock & Brown must ensure that ASX is continuously 

notified of information about specific events and matters as 

they arise for the purpose of ASX making the information 

available to the Australian stock market. 

Babcock & Brown has an obligation under the Listing Rules 

(subject to certain exceptions) to notify ASX immediately of 

any information concerning it of which it becomes aware, 

which a reasonable person would expect to have a material 

effect on the price or value of its quoted securities. 

8.2 Availability of documents 

Babcock & Brown will provide a copy of any of the following 

documents free of charge to any person who requests a copy 

during the Offer Period: 

• the consolidated annual financial statements of Babcock 

& Brown for the year ended 31 December 2004 (being the 

most recent audited annual financial statements lodged with 

ASIC before lodgement of this Prospectus with ASIC); 

• the consolidated half-year financial statements of Babcock 

& Brown for the six months ended 30 June 2005 (being 

the most recent reviewed half-year financial statements 

lodged with ASIC before lodgement of this Prospectus 

with ASIC); and 

• any continuous disclosure notices given by Babcock & 

Brown in the period after the lodgement of the annual 

financial statements for the year ended 31 December 

2004 and before lodgement of this Prospectus with ASIC. 

All requests for copies of the above documents should be 

addressed to: 

The Company Secretary 


Level 39, The Chifley Tower 



Australia 

These documents are also available from the Babcock & Brown 

website at www.babcockbrown.com 

8.3 Rights and liabilities attaching to BBSN 

The rights and liabilities of BBSN are contained in the Trust 

Deed which incorporates the Terms. The Terms are set out in 

full in Appendix B of this Prospectus and the Trust Deed is 

summarised in Section 8.4. Rights and liabilities attaching 

to BBSN may also arise under the Corporations Act, Listing 

Rules and other laws. 

As BBSN may Exchange into Ordinary Shares, a summary of the 

rights and liabilities attaching to Ordinary Shares is set out in 

Section 8.5. 

8.4 Summary of the Trust Deed 

Babcock & Brown has entered into the Trust Deed with 

Permanent Trustee Company Limited (Trustee) and BBIPL. 

The Trust Deed is governed by New South Wales law and 

is dated 9 November 2005. 

The Terms, the Trust Deed, the Corporations Act, the Listing 

Rules and other laws govern the terms and conditions of 

BBSN and the rights and obligations of Babcock & Brown, 

the Trustee, BBIPL and the Holders in respect of BBSN. The 

benefit of the Trust Deed is held on trust by the Trustee for the 

Holders. All Holders are bound by the terms of the Trust Deed. 

The Trust Deed is a complex and lengthy document. It has not 

been reproduced in this Prospectus. The Trust Deed has been 

lodged with ASIC and is incorporated by reference into this 

Prospectus. A summary of some important provisions of the Trust 

Deed is set out below and the Terms for BBSN are set out in 

full in Appendix B. A copy of the Trust Deed can be obtained 

free of charge by any person who requests it during the Offer 

Period, by calling the BBSN InfoLine on 1800 818 562. 

The Trust Deed contains provisions governing a payment 

guarantee (Guarantee) and not a performance guarantee 

granted by BBIPL (Guarantor). Under the Guarantee, the 

Guarantor guarantees the due and punctual payment of the 

moneys due under the Trust Deed and the Terms to the 

Trustee and the Holders. 

Some of the features of the Guarantee are summarised below: 

• Payment. If the moneys due under the Trust Deed and 

Terms to the Trustee or Holders are not paid when due, 

the Guarantor must immediately on demand from the 

Trustee pay to the Trustee the moneys owing. 


• Subordination. A claim by the Trustee or a Holder is 

subordinated in right of payment and on winding up 

to the claims of any creditors of the Guarantor. 

• Indemnity. If any of the moneys owing under the Trust 

Deed and Terms are irrecoverable by the Trustee from 

Babcock & Brown, the Guarantor unconditionally and 

irrevocably indemnifies the Trustee against any loss 

suffered, paid or incurred by the Trustee in relation 

to the non payment of that money and must pay the 

Trustee an amount equal to that money on demand. 

• Principal and unconditional obligation. The Guarantee 

is a principal obligation and independent of and not in 

substitution for any obligation of Babcock & Brown or any 

other person. The Guarantee and obligations of the Guarantor 

under the Trust Deed, the Terms, the BBSN Subordination 

Deed and other subordination documents entered into 

pursuant to the Trust Deed (if any) are absolute, binding 

and unconditional and are not released or discharged or 

otherwise affected by anything which might, but for the 

Trust Deed, have that effect. 

• Winding Up. Although there is no restriction under the 

Trust Deed on the Trustee applying for a Winding Up of 

the Guarantor on the failure of the Guarantor to pay monies 

owing under the Guarantee, the BBSN Subordination Deed 

provides that the Trustee may only do so with the security 

trustee’s consent. The Guarantor may also require the Trustee 

to enter into other subordination documents which may 

restrict the Trustee’s rights to wind-up the Guarantor. 

The Trust Deed also contains provisions dealing with, among 

others, the following matters: 

• the power of Babcock & Brown to issue BBSN 

in accordance with the Trust Deed and Terms; 

• the Trustee and Holders are restricted from: 

- issuing any statutory demand against Babcock & Brown; 

- applying for liquidation, Winding Up or dissolution 

of Babcock & Brown; 

- enforcing any execution to, on or against any assets 

of Babcock & Brown; 

- applying for the appointment by a court of a receiver 

to any of the assets of Babcock & Brown; 

- exercising any set off or counter-claim against Babcock 

& Brown; and 

- appointing any administrator to Babcock & Brown; 

• any action taken by the Trustee under the Trust Deed and 

the Terms is binding on all Holders; 

• the issue of BBSN to any Holder confers on that Holder 

the benefit of all covenants, warranties and indemnities 

under the Trust Deed. No Holder will be entitled to 

proceed directly against Babcock & Brown to enforce 

any rights or remedies under the Trust Deed, except in 

circumstances where: 

- the Trustee, having been directed to proceed by way 

of a special resolution, fails to do so within 30 days 

and such failure continues; and 

- the Holder gives an indemnity satisfactory to the Trustee, 

in which case the Holder may institute proceedings against 

Babcock & Brown for the relevant remedy to the same 

extent that the Trustee would have been entitled to do so; 

• Babcock & Brown acknowledges its indebtedness to the 

Trustee in respect of payments of interest and the principal 

on BBSN; 

• Babcock & Brown covenants for the benefit of the Trustee 

and the Holders that it will: 

- comply with the Trust Deed, Terms and Corporations Act; 

- provide notification of certain events (including breaches 

of the Trust Deed, the Terms, Chapter 2L of the 

Corporations Act, Trigger Events, deferral of interest 

and Events of Default (as defined in the Terms)); and 

- provide certain information to the Trustee, including: 

• copies of all material reports and releases made 

by Babcock & Brown to ASX in respect of BBSN; 

• copies of all documents and notices given 

to Holders; and 

• all other information or reports required 

to be provided to the Trustee under the 


• Babcock & Brown’s obligation to provide notices identifying 

any proposal by Babcock & Brown to issue or incur further 

indebtedness or amend the Trust Deed or Terms; 

• how money which is due to Holders is dealt with where 

the Holder is unable to be contacted including that interest 

will not be paid to Holders on any amounts held by 

Babcock & Brown in these circumstances; 

• the powers, duties and discretions of the Trustee, including: 

- the powers to carry out its obligations and duties under 

the Trust Deed, the Terms, the BBSN Subordination 

Deed and other subordination documents entered into 

pursuant to the Trust Deed (if any) and Corporations 

Act; 

- the discretion to (among other things) delegate, make 

determinations as between itself and Holders about 

questions and matters of doubt arising in relation to 

the Trust Deed (such determinations being conclusive 

and binding on all Holders) and waive breaches by 

Babcock & Brown; 



• the Trustee has no obligation to exercise or to exercise in a 

particular way any of its powers, duties or discretions, unless 

subject to the BBSN Subordination Deed, it is directed 

to do so by a meeting of Holders and indemnified to its 

satisfaction against any expense or liability which it may 

incur as a result of doing so or if it required to do so in 

accordance with clause 11.3 of the Terms; 

• the Trustee is taken to be unaware of a Trigger Event 

or other breach of the Trust Deed unless it has actual 

knowledge or it receives a notice from a Holder or 

Babcock & Brown; 

• the representations and warranties of the Trustee, the 

Guarantor and Babcock & Brown as to their status and 

power to perform obligations under the Trust Deed; 

• the payment of fees by Babcock & Brown to the Trustee 

(in priority to any claim by any Holder) and payment of 

all costs incurred in connection with (among other things) 

the Trustee’s performance of its duties under the Trust Deed, 

the Terms, the BBSN Subordination Deed and other 

subordination documents entered into pursuant to the 

Trust Deed (if any); 

• the limitation on the liability of the Trustee in certain 

respects, including that the Trustee is not liable to any 

person for loss caused by, among other things, its acts or 

omissions in accordance with the terms of the Trust Deed 

in reliance on certain information and that (unless the Trustee 

wilfully defaults, is fraudulent or negligent) the Trustee is not 

liable in its personal capacity for any loss which may result 

from the exercise of its powers under the Trust Deed; 

• the entitlement of the Trustee to be indemnified by 

Babcock & Brown against all actions, proceedings, 

claims, costs and demands in relation to the Trust Deed; 

• the retirement and removal of the Trustee and appointment 

of a new trustee, including notice requirements, the 

circumstances in which the Trustee must retire and when 

Babcock & Brown may remove the Trustee; 

• the termination of the Trust Deed and the procedures 

for disposing of assets as a result of termination; 

• procedures and requirements for meetings of Holders; 

• establishment and maintenance of a register of Holders 

by Babcock & Brown; 

• procedures and requirements for transferring BBSN; and 

• procedures and approvals required to amend the Trust 

Deed and the Terms. 

8.5 Constitution and rights and liabilities 

attaching to Ordinary Shares 

The rights attaching to the Ordinary Shares are set out in 

Constitution and are also regulated by the Corporations Act, 

Listing Rules and the general law. This Section 8.5 briefly 

summarises the key rights attaching to the Ordinary Shares. 

It is not intended to be an exhaustive summary of the rights 

and obligations of Shareholders. Investors who wish to inspect 

the Constitution may do so at the registered office of Babcock 

& Brown during normal office hours. 

8.5.1 Voting 

Subject to the Corporations Act, the Listing Rules and any 

rights or restrictions for the time being attached to any class 

or classes of Babcock & Brown shares at general meetings 

of shareholders or classes of shareholders: 

• Every shareholder entitled to vote may vote in person 

or by proxy, attorney or representative. 

• On a show of hands, every person present who is a 

shareholder or a proxy, attorney or representative of a 

shareholder has one vote. 

• On a poll, every person present who is a shareholder 

or a proxy, attorney or representative has one vote 

for every fully paid share and a fraction of a vote for 

every partly paid share. 

Voting at any shareholder meeting is, subject to the 

Corporations Act, by a show of hands unless a poll 

is demanded by the chairperson of the meeting, five 

shareholders who are present, or shareholders holding at 

least 5% of the votes that may be cast on the resolution. 

On certain resolutions, notably the election of directors 

of BBIPL, the proportions in which votes are cast will 

‘flow through’ to the votes cast by Babcock & Brown 

on its shares in BBIPL in relation to the corresponding 

resolution in that company. 

8.5.2 Dividends 

Subject to the BBIPL Constitution, the Directors may from 

time to time declare and pay dividends out of the profits of 

Babcock & Brown and may fix the amount and timing for 

payment and the method of payment of any such dividend. 

Subject to any special rights attached to any class of Babcock 

& Brown share dividends are payable to all shareholders in 

proportion to the amounts paid up (not credited) on the 

shares held by them. Except as otherwise provided by law, all 

dividends unclaimed for one year after having been declared 


may be invested or otherwise made use of by the Directors 

for the benefit of Babcock & Brown until claimed. 

In addition, the Directors may implement a dividend 

reinvestment plan on such terms as they think fit to be 

amendable as and when they think fit. 

8.5.3 General meetings and notices 

Subject to the Constitution and any special terms of a class 

of shares, each shareholder is entitled to receive notice of, 

and to attend and vote at, general meetings of Babcock 

& Brown and to receive all notices, accounts and other 

documents required to be sent to shareholders under the 

Constitution, the Corporations Act or the Listing Rules. 

8.5.4 Issue of further shares 

Subject to the Constitution, the Corporations Act, the Listing 

Rules and any rights previously conferred on the shareholders 

the Directors may allot, issue or otherwise dispose of Babcock 

& Brown shares to any person, on any terms and conditions, 

at that face value and at those times as the Directors think fit. 

Directors have full power to give any person a call or option 

over any shares during any time and for any consideration 

as they think fit and may issue shares with any preferential, 

deferred or special rights, privileges or conditions or with any 

restrictions (whether in regard to dividend, voting, return of 

share capital or otherwise) as they determine. 

8.5.5 Winding Up 

Subject to the rights of shareholders with special rights in a 

winding up, on a winding up of Babcock & Brown all assets 

that may be legally distributed among the shareholders will 

be distributed to shareholders in order to return capital paid 

up on their shares in Babcock & Brown and distribute any 

surplus in proportion to the amount paid up (not credited) 

on shares held by them. 

8.5.6 Transfer of shares 

Shareholders may transfer shares in Babcock & Brown by 

a written transfer instrument in the usual form, any form 

approved by the Directors, or by a proper transfer effected 

in accordance with the ASTC Settlement Rules and ASX 

requirements. All transfers must comply with Constitution, the 

Corporations Act, the Listing Rules and the ASTC Settlement 

Rules. The Directors may refuse to register a transfer of 

shares, including in circumstances where the transfer is not 

in registrable form or the refusal to register the transfer is 

permitted by the Listing Rules or ASX. The Directors must 

refuse to register a transfer of shares where required to do so 

by the Listing Rules. In addition, subject to the Corporations 

Act and the ASX Listing Rules, the Directors may, in limited 

circumstances as described in the Constitution, apply a 

holding lock to prevent a transfer of shares. 

8.5.7 Number of Directors and appointment 

The number of Directors must be not less than three and 

the maximum is to be fixed by the Directors but may not be 

more than 10 unless Babcock & Brown passes a resolution 

varying that number. 

Subject to the Corporations Act and the Listing Rules, 

Directors, other than the managing director, must retire from 

office or seek re‐election by no later than the third annual 

general meeting following their appointment or election or 

three years, whichever is longer. In addition, unless otherwise 

determined by a resolution of the shareholders of Babcock & 

Brown, while Babcock & Brown is admitted to the official list 

of ASX, at least one Director must retire from office at each 

annual general meeting unless there has been an election of 

Directors earlier that year. 

The Directors may also appoint a Director to fill a casual vacancy 

on the Board or in addition to the existing Directors, who 

may then hold office until the next annual general meeting 

of Babcock & Brown. 

8.5.8 Remuneration of Directors 

Subject to the Listing Rules, in a general meeting of 

shareholders Babcock & Brown has the ability to determine the 

maximum cash fees to be paid to Directors. The sum fixed in 

the Constitution as the maximum aggregate cash remuneration 

to be paid to the Directors for services rendered as Directors 

is $1.5 million, which may be distributed among the Directors 

as they determine. The Constitution also makes provision for 

Babcock & Brown to pay all reasonable expenses of Directors 

in attending meetings and carrying out their duties. 

8.5.9 Indemnification and insurance of Directors 

Babcock & Brown, on a full indemnity basis and to the full 

extent permitted by law, indemnifies each person who is or 

has been a Director or secretary of Babcock & Brown, and 

such other officers or former officers of Babcock & Brown as 

the Directors in each case determine (each an Officer) against 

any liability (other than legal costs) incurred in the discharge of 

their duties as an Officer of Babcock & Brown except where 



the liability is a liability owed to Babcock & Brown or a related 

body corporate or the liability arises out of conduct involving 

a lack of good faith on the part of the Officer or conduct 

attracting the civil penalty provisions of the Corporations 

Act. Officers are also indemnified by Babcock & Brown, 

subject to certain exceptions, for costs (including legal costs) 

and expenses incurred in defending an action for a liability 

incurred in acting as an Officer of Babcock & Brown. 

Babcock & Brown also provides an indemnity, on similar terms 

to those described in the preceding paragraph, in relation to 

current and former directors and secretaries of Babcock & 

Brown who are or were serving as a director or secretary of 

another company at the request of Babcock & Brown. 

Babcock & Brown may pay insurance premiums on behalf 

of an Officer of Babcock & Brown or of a subsidiary of 

Babcock & Brown, other than in relation to a liability arising 

out of conduct involving wilful breach of duty in relation 

to Babcock & Brown or a contravention of civil obligations 

under the Corporations Act prohibiting improper use of 

position or information gained in that position. 

8.5.10 Proportional takeover provisions 

The Constitution requires an ordinary resolution to approve 

registration of a transfer giving effect to an offer made under 

a proportional takeover scheme. The provision regulating 

proportional takeover bids must be renewed in a general 

meeting every three years to remain effective. 

8.5.11 Share buy back 

Babcock & Brown may, in accordance with the Corporations 

Act and the Listing Rules, buy back its own shares on any 

terms and conditions determined by the Directors. The 

consideration paid for a buy back of shares may include 

specific assets, including securities of Babcock & Brown 

or of any other corporation, trust or entity. 

8.5.12 Variation of rights 

Subject to the Corporations Act and the Listing Rules, all or 

any of the rights attached to any class of shares may be varied 

or cancelled with the consent in writing of the holders of 

at least 75% of the issued shares in the particular class or the 

sanction of a special resolution passed at a meeting of holders 

of shares in that class. 

8.5.13 Unmarketable parcel 

If a shareholder holds a number of shares which is less than a 

marketable parcel (as defined in the Listing Rules) Babcock 

& Brown may, as agent for the shareholder, sell or dispose 

of such shares held by each unmarketable parcel holder on 

any terms and in that manner and at those times which the 

Directors determine provided that the procedures set out in 

the Constitution are followed. 

8.5.14 Alteration of the Constitution 

The Constitution can only be amended by a special resolution 

passed by at least 75% of votes cast by shareholders present and 

entitled to vote at a general meeting of Babcock & Brown. 

8.6 Summary of BBIPL Constitution 

US Executive Stakeholders hold such interests in Babcock 

& Brown acquired in the IPO indirectly through their 

shareholdings in BBIPL, the holding company for Babcock 

& Brown’s operations. The US Executive Stakeholders hold 

such interest at the BBIPL level because direct ownership 

at the Babcock & Brown level would have materially 

adverse tax consequences for US Executive Stakeholders. 

The following summary sets out details of the special 

provisions in the BBIPL Constitution that regulate the 

relationship between: 

• Babcock & Brown, which holds a majority shareholding 

in BBIPL in the form of ‘A Class’ shares (A Class Shares) 

(Babcock & Brown is the sole holder of A Class Shares); and 

• the various US Executive Stakeholders who hold 

redeemable preference shares in BBIPL (B Class Shares). 

The various special provisions in the BBIPL Constitution are 

designed to provide an appropriate balance between the rights 

of Babcock & Brown and those of the B Class Shareholders. 

An overriding principle in relation to that balance, however, is 

that B Class Shareholders should not interfere with the ability 

of Babcock & Brown’s Shareholders to determine issues 

concerning control of Babcock & Brown and of Babcock 

& Brown as a whole. 

Specific relevant provisions of the BBIPL Constitution are 

summarised as follows. This Section 8.6 is not intended to be 

an exhaustive summary of the BBIPL Constitution. Investors 

who wish to inspect the BBIPL Constitution may do so at 

the registered office of Babcock & Brown during normal 

office hours. 


8.6.1 Classes of shares 

The A Class Shares held by Babcock & Brown are ordinary 

shares. The B Class Shares held by employees are redeemable 

preference shares. The preference given to B Class Shares is a 

token one cent per share priority on a winding up, and those 

shares otherwise have the right to participate equally with 

A Class Shares in a distribution of surplus assets on a winding 

up. B Class Shares do not have a preferential right to dividends. 

8.6.2 B Class Share redemption/conversion 

provisions 

1. Redemption/conversion at the request 

of a shareholder 

The ability of B Class Shareholders to deal with their 

shares is initially limited, subject to certain exceptions, by 

a progressively reducing escrow restriction (ending on the 

release, by Babcock & Brown, of its periodic financial results 

for the year ending 31 December 2007) equivalent to that 

applying to Ordinary Shares which are held by Employee 

Stakeholders. Should any B Class Shares be converted into 

Ordinary Shares, a similar restriction will continue to apply 

for the balance of that period of time. 

B Class Shareholders are able to request that their shares 

are redeemed or converted. When a shareholder makes this 

request, one of three things will happen: 

• the shares will be redeemed by BBIPL for cash; 

• the shares will by purchased by Babcock & Brown for cash; or 

• Babcock & Brown will purchase the B Class Shares in return 

for an issue of new Ordinary Shares (in which case those 

B Class Shares automatically convert into A Class Shares). 

A decision as to how a redemption/conversion request is 

dealt with under one of the three options above will be 

made by Babcock & Brown or, in its absence, BBIPL. In 

the event of a scheme of arrangement, takeover or similar 

control transaction being announced, B Class Shareholders 

may, in certain circumstances, require that their shares are 

converted into Ordinary Shares rather than being redeemed 

or purchased for cash. 

2. Redemption/conversion price 

The conversion ratio will be maintained at one for one, subject 

only to an adjustment for Babcock & Brown having material 

assets or liabilities other than its shares in BBIPL. Likewise, the 

amount of the cash redemption or purchase price payable to 

a B Class Shareholder will generally be the market value of 

a share in Babcock & Brown. In the case of a redemption or 

cash purchase, the market value is determined as the highest 

sale price on ASX of Ordinary Shares on the fourth business 

day after the redemption notice is received. 

After the later to occur of the date 11 years after Babcock 

& Brown’s listing on ASX and the date on which at least 60% 

of the B Class Shares have been redeemed or purchased, the 

redemption and conversion price begins to decline at the rate 

of 5% per annum. 

3. Redemption/conversion instigated by BBIPL 

There are certain circumstances in which BBIPL can 

compulsorily redeem or convert (at its option) B Class 

Shareholdings. The first such circumstance is the later of the 

date seven years after the IPO and the date on which 80% of 

B Class Shares have been redeemed or purchased. At any time 

after that date, BBIPL can require any B Class Shareholder to 

either have its shares redeemed for cash, or to sell its shares 

to Babcock & Brown for either cash or an issue of Ordinary 

Shares. The cash redemption or purchase price is the same as 

that set out above, with the exception that the diminishing 

price after 11 years does not apply to mandatory redemptions. 

Further circumstances in which BBIPL can compulsorily 

redeem or buy out B Class Shares are following a successful 

scheme of arrangement, selective capital reduction, or takeover 

bid of Babcock & Brown which results in a third party (and 

its associates) acquiring 100% of the issued Ordinary Shares. 

In that case, regardless of whether or not the seven year / 80% 

threshold referred to above has been met, BBIPL can require 

any remaining B Class Shareholders to either have their shares 

redeemed or sell their shares to Babcock & Brown in exchange 

for either cash or Ordinary Shares so long as the Ordinary 

Shares remain listed on ASX (at BBIPL’s option). 

8.6.3 Issue of further BBIPL shares 

In order to maintain the one for one conversion ratio between 

B Class Shares and Babcock & Brown’s shares, it will be 

necessary to maintain the number of issued Ordinary Shares 

and options in Babcock & Brown at exactly the same number 

as the A Class Shares which Babcock & Brown holds in 

BBIPL. In this way, both an Ordinary Share and a B Class 

Share will have the same per share dividend entitlement, and 

this should ensure that (all else being equal) both shares have 

a comparable value so as to make the one for one conversion 

ratio fair to both B Class Shareholders and Shareholders. 



Accordingly, whenever Babcock & Brown issues further 

Ordinary Shares and options (for example, under a placement, 

dividend reinvestment plan, employee incentive plan, etc) 

it will be obliged to subscribe for an equal number of new 

A Class Shares in BBIPL. The issue price for those new A Class 

Shares will be the amount (net of issue costs) that Babcock & 

Brown receives for the issue of its Ordinary Shares. 

Further B Class Shares may be issued if there is a rights issue 

at the Babcock & Brown level, in which case BBIPL may be 

obliged to offer rights to its own shareholders in the same 

ratio. B Class Shareholders also have the right to ‘cash out’ 

their BBIPL rights at the applicable market price of Babcock 

& Brown’s rights. 

8.6.4 Voting rights and election of directors to the 

BBIPL board 

Generally, A Class and B Class Shares have equal voting rights 

at a general meeting of BBIPL. 

There are some cases, however, where the A Class Shares 

‘flow through’ the votes taken at a general meeting of Babcock 

& Brown. In these cases, a ‘proportional voting requirement’ 

applies under which Babcock & Brown is obliged to vote and 

abstain from voting its A Class Shares in the same proportions 

as ‘for’ and ‘against’ votes were cast and shares were not voted 

(respectively) by shareholders of Babcock & Brown. 

One of the key matters to which the proportional voting 

requirement applies is the election of directors at the BBIPL 

level. It is intended that the boards of Babcock & Brown and 

BBIPL should closely mirror one another, subject to B Class 

Shareholders having a vote at the BBIPL level. For instance, 

whenever a BBIPL director who is also a Director retires and 

stands for re-election at Babcock & Brown level, the director 

must also retire and stand for re-election at the BBIPL level. 

Even if a BBIPL director is not a Director, the person must 

retire and stand for re-election on the same rotational basis as 

if he or she was a director of a listed company. The right of 

the BBIPL board to appoint a new director as a casual vacancy 

is also limited to people who are also Directors. 

Further, the BBIPL Constitution provides that after the date on 

which BBIPL is entitled to compulsorily redeem B Class Shares 

(see above), Babcock & Brown will essentially be able to exercise 

complete control over the composition of the BBIPL board. 

8.6.5 Election of Directors 

B Class Shareholders do not have any voting rights at a general 

meeting of Babcock & Brown, including in relation to the 

appointment of Directors. 

However, Babcock & Brown is obliged to accept a nomination 

from the board of BBIPL where an election is to be held to 

fill a Board vacancy at Babcock & Brown level. However, such 

nominations do not displace the right of the Board to put its 

own nominees to a vote of Shareholders. 

8.6.6 Sale of substantial assets by BBIPL 

Babcock & Brown’s business interests, investments and assets 

are held through BBIPL and BBIPL’s subsidiaries. 

If Shareholders are to vote on a significant acquisition, disposal 

or related party transaction to which chapter 10 or 11 of the 

Listing Rules applies and which affects BBIPL (which will 

usually be the case), any such decision must also be approved 

by BBIPL’s shareholders to the extent that it affects BBIPL’s 

assets. Babcock & Brown can vote its A Class Shares on that 

resolution, and the proportional voting requirement referred 

to above applies to this resolution. 

Similarly, the sale by Babcock & Brown of its A Class Shares 

in BBIPL (this will be Babcock & Brown’s major directly held 

asset) also requires the approval of BBIPL shareholders. Babcock 

& Brown can vote its A Class Shares on this resolution, and 

the proportional voting requirement referred to above applies. 

These special provisions in relation to substantial assets only 

apply until the date on which BBIPL becomes entitled to 

compulsorily redeem B Class Shares. After that date, acquisitions 

or disposals of this kind do not require the approval of BBIPL 

shareholders. 

8.6.7 Dividends 

A Class Shares and B Class Shares have the same per share 

dividend rights. While there are B Class Shareholders in 

BBIPL, Babcock & Brown may not pay a total dividend 

which exceeds the total dividend that it receives from BBIPL 

on its A Class Shares. 

8.6.8 General minority shareholder protection 

The BBIPL Constitution requires Babcock & Brown not to do 

anything that would materially prejudice the ability of B Class 

members to have their B Class Shares redeemed or converted. 

This restriction does not apply where the relevant event is 

specifically provided for elsewhere in the BBIPL Constitution, 

such as under a scheme of arrangement or takeover bid. 

8.7 Summary of Offer Management Agreement 

On 9 November 2005, Babcock & Brown and the Lead 

Manager & Bookrunner entered into the Offer Management 


Agreement. Under the agreement, the Lead Manager & 

Bookrunner agreed to manage the Offer, including the 

Bookbuild and Allocation processes for the Offer. 

The Lead Manager & Bookrunner has agreed to provide 

settlement support for the Offer, subject to the determination 

of the number of BBSN to be issued, the Margin, the number 

of BBSN to be Allocated to, and the Allocation of BBSN 

within, the Broker Firm Offer and Institutional Offer. 

Babcock & Brown must pay the Lead Manager & 

Bookrunner a management, bookrunner and selling fee of 

1.75% of that amount that equals the Issue Price multiplied 

by the number of BBSN issued under the Offer. 

In addition, Babcock & Brown has agreed to pay the Lead 

Manager & Bookrunner a variable incentive fee of up to 

0.65% of that amount that equals the Issue Price multiplied 

by the number of BBSN issued under the Offer, subject to 

achieving certain price and volume thresholds. 

Babcock & Brown must pay or reimburse the Lead Manager 

& Bookrunner for reasonable costs incurred in respect of the 

Offer and all costs payable in relation to ASX’s delivery versus 

payment settlement service as soon as reasonably practicable 

after a request for payment or reimbursement is made by 

the Lead Manager & Bookrunner. The Lead Manager & 

Bookrunner is responsible for all fees and commissions due 

to any Retail Broker it appoints. Such fees are to be paid from 

the fees payable to the Lead Manager & Bookrunner under 

the Offer Management Agreement. 

Under the Offer Management Agreement, Babcock & Brown 

gives certain representations, warranties and undertakings. 

Subject to certain exclusions relating to, among other 

things, fraud, bad faith, negligence and wilful default by an 

indemnified party, Babcock & Brown agrees to keep the 

Lead Manager & Bookrunner and certain affiliated parties 

indemnified from losses suffered in connection with the Offer. 

The Lead Manager & Bookrunner may terminate the Offer 

Management Agreement by notice to Babcock & Brown 

if one or more of the termination events set out below 

occurs before the Settlement Date (although, in the case of 

termination events marked with an asterisk, the Lead Manager 

& Bookrunner may not terminate the agreement unless it 

has reasonable grounds to believe and does believe that (i) the 

event has or is likely to have a materially adverse effect on the 

success or settlement of the Offer or, the likely price at which 

BBSN will trade on ASX; or (ii) the event would give rise to 

a material liability of the Lead Manager & Bookrunner under 

any applicable law or regulation): 

• * 

A statement contained in this Prospectus is misleading 

or deceptive, or a matter is omitted from this Prospectus. 

• * 

After successful completion of the Bookbuild process, 

there is an adverse change in the assets, liabilities, financial 

position or performance, profits, losses or prospects of 

the Group. 

• * 

Babcock & Brown issues or becomes required to issue 

a supplementary prospectus in circumstances where the 

matter is materially adverse from the point of view of 

an investor within the meaning of section 719 of the 


• * 

Trading of Babcock & Brown’s securities on ASX is halted 

or quotation of Babcock & Brown’s securities on ASX is 

suspended for more than three consecutive business days 

or such securities cease to be quoted on ASX. 

• There is an outbreak or major escalation of hostilities 

involving any one or more of Australia, New Zealand, 

the United States, the United Kingdom, any member 

of the European Union, Indonesia, North Korea, South 

Korea, China or Japan or the declaration by any of these 

countries of a national emergency or war or a terrorist 

attack is perpetrated involving any of those countries or any 

diplomatic, military, commercial or political establishment of 

any of those countries elsewhere in the world in each case 

the effect of which is such as to make it, in the reasonable 

opinion of the Lead Manager & Bookrunner, impracticable 

to market the Offer or to enforce contracts 

to issue and allot BBSN. 

• * 

There is introduced, or there is a public announcement 

of a proposal to introduce, into the parliament of Australia 

or any State of Australia a new law, or the Reserve Bank of 

Australia, any federal or state authority of Australia, adopts 

or announces a proposal to adopt a new policy (other than a 

law or policy which has been announced before the date of 

this agreement), any of which does or is likely to prohibit 

or regulate the Offer, capital issues or stock markets. 

• Babcock & Brown withdraws the Offer. 

• * 

The due diligence report signed by the due diligence 

committee established in relation to the Offer is or 

becomes misleading or deceptive. 

• * 

There is a change in senior management of Babcock 

& Brown or in the Board. 

• * 

Any of the following occur: 

– a Director is charged with an indictable offence; 

– any regulatory body commences any public action 

against a Director in their capacity as a Director, or 

announces that it intends to take such action; 



– any Director is disqualified from managing a corporation 

under the Corporations Act; or 

– the chairman or chief executive officer of Babcock 

& Brown vacates his or her office. 

• * 

A contravention by Babcock & Brown or any entity in 

the Group of the Corporations Act, its constitution, the 

Listing Rules or any other applicable law or regulation. 

• Approval is refused or not granted, other than subject 

to customary conditions, in respect of the quotation of 

BBSN on ASX. 

• Any of the following notifications are made: 

– ASIC issues an order under section 739 of the 

Corporations Act; 

– an application is made by ASIC for an order under 

sections 1324 B or 1325 of the Corporations Act in 

relation to this Prospectus or ASIC commences any 

investigation or hearing under Part 3 of the Australian 

Securities and Investments Commission Act 2001 

(Cth) in relation to this Prospectus; 

– any person gives a notice under section 733(3) of the 

Corporations Act or any person who has previously 

consented to the inclusion of its name in this Prospectus 

or any supplementary prospectus withdraws that 

consent; or 

– any person gives a notice under section 730 of the 

Corporations Act in relation to this Prospectus. 

• * 

There is a default by Babcock & Brown in the 

performance of any of its obligations under the Offer 

Management Agreement. 

• * 

A warranty given by Babcock & Brown or BBIPL in 

relation to the Offer is not true or correct. 

• Babcock & Brown is unable to issue BBSN within the 

time required by section 723 of the Corporations Act, by 

ASX or ASIC, any statute or regulation, by the order of 

court or any governmental agency. 

• * 

After successful completion of the Bookbuild process there 

is a suspension or material limitation in trading in securities 

generally on ASX, the New York Stock Exchange and/or 

the London Stock Exchange. 

• * 

After successful completion of the Bookbuild process, 

a general moratorium on commercial banking activities 

in Australia, New Zealand, the US or UK is declared, or 

there is a material disruption in commercial banking or 

securities settlement or clearance services in those places. 

• * 

After successful completion of the Bookbuild process, there 

is an adverse change or disruption to the existing financial 

markets, political or economic conditions of Australia, Japan, 

the UK, the US or the international financial markets or 

any change in national or international political, financial 

or economic conditions, in each case the effect of which 

is such as to make it, in the reasonable opinion of the Lead 

Manager & Bookrunner, impracticable to market the Offer 

or to enforce contracts to issue and allot BBSN. 

8.8 Summary of the BBIPL Loan Agreement 

The BBIPL Loan Agreement is made between Babcock & 

Brown as lender and BBIPL as borrower on the following terms: 

• The principal amount of each advance under the BBIPL 

Loan Agreement will be the aggregate amount received 

by Babcock & Brown from Holders in respect of the 

corresponding issue of BBSN less costs which are paid 

out of the proceeds of the issue. BBIPL will pay an 

establishment fee to Babcock & Brown on the date of 

the initial advance under the BBIPL Loan Agreement. 

• The amount of interest payable by BBIPL to Babcock & 

Brown on the BBIPL Loan will be the same as the amount 

of interest payable by Babcock & Brown on the BBSN. 

• Because the principal amount of the BBIPL Loan is less 

than the principal amount of the BBSN: 

– the effective interest rate payable by BBIPL under the 

BBIPL Loan Agreement is higher than that payable by 

Babcock & Brown under the Terms; and 

– aggregate repayments of principal under the BBIPL 

Loan Agreement are less than the aggregate repayments 

of principal required to be paid by Babcock & Brown 

to Holders under the Terms. 

• BBIPL will have no obligation to pay interest under the 

BBIPL Loan Agreement once the BBIPL Loan is repaid in 

full, even though at that time BBSN may be outstanding 

so that Babcock & Brown may still be under an obligation 

to pay interest to the Holders under the Terms. 

• BBIPL may defer interest payments under the BBIPL 

Loan Agreement where: 

– it is insolvent or the interest payment would cause it to 

become insolvent; 

– the interest payment would cause it to breach any legal 

obligation; or 

– the directors of BBIPL determine that it does not have 

sufficient cash to make the interest payment. 


This right is independent of Babcock & Brown’s right to 

defer interest under the Terms. 

• Whilst the Dividend Stopper applies to prevent Babcock 

& Brown from doing certain things under clause 2.6 of the 

Terms or there is any deferred interest outstanding under 

the BBIPL Loan Agreement, BBIPL must not: 

– declare or pay any dividend or make any return of 

capital or other payment to its shareholders in respect of 

shares of any class; 

– set aside any amount of cash or any assets for doing any 

of those things; or 

– undertake any arrangement, reconstruction or 

reorganisation between itself and its members or any 

class of them, or between itself and its creditors or any 

class of them, which would have a material adverse 

effect on the value of its shares. 

• Babcock & Brown’s rights (as lender) against BBIPL (as 

borrower) under the BBIPL Loan Agreement are currently 

subject to the terms of the Parent Subordination Deed only 

and are not subordinated to BBIPL’s creditors generally. 

The BBIPL Loan Agreement does however provide 

for subordination of the BBIPL Loan to additional debt 

obligations at the discretion of BBIPL. 

• Where BBSN are Exchanged under the Terms and the 

exchange is effected by the issue of new Ordinary Shares, 

Babcock & Brown must subscribe for an equivalent number 

of A Class Shares in BBIPL. That subscription effectively 

offsets a corresponding portion of BBIPL’s obligations under 

the BBIPL Loan Agreement. Where the Exchange under the 

Terms is effected by a transfer of existing Ordinary Shares, 

a corresponding portion of the BBIPL Loan and interest 

is payable. 

8.9 Subordination Deeds 

8.9.1 BBSN Subordination Deed 

Under the BBSN Subordination Deed, no amount that may 

become payable under the Guarantee is payable until the 

BBSN Senior Debt is paid in full, however, BBIPL may make 

payments in respect of the Guarantee to the extent permitted 

by the Existing Corporate Facility. The Existing Corporate 

Facility permits payments in connection with the Guarantee 

where there is no actual or potential event of default or review 

event subsisting. 

The Trustee is not permitted to requisition a meeting to 

consider a resolution for the winding up of, or appointment of 

an administrator to, BBIPL, vote for the winding up of BBIPL 

or in connection with the composition with creditors of BBIPL 

or apply to a court to wind up BBIPL or prove in any such 

winding up, except in accordance with the directions of BWA 

Custodians Limited, as security trustee for the Senior Creditors. 

A winding up of Babcock & Brown or BBIPL (among other 

things) is an event of default under the Existing Corporate 

Facility. Accordingly, if Babcock & Brown or BBIPL is wound 

up, no payment may be made under the Guarantee until the 

BBSN Senior Debt is paid in full. 

Events of default and review events under the Existing 

Corporate Facility are described more fully under the heading 

“Parent Subordination Deed” in this Section 8.9. 

8.9.2 Parent Subordination Deed 

Under the Parent Subordination Deed, none of the 

Subordinated Debt (including any amount that may become 

payable under the BBIPL Loan) is payable until the BBSN 

Senior Debt is paid in full, other than where Babcock & Brown 

lodges proof of the Subordinated Debt in accordance with 

the Parent Subordination Deed. However, BBIPL may make 

payments in respect of the BBIPL Loan to the extent permitted 

by the Existing Corporate Facility. The Existing Corporate 

Facility permits payments in connection with the BBIPL Loan 

where there is no actual or potential event of default or review 

event subsisting. 

Events of default under the Existing Corporate Facility include 

the following: 

• BBIPL does not pay on the due date any amount payable 

pursuant to the Existing Corporate Facility in the manner 

required under it, subject to certain technical difficulties 

which are rectified within the required time. 

• Any requirement under certain covenants (including 

financial covenants and covenants relating to financial 

indebtedness, cross collateralisation and change of business 

or investments) is not satisfied. 

• BBIPL does not comply with any provision of the Existing 

Corporate Facility (other than those referred to in the above 

two paragraphs), Babcock & Brown does not comply with 

any provision of the Parent Subordination Deed or BBIPL 

or Babcock & Brown does not comply with any condition 

of any waiver or consent by a lender under the Existing 

Corporate Facility and such failure is remediable but not 

remedied within the required time. 

• Any representation or statement made by BBIPL in the 

Existing Corporate Facility or by Babcock & Brown in the 

Parent Subordination Deed is incorrect or misleading in any 

material respect when made or deemed to be made. 



• Any financial indebtedness of BBIPL is not paid when due 

after taking into account any grace period; any financial 

indebtedness of BBIPL is declared to be or otherwise 

becomes due and payable prior to its specified maturity; 

any commitment for any financial indebtedness of BBIPL 

is cancelled or suspended; any creditor of BBIPL becomes 

entitled to declare any financial indebtedness of BBIPL 

due and payable prior to its specified maturity, except 

where, in each case, the aggregate amount of financial 

indebtedness referred to in this paragraph is less than or 

equal to $5 million. 

• BBIPL or Babcock & Brown is unable to pay its debts as 

and when they fall due, or is declared unable to do so or 

suspends or threatens to suspend payments or a moratorium 

is declared in respect of any of its indebtedness. 

• Insolvency or related steps, proceedings or actions are 

taken in relation to BBIPL or Babcock & Brown. 

• Any expropriation, attachment, sequestration, execution 

or analogous process is taken affecting any assets of BBIPL 

or Babcock & Brown having an aggregate value of at least 

$20 million other than those being contested in good faith. 

• It is or becomes unlawful for BBIPL to perform its 

obligations under the Existing Corporate Facility or any 

security interest or for Babcock & Brown to perform its 

obligations under the Parent Subordination Deed; any 

relevant governmental authorisation has been revoked or 

the Existing Corporate Facility ceases to be of full force 

and effect. 

• BBIPL suspends payments generally or ceases to carry on 

all or a material part of its business. 

• Babcock & Brown no longer holds at least 70% of the 

ordinary voting shares in BBIPL or holds a direct majority 

ownership interest in an entity other than BBIPL. 

• The authority or ability of BBIPL or Babcock & Brown 

to conduct its business is wholly or substantially limited 

or curtailed by any seizure, expropriation, nationalisation, 

intervention, restriction or other action by or on behalf of 

any governmental, regulatory or other authority or person 

in relation to any of its assets. 

• BBIPL or any other relevant party rescinds or purports to 

rescind or repudiates or purports to repudiate the Existing 

Corporate Facility or any of the security or evidences an 

intention to rescind or repudiate the Existing Corporate 

Facility or any security. 

• Any litigation, arbitration, regulatory or other investigations, 

proceedings or disputes are commenced or threatened in 

relation to the Existing Corporate Facility or BBIPL or 

its assets which has a material adverse effect on BBIPL’s 

capacity to satisfy its payment obligations under the 

Existing Corporate Facility. 

• Any event or circumstance occurs which in the lenders’ 

reasonable opinion would lead to a payment default under 

the Existing Corporate Facility. 

• The auditors of BBIPL qualify the annual financial 

statements of the Group to the effect that they do not 

accurately reflect the financial position or performance of 

the Group. 

Each of the following is a review event under the Existing 

Corporate Facility: 

• If the economic interests owned by employees of the 

Group in Babcock & Brown and BBIPL (collectively) 

fall below 40% at any time up to and including the first 

anniversary of the Existing Corporate Facility or fall 

below 35% at any time up to and including the second 

anniversary of the Existing Corporate Facility or at any 

time thereafter fall below 25%. 

• If at any time over the preceding 12 month period, more 

than 10% of the key management persons leave the 

employment of the Group. 

• Any person acquires a Relevant Interest in shares such that 

they have an aggregate Relevant Interest in 20% or more 

of the Ordinary Shares at that time. 

• Net profit after tax as shown in the most recent financial 

statements is less than $100 million. 

• The average share price of Babcock & Brown on the last 

day of any financial quarter (Quarter Date) (commencing 

on 31 March 2005) falls by more than 25% when 

compared to the average share price of Babcock & Brown 

calculated on the previous Quarter Date. 

• The shares in Babcock & Brown cease to be listed on the 

official list of ASX or are suspended or withdrawn from 

trading on ASX for a continuous period of more than 

seven business days (excluding any trading halt in 

connection with a proposed takeover of Babcock 

& Brown by a third party). 

• There is an attachment, sequestration, distress or execution 

or any analogous process in any jurisdiction for an amount 

exceeding $20 million affecting any assets of a Group 

member (other than BBIPL), other than those which are 

being contested in good faith. 

Some of the events of default and review events may be 

amended in connection with the extension of the Existing 

Corporate Facility as described in Section 5.5. 


8.10 Summary of the Arrangement Deed 

The parties to the Arrangement Deed are Babcock & Brown 

and the Arranger. 

Under the Arrangement Deed, the Arranger has been 

appointed and authorised to make offers to people to 

arrange for the issue of BBSN, and as instructed by Babcock 

& Brown to distribute, or arrange for the distribution of 

disclosure documents and promotional material to potential 

investors and financial service providers in relation to the 

issue of BBSN. Babcock & Brown agrees to issue BBSN in 

accordance with offers made by the Arranger. 

The Arranger represents and warrants that it is authorised 

under its AFSL to undertake its role as arranger under the 

Arrangement Deed. The appointment of the Arranger in this 

capacity may be terminated by Babcock & Brown at any time 

by written notice to the Arranger. 

8.11 Summary of the proposed terms of the 

Standby Acquisition Facility 

Babcock & Brown is in the process of negotiating the terms 

of a $300 million Standby Acquisition Facility with UBS. 

Babcock & Brown will be the borrower under the proposed 

Standby Acquisition Facility, the proceeds of which will 

be on-lent to BBIPL for the purpose of being applied by 

BBIPL (or one of its wholly owned subsidiaries) in or 

towards the acquisition of specified assets. BBIPL will give 

a guarantee of the obligations of Babcock & Brown under 

the Standby Acquisition Facility, which will be subordinated 

to the Existing Corporate Facility. The Guarantee will be 

subordinated to this guarantee. 

It is currently proposed that the Standby Acquisition Facility 

be available as a bridging facility for a six month term. 

8.12 Related party transactions 

Babcock & Brown’s interests in a small number of its 

investments are obtained under arrangements with entities 

(Related Parties) associated with Directors. In these cases 

the underlying assets are held by the Related Parties, and the 

relevant arrangements ensure that Babcock & Brown obtains 

the full economic benefit of and interest in the assets. Due to 

the fact that Babcock & Brown is the economic (although not 

legal) holder of these investments, Babcock & Brown in some 

cases has agreed to guarantee or indemnify certain of the 

Related Parties’ liabilities and obligations in connection with 

their holding of the investments. 

In particular, Babcock & Brown has guaranteed a payment of 

approximately $1.1 million of Adder Securities Pty Limited, a 

Related Party, to the Commonwealth Government. However, 

Babcock & Brown does not believe that it will be necessary 

for the Commonwealth Government to call on this guarantee. 

8.13 Consents 

Each of the parties (referred to as Consenting Parties) 

who are named below: 

(a) has given and has not, before the lodgement of this 

Prospectus with ASIC, withdrawn its written consent to 

be named in this Prospectus in the form and context in 

which it is named; 

(b) has not made any statement in this Prospectus or any 

statement on which a statement made in this Prospectus 

is based, other than as specified in paragraphs (d) 

and (f) below; 

(c) to the maximum extent permitted by law, expressly 

disclaims and takes no responsibility for any statements in 

or omissions from this Prospectus, other than the reference 

to its name and a statement included in this Prospectus 

with the consent of that person as specified in paragraphs 

(d) and (f); 

(d) in the case of BBAH, has given and has not, before the 

lodgement of this Prospectus with ASIC, withdrawn its 

written consent to the inclusion of statements concerning 

BBAH and its Financial Services Guide, in the form and 

context in which those statements and Financial Services 

Guide are included in this Prospectus; 

(e) in the case of BBIPL, has given and has not, before the 

lodgement of this Prospectus with ASIC, withdrawn 

its written consent to the inclusion of statements or 

information by or on BBIPL in the form or context 

in which they appear; and 

(f) in the case of Greenwoods & Freehills, has given and has 

not, before the lodgement of this Prospectus with ASIC, 

withdrawn its written consent to the inclusion of the 

Tax Letter in the form and context in which it appears 

in Section 7. 



Role 

Consenting parties 

Holding company for Babcock & Brown 

the Group’s operations International Pty Limited 

and Guarantor 

Arranger 

Lead Manager & 

Bookrunner 


Co-Managers 

Trustee 

Registry 

Legal advisor 

Auditor 

Tax advisor 

8.14 IPO Prospectus 

Babcock & Brown Asset 

Holdings Pty Limited 

UBS AG, Australia Branch 






UBS Private Clients Australia 

Limited 

Permanent Trustee Company 

Limited 


Freehills 

Ernst & Young 

Greenwoods & Freehills 

Pty Limited 

Parts of the IPO Prospectus are referred to in Sections 5.3, 

8.15 and 8.16 of this Prospectus. 

The IPO Prospectus has been lodged with ASIC and sections 

4.6, 4.7, 8.5, 8.10 and 8.12 and Notes 2, 3 and 4 of Appendix A 

of that document are incorporated by reference into this 

Prospectus. A copy of those parts of the IPO Prospectus can 

be obtained free of charge by any person who requests them 

during the Offer Period, by contacting the BBSN InfoLine 

on 1800 818 562. 

8.15 Interests of advisors 

8.15.1 Interests in formation or promotion of 


To the extent not inconsistent with this Prospectus, and other 

than as set out in section 8.12 of the IPO Prospectus: 

• no person named in this Prospectus as performing a 

function in a professional, advisory or other capacity in 

connection with the preparation or distribution of the 

Prospectus; and 

• no promoter or underwriter of the Offer or financial 

services licensee named in the Prospectus as a financial 

services licensee involved in the Offer, 

holds, at the date of this Prospectus, or has held in the two 

years before that date, an interest in: 

• the formation or promotion of Babcock & Brown; or 

• any property acquired or proposed to be acquired by 

Babcock & Brown in connection with the formation 

or promotion of Babcock & Brown. 

Other than as set out in section 8.12 of the IPO Prospectus, 

none of such persons has been paid or agreed to be paid any 

amount, nor has any benefit been given or agreed to be given to 

any such persons for services provided by them, in 

connection with the formation or promotion of Babcock & 

Brown. 

8.15.2 Interests in the Offer 

Other than as set out in this Prospectus: 

• no person named in this Prospectus as performing a function 

in a professional, advisory or other capacity in connection 

with the preparation or distribution of the Prospectus; and 

• no promoter or underwriter of the Offer or financial 

services licensee named in the Prospectus as a financial 

services licensee involved in the Offer, 

holds, at the date of this Prospectus, or has held in the two 

years before that date, an interest in: 

• the Offer; or 


Babcock & Brown in connection with the Offer. 

Other than as set out in this Prospectus, none of such persons 

has been paid or agreed to be paid any amount, nor has any 

benefit been given or agreed to be given to any such persons 

for services provided by them, in connection with the Offer. 

UBS is acting as the Lead Manager & Bookrunner to the Offer, 

in respect of which it will receive fees as set out in Section 8.7. 

UBS has a substantial holding in Babcock & Brown for the 

purposes of the Corporations Act. As at the date of this 

Prospectus, UBS has a substantial holding in Babcock & Brown 

for the purposes of the Corporations Act. As at the date of this 

Prospectus, UBS and its associates held a relevant interest in 

approximately 14.85 million Ordinary Shares. Approximately 

9.43 million of these Ordinary Shares are subject to escrow 

arrangements. 

Ernst & Young has acted as Auditor of Babcock & Brown 

and performed specific verification procedures in relation 

to the financial information contained in this Prospectus. 

In relation to the Offer, Babcock & Brown will pay 

approximately $30,500 (excluding disbursements and GST) 

to Ernst & Young. Further amounts may be paid to Ernst & 

Young in accordance with its normal time based charges. 


Greenwoods & Freehills has acted as a tax advisor to Babcock 

& Brown in relation to the Offer and has prepared the 

Tax Letter included in Section 7. In respect of this work, 

Babcock & Brown will pay approximately $50,000 (excluding 

disbursements and GST) to Greenwoods & Freehills. 

Further amounts may be paid to Greenwoods & Freehills 

in accordance with its normal time based charges. 

Freehills has acted as legal advisor to Babcock & Brown in 

relation to the Offer and has performed preparatory work 

in relation to the due diligence system and verification 

program, and conducted due diligence investigations on legal 

matters. In respect of this work, Babcock & Brown will pay 

approximately $350,000 (excluding disbursements and GST) 

to Freehills. Further amounts may be paid to Freehills in 

accordance with its normal time based charges. 

Permanent Trustee Company Limited is acting as Trustee for 

Holders under the Trust Deed. In respect of this role, Babcock 

& Brown has paid or agreed to pay an establishment fee of 

$7,500 and an ongoing fee of $52,500 per annum (indexed 

to CPI and excluding disbursements and GST) to Permanent 

Trustee Company Limited. 

The Lead Manager & Bookrunner will be responsible for 

fees payable to each Retail Broker, details of which are set 

out in Section 8.7. 

8.16 Interests of Directors 

8.16.1 Babcock & Brown Limited 

The Directors’ interests in Babcock & Brown as at the date 

of this Prospectus are detailed in the following table: 

Directors 

Relevant Interest 

held 

Ordinary 

Shares 

Options 

James Babcock – 100,000 

Elizabeth Nosworthy 100,000 – 

Phillip Green 12,622,963 800,000 

James Fantaci – 100,000 

Ian Martin 100,000 – 

Michael Sharpe 37,500 – 

Dieter Rampl – – 

Martin Rey 1,623,788 200,000 

Total 14,484,251 1,200,000 

8.16.2 Babcock & Brown International Pty Limited 

The Directors’ interests in Babcock & Brown International 

Pty Limited as at the date of this Prospectus are detailed in 

the following table: 

Directors 


held 

B Class 

Shares 

James Babcock 21,115,804 

Elizabeth Nosworthy – 

Phillip Green – 

James Fantaci 8,198,694 

Ian Martin – 

Michael Sharpe – 

Dieter Rampl – 

Martin Rey – 

Total 29,314,498 

8.16.3 Interests in the Offer and formation 

or promotion of Babcock & Brown 

The Directors (and their related parties) may acquire BBSN 

offered under this Prospectus subject to the Listing Rules 

(including any waivers as described in Section 8.22). 

Other than as set out in this Prospectus, no Director or 

proposed Director holds, at the date of this Prospectus, 

or has held in the two years before that date, an interest in: 

• the Offer; or 


Babcock & Brown in connection with the Offer. 

To the extent not inconsistent with this Prospectus, and other 

than as set out in sections 4.6, 4.7, 8.5 and 8.10 of the IPO 

Prospectus, no Director or proposed Director holds, at the 

date of this Prospectus, or has held in the two years before 

that date, an interest in: 

• the formation or promotion of Babcock & Brown; or 


Babcock & Brown in connection with the formation 

or promotion of Babcock & Brown. 

At the date of this Prospectus, no one has paid or agreed to 

pay any amount, and no one has given or agreed to give any 

benefit, to any Director or proposed Director: 



• to induce that person to become, or qualify as, a Director, 

other than as set out in sections 4.6, 4.7, 8.5 and 8.10 of 

the IPO Prospectus; or 

• for services provided by that person in connection with 

the formation or promotion of Babcock & Brown, other 

than as set out in sections 4.6, 4.7, 8.5 and 8.10 of the 

IPO Prospectus; or 

• for services provided by that person in connection with 

the Offer, other than as set out in this Prospectus. 

8.17 Foreign selling restrictions 

As at the date of this Prospectus, no action has been taken to 

register or qualify BBSN or the Offer or otherwise to permit 

a public offering of BBSN outside Australia. 

The distribution of this Prospectus (including an electronic 

copy) outside Australia may be restricted by law. If you come 

into possession of this Prospectus outside Australia, then you 

should seek advice on, and observe, any such restrictions. Any 

failure to comply with such restrictions may violate securities 

laws. This Prospectus does not constitute an offer or invitation 

in any jurisdiction in which, or to any person to whom, it 

would not be lawful to make such an offer or invitation. 

In particular, BBSN have not been and will not be registered 

under the US Securities Act or the securities laws of any 

state of the United States, and may not be offered or sold in 

the United States or to, or for the account or benefit of, a 

US Person, except pursuant to an exemption from, or in a 

transaction not subject to the registration requirements of, the 

US Securities Act and applicable United States securities laws. 

Any offer, sale or resale of BBSN in the United States by a 

dealer (whether or not participating in the Offer) may violate 

the registration requirements of the US Securities Act if made 

within 40 days of the Issue Date. 

A public offering of BBSN to New Zealand investors may 

only be made pursuant to an investment statement which has 

been lodged with the appropriate authority. 

Notwithstanding the above, Babcock & Brown and the Lead 

Manager & Bookrunner reserve the right to offer BBSN 

under the Institutional Offer to any Institutional Investor 

outside Australia, where to do so would not be in breach of 

the securities law requirements of the relevant jurisdiction. 

It is the intention and expectation of Babcock & Brown 

that none of Babcock & Brown’s non-Australian associates 

acquires BBSN as any such acquisition of BBSN by non- 

Australian associates of Babcock & Brown could result in the 

entire issue failing the “public offer test” under section 128F 

of the Income Tax Assessment Act 1936 (Cth). 

Each person submitting an Application Form or otherwise 

acquiring BBSN will be deemed to have acknowledged that it 

is aware of the restrictions referred to in this Section 8.17 and 

to have represented and warranted that it is able to apply for 

and acquire BBSN in compliance with those restrictions. 

8.18 Privacy statement 

If you apply for BBSN, you will be asked to provide personal 

information to Babcock & Brown (and the Lead Manager & 

Bookrunner or your Retail Broker, if you are a Broker Firm 

Applicant) and the Registry, on Babcock & Brown’s behalf. 

Babcock & Brown, the Registry and the Lead Manager & 

Bookrunner (or your Retail Broker) will collect, hold and use 

that personal information to assess your Application, service 

your needs as a Holder, and provide facilities and services that 

you request and carry out appropriate administration. 

Company and tax law requires some of the information to 

be collected. If you do not provide the information requested, 

your Application may not be able to be processed efficiently, 

if at all. 

Under the Privacy Act 1988 (Cth), you may request access 

to your personal information held by or on behalf of 

Babcock & Brown. You can request access to your personal 

information or obtain further information about Babcock & 

Brown’s management practices by contacting the Registry or 

Babcock & Brown. If the Registry’s record of your personal 

information is incorrect or out of date, it is important that 

you contact Babcock & Brown or the Registry so that your 

records can be corrected. 

8.19 ASX quotation 

Babcock & Brown will apply for BBSN to be quoted on 

ASX within seven days after the date of this Prospectus. 

If ASX does not grant permission for BBSN to be quoted 

within three months (or any longer period permitted by 

law) after the date of this Prospectus, BBSN will not be 

issued and all Application payments will be refunded 

(without interest) to applicants as soon as practicable. 


8.20 Foreign acquisitions and takeovers 

The Babcock & Brown Group may require approval under 

the Foreign Acquisitions and Takeovers Act 1975 (Cth) in 

respect of certain kinds of Corporate Finance and Real Estate 

transactions which it may wish to enter into in the future. 

For a description of the types of transactions undertaken by 

the Group in this regard, see Section 4.2. 

8.21 Incorporation by reference 

The following important material has been lodged with 

ASIC and is incorporated by reference into this Prospectus: 

• pages 22 to 58 of the Half-Year Financial Statements 

(see Section 5.2); 

• the Trust Deed (see Section 8.4); and 

• sections 4.6, 4.7, 8.5, 8.10, 8.12 and Notes 2, 3 and 4 

of Appendix A of the IPO Prospectus (see Section 5.3 

and 8.14). 

Copies of any or all of this material can be obtained free of 

charge by any person who requests it during the Offer Period, 

by contacting the BBSN InfoLine on 1800 818 562. 

8.22 ASX relief 

ASX has given its in principle agreement to grant the 

following waivers in relation to the Listing Rules as they 

apply to BBSN: 

• in relation to the listing rules 10.1 and 10.11 to the extent 

necessary to permit Babcock & Brown to issue Ordinary 

Shares to related parties of Babcock & Brown on Exchange 

of BBSN and otherwise to facilitate the Exchange of 

BBSN without the approval of Shareholders; and 

• in relation to listing rule 10.11 to permit Directors and 

their related parties to participate in the Offer without 

shareholder approval, on condition that Directors and their 

related parties in aggregate are not issued more than 0.2% 

of the total number of BBSN which may be issued under 

the Offer and their participation is on the same terms and 

conditions as those for any other applicant. 

• in calculating the number of BBSN that may be issued 

in accordance with listing rule 7.1, Babcock & Brown 

may notionally convert BBSN at the closing market price 

of Ordinary Shares on ASX on the day prior to the 

announcement of the Offer. 

8.23 ASIC relief 

The Arranger has received ASIC relief to enable its Financial 

Services Guide to be included as a separate part of this 

Prospectus in Appendix C. 

8.24 Expiry Date 

No BBSN will be offered on the basis of this Prospectus 

after the Expiry Date. 

8.25 Governing law 

This Prospectus and the contracts that arise from the 

acceptance of the Applications are governed by the law 

applicable in New South Wales and each applicant submits to 

the exclusive jurisdiction of the courts of New South Wales. 

8.26 Directors’ consents to lodgement 

Each Director has given and has not withdrawn their 

consent to the issue of this Prospectus, and to its lodgement 

with ASIC. 

Signed for and on behalf of Babcock & Brown by: 

Phillip Green 

Director 

In addition, ASX has confirmed that: 

• a change to the Interest Rate, the Market Rate or the 

Margin or to the frequency or timing of Interest Payment 

Dates contemplated by the Terms is not a change to 

Holder’s rights to receive Interest for the purpose of listing 

rule 6.10; and 




APPENDIX A – Glossary 



This Appendix A contains a glossary of defined terms and expressions used in this Prospectus. There is also a list of definitions 

specific to BBSN in clause 14.2 of the Terms in Appendix B. Defined terms in this glossary and in clause 14.2 of the Terms are 

used throughout this Prospectus and the attached Application Forms. 

A Class Share has the meaning given in Section 8.6 

ABN 

ACN 

Additional 

Corporate Facility 

AFSL 

AGAAP 

AIFRS 

Allocation 

Applicant 

Application 

Application Form 

Australian Business Number 

Australian Company Number 

the increase in the Existing Corporate Facility, on materially equivalent terms as the Existing 

Corporate Facility, of up to $450 million 

Australian financial services licence 

Australian GAAP 

Australian equivalents to IFRS 

the number of BBSN allocated to successful applicants. 

Allocate and Allocated have corresponding meanings 

a person who submits an Application Form under this Prospectus 

a valid application made under this Prospectus by using the applicable Application Form to apply for 

a specified number of BBSN 

the application form attached to this Prospectus 

Arrangement Deed the deed entered into by Babcock & Brown and the Arranger, as summarised in Section 8.10 

Arranger Babcock & Brown Asset Holdings Pty Limited (ABN 58 002 332 345, AFSL Number 247385) 

ASIC 

ASTC Settlement 

Rules 

ASX 

Auditor 

Australian Securities and Investments Commission 

the clearing and settlement rules made by ASX Settlement and Transfer Corporation Pty Limited, 

as amended from time to time 

Australian Stock Exchange Limited or the stock market conducted by Australian Stock Exchange 

Limited, as the context requires 

Ernst & Young 

B Class Share has the meaning given in Section 8.6 

B Class Shareholder a registered holder of B Class Shares 


or Issuer 


Capital 


Group or Group 


Wind Partners 

BBAM 

Babcock & Brown Limited (ABN 53 108 614 955) (ASX code: BNB) or Babcock & Brown Limited 

and its consolidated entities and operations, as the context permits or requires 

Babcock & Brown Capital Limited (ABN 31 112 119 203) (ASX code: BCM) 

Babcock & Brown and its consolidated entities and operations 

Babcock & Brown Wind Partners Group (ASX code: BBW), comprising Babcock & Brown Wind 

Partners Limited (ABN 39 105 051 616), Babcock & Brown Wind Partners (Bermuda) Limited 

(ARBN 116 360 715) and Babcock Brown Wind Partners Trust (ARSN 116 244 118) 

Babcock & Brown Aircraft Management 

BBDIF Babcock & Brown Direct Investment Fund Limited (ABN 15 101 611 438) 


BBEM 

BBGP 

BBI 

Babcock & Brown Electronics Management 

Babcock & Brown Global Partners 

Babcock & Brown Infrastructure Group (ASX code: BBI), comprising Babcock & Brown Infrastructure 

Limited (ABN 61 100 364 234) and Babcock & Brown Infrastructure Trust (ARSN 100 375 479) 

BBIPL Babcock & Brown International Pty Limited (ABN 76 108 617 483) 

BBIPL Constitution the constitution of BBIPL, as summarised in Section 8.6 

BBIPL Loan 

the loan arrangements between Babcock & Brown and BBIPL pursuant to the BBIPL Loan Agreement 

BBIPL Loan the loan agreement dated 9 November 2005 between Babcock & Brown as lender and 

Agreement BBIPL as borrower, as summarised in Section 8.8 

BBRM 

BBSN 

BBSN Senior Debt 

Babcock & Brown Rail Management 

Babcock & Brown Subordinated Notes, which are issued by Babcock & Brown under this Prospectus, 

the Trust Deed and the Terms 

at any time, all amounts then due for payment or which will or may become due for payment 

or that remain unpaid by BBIPL to the Senior Creditors under or in connection with the Existing 

Corporate Facility 

BBSN Subordination the subordination deed between BBIPL (as borrower) and Trustee (as junior creditor) in favour 

Deed of the Senior Creditors, as summarised in Section 8.9 

BEI 

BJT 

Board 

Babcock & Brown Environmental Investments Limited (ABN 77 074 226 065) (ASX code: BEI) 

Babcock & Brown Japan Property Trust (ARSN 112 799 854) (ASX code: BJT) 

the Directors acting as a board 

Bookbuild the process described in Section 3.10.1 

Broker Firm 

Applicant 

an Australian resident retail client of a Retail Broker who applies for a broker firm Allocation from 

that Retail Broker 

Broker Firm closing date of the Broker Firm Offer, expected to be 10.00am on 19 December 2005 1 

Closing Date 

Broker Firm Offer 

Broker Firm 

Offer Period 

Business Day 

CHESS 

Closing Dates 

Co-Managers 

Note: 1. 

the invitation made by Babcock & Brown (through the Arranger) pursuant to this Prospectus for 

Australian resident retail investors to apply for a broker firm Allocation from a Retail Broker 

the period from the Opening Date to the Broker Firm Closing Date 

a day, other than a Saturday or a Sunday, on which trading banks are open for general banking business 

in Sydney and Melbourne and ASX is conducting trading in Sydney and Melbourne 

the Clearing House Electronic Sub-register System operated by an associate of ASX 

the General Offer Closing Date and the Broker Firm Closing Date 

Bell Potter Securities Limited (ABN 25 006 390 772, AFSL Number 243480), Commonwealth Securities 

Limited (ABN 60 067 254 399, AFSL Number 238814), Ord Minnett Limited (ABN 86 002 733 048, 

AFSL Number 237121), Tricom Equities Limited (ABN 92 067 161 755, AFSL Number 238148) and 

UBS Private Clients Australia Limited (ABN 50 005 311 937, AFSL Number 231127) 

Babcock & Brown and the Lead Manager & Bookrunner may agree to extend the Closing Dates, to close the Offer early 

without notice, or to withdraw the Offer at any time before BBSN are issued. Also, ASIC may extend the Exposure Period 

by up to seven days in which case the Opening Date will be varied accordingly without notice. 



Consenting Party each of the consenting parties named in Section 8.13 

Constitution the constitution of Babcock & Brown, as summarised in Section 8.5 

Corporations Act 

Directors 

Dividend Stopper 

EBB 

EBIT 

Eircom 

Employee 

Stakeholders 

EPS 

Existing Corporate 

Facility 

Expiry Date 

Exposure Period 

Finance Party 

Financial Services 

Guide 

GAAP 

General Applicant 

General Offer 

Corporations Act 2001 (Cth) 

the directors of Babcock & Brown 

the restrictions on Babcock & Brown as set out in clause 2.6 of the Terms 

Everest Babcock & Brown Alternative Investments Group (ASX code: EBB), comprising Babcock & 

Brown Alternative Investment Management Limited (ABN 42 112 480 145) and Everest Babcock & 

Brown Alternative Investments Trust (ARSN 112 129 218) 

earnings before interest and tax 

Eircom Group plc (ISE code: EIR.I) (LSE code: EIR.L) 

Employees of Babcock & Brown who are also equity holders in Babcock & Brown (either directly 

or in conjunction with their associated entities) and who acquired equity in Babcock & Brown in 

the IPO 

earnings per share 

the $550 million loan facility made available to BBIPL pursuant to the Senior Facility Agreement 

the date which is 13 months after the date of this Prospectus 

the period of seven days (which may be extended by ASIC for a further seven days) after lodgement 

of this Prospectus with ASIC during which Babcock & Brown must not accept Applications 

the agent, the arranger, the security trustee, the issuing bank or a lender in connection with the Senior 

Facility Agreement. 

the Arranger’s financial services guide in Appendix C 

Generally Accepted Accounting Principles 

Applicants who are neither Institutional Investors nor Broker Firm Applicants 

The invitation to Australian resident retail investors to apply for BBSN according to this Prospectus 

General Offer closing date of the General Offer, expected to be 5.00pm on 14 December 2005 1 

Closing Date 

General Offer 

Period 

the period from the Opening Date to the General Offer Closing Date 

GPT GPT Group (ASX code: GPT), comprising GPT Management Holdings Limited (ABN 67 113 510 

188) and General Property Trust (ARSN 090 110 357) 

GPT JV a strategic joint venture between Babcock & Brown and GPT Group, as summarised in Section 4.3.6 

Greenwoods Greenwoods & Freehills Pty Limited (ABN 60 003 146 852) 

& Freehills 

GST 

goods and services tax 

Note: 1. Babcock & Brown and the Lead Manager & Bookrunner may agree to extend the Closing Dates, to close the Offer early without 

notice, or to withdraw the Offer at any time before BBSN are issued. Also, ASIC may extend the Exposure Period by up to seven 

days in which case the Opening Date will be varied accordingly without notice. 


Guarantee 

Guarantor 

the unsecured and subordinated guarantee provided by BBIPL under the Trust Deed, as summarised 

in Section 8.4 

BBIPL 

Half-Year Financial Babcock & Brown’s consolidated half-year financial statements for the six months 

Statements ended 30 June 2005 

HIN 

Holder 

Holding Statement 

HVB 

IFRS 

holder identification number 

a person whose name is entered in the Register as a holder of BBSN 

a statement issued to each Holder by the Registry setting out details of their BBSN holding 

Bayerische Hypo- und Vereinsbank AG, a publicly traded holding company based in Germany focusing 

on the banking and financial services industry 

International Financial Reporting Standards 

Institutional Investor an investor to whom BBSN are able to be offered under the laws of the relevant jurisdiction without 

the need for any prospectus, registration or other formality (other than a registration or formality 

which Babcock & Brown is willing to comply with) including, in Australia, persons to whom 

offers of securities can be made without the need for a lodged prospectus under Chapter 6D of 

the Corporations Act 


Interest 


IPO 

IPO Prospectus 

IRS 

the invitation made by the Lead Manager & Bookrunner to certain Institutional Investors to bid for 

BBSN in the Bookbuild and apply for BBSN under this Prospectus. Babcock & Brown and the Lead 

Manager & Bookrunner reserve the right to treat Applications in excess of $250,000 as part of the 


has the meaning given in clause 2.1 of the Terms 

the payment of any interest due in respect of BBSN including Interest calculated in accordance with 

clause 2.2 of the Terms 

the initial public offer of Babcock & Brown 

the replacement prospectus issued by Babcock & Brown on 20 September 2004 and lodged with 

ASIC on that date, as supplemented by the supplementary prospectuses dated 24 September 2004 

and 28 September 2004 and lodged with ASIC on those dates respectively 

US Internal Revenue Service 

Issue Date the date on which BBSN are issued to successful Applicants, expected to be 21 December 2005 1 

Issue Price 

Junior Debt 

Documents 

Lead Manager or 

Lead Manager & 

Bookrunner 

Listing Rules 

the issue price for BBSN under the Offer, being $100 per BBSN 

any document in respect of financial indebtedness which BBIPL may owe Babcock & Brown, from 

time to time, as permitted by the Senior Facility Agreement 

UBS 

the listing rules of ASX as amended or waived from time to time 






Margin 

MW 

NASD 

NHS LIFT 

Offer 

the margin for the Interest Periods prior to the first Reset Date will be set under the Bookbuild 

that will be in the indicative range of 2.00% to 2.30% per annum and, after the first Reset Date 

(15 December 2010), the margin as determined by Babcock & Brown under clause 3 of the Terms 

Megawatt 

National Association of Securities Dealers (US) 

National Health Service Local Improvement Finance Trust (UK), being a PPP established in the UK 

to stimulate investment in local primary and social care facilities 

the invitation made by Babcock & Brown (through the Arranger) pursuant to this Prospectus for 

prospective investors to apply for BBSN, at an issue price of $100 each to raise up to $250 million 

with the ability to accept oversubscriptions for up to $50 million 

Offer Management the agreement dated 9 November 2005 between Babcock & Brown and the Lead Manager 

Agreement & Bookrunner, as summarised in Section 8.7 

Offer Period 

Officer 

the period from the Opening Date to the General Offer Closing Date 

has the meaning given in Section 8.5 in relation to the indemnification and insurance of Directors 

Opening Date the first day on which Applications will be accepted, which is expected to be 21 November 2005 1 

Ordinary Shares 

fully paid ordinary shares in Babcock & Brown 

Parent Subordination the subordination deed dated 28 April 2005 between BBIPL (as borrower) and Babcock & Brown 

Deed (as junior creditor) in favour of the Senior Creditors, as summarised in Section 8.9 

Participating 

Broker 

PFI 

PPPs 

any participating organisation of ASX selected by the Lead Manager & Bookrunner to participate 

in the Broker Firm Offer 

the UK government’s Private Finance Initiative, which is the main form of PPP in the UK 

Public Private Partnerships, being partnerships between the public and private sectors for the 

purposes of undertaking projects which would be regarded traditionally as falling within the remit 

of the public sector 

Prospectus this prospectus in relation to the Offer lodged with ASIC on 9 November 2005 

Quarter Date has the meaning given in Section 8.9 

Register 

Registry 

the official register of Ordinary Shares and the official register of BBSN, both maintained by the 

Registry on behalf of Babcock & Brown and including any sub-register established and maintained 

under CHESS 

Link Market Services Limited or any other registry that Babcock & Brown appoints to maintain the 

Register relating to BBSN 

Related Parties has the meaning given in Section 8.12 


Retail Broker 

Securities Act or 

US Securities Act 

has the meaning given in Section 9 of the Corporations Act 

a Senior Co-Manager, Co-Manager or Participating Broker 

United States Securities Act of 1933, as amended 





Security Trust Deed means the deed so entitled dated 28 April 2005 among BWA Custodians Limited, 

BBIPL and BOS International Limited 

Senior Co-Manager Grange Securities Limited (ABN 12 066 797 760, AFSL Number 246572) 

Senior Creditors 

Senior Facility 

Agreement 

BWA Custodians Limited, as security trustee for the BBIPL security trust established under the 

Security Trust Deed and each other beneficiary under the Security Trust Deed 

loan note subscription agreement dated 28 April 2005 (as amended or restated from time to time) 

between BBIPL (as borrower), BOS International (Australia) Limited (as arranger), the financial 

institutions listed in schedule 1 to the Senior Facility Agreement (as lenders and (if applicable) issuing 

banks), BOS International (Australia) Limited (as agent) and BWA Custodians Limited (as security 

trustee) and includes the other finance documents relating to that loan note subscription agreement. 

Settlement Date the day that Institutional Investors settle their Allocations, expected to be 20 December 2005 1 

Shareholder 

SRN 

a registered holder of Ordinary Shares 

securityholder reference number 

Standby Acquisition a $300 million standby acquisition facility proposed to be arranged and underwritten by UBS or its 

Facility affiliates for Babcock & Brown, some of the proposed terms of which are summarised in Section 8.11 

Starting Level has the meaning given in Section 8.7 

Subordinated Debt 

at any time, all amounts then due for payment or which will or may become due for payment or 

that remain unpaid by BBIPL to Babcock & Brown under or in connection with the Junior Debt 

Documents or the Parent Subordination Deed 

Tax Letter the tax letter from Greenwoods & Freehills in Section 7 

Terms or Terms 

of Issue 

TFN 

Trust Deed 

Trustee 

the terms of issue of BBSN, as set out in Appendix B 

Tax File Number 

the trust deed dated 9 November 2005 between Babcock & Brown, BBIPL and the Trustee, 

as summarised in Section 8.4 

Permanent Trustee Company Limited (ABN 21 000 000 993), in its capacity as trustee under the 

Trust Deed 

UBS UBS AG, Australia Branch (ABN 47 088 129 613, AFSL Number 231087) 

UK 

US or United States 

US Executive 

Stakeholders 

USGAAP 

US Person 

US Securities Act 

United Kingdom 

United States of America 

employees of the Babcock & Brown Group who are also equity holders in BBIPL (either directly 

or in conjunction with their associated entities) and who acquired equity in BBIPL in the IPO 

United States GAAP 

has the meaning given in Regulation S of the US Securities Act 

United States Securities Act of 1933 (United States), as amended 








APPENDIX B – Terms of Issue 


APPENDIX B – terms of issue 

This schedule to the Trust Deed is the full Terms of Issue of BBSN. 

1 Form and Face Value 

1.1 Form 

BBSN (Babcock & Brown Subordinated Notes) are cumulative, subordinated, repayable, resettable notes issued 

under the Trust Deed by Babcock & Brown Limited (ABN 53 108 614 955) (Issuer). Holders are entitled to the 

benefit of and are bound by the provisions of the Trust Deed. 

1.2 Face Value 

(a) Each BBSN will have a face value of $100 (Face Value). 

(b) Each BBSN will be issued by the Issuer at an issue price of $100 or such other amount as set out in or 

determined in accordance with the relevant offer document. The issue price must be paid in full on application. 

2 Interest 

2.1 Interest 

(a) Subject to these Terms of Issue, with respect to each Interest Period, Interest will accrue on each BBSN from 

(and including) the date set out in clause 2.1(c) on a daily basis according to the following formula: 

Interest = 

Interest Rate x Face Value x N 

365 

Where: 

Interest Rate = Market Rate + Margin (subject to clause 2.1(b)); 

Market Rate (expressed as a percentage per annum) means: 

(1) for each Interest Period in the period from (and including) the Settlement Date to (but not including) the 

first Reset Date, the Bank Bill Swap Rate applying on the first Business Day of that Interest Period; or 

(2) for each Interest Period in the period from (and including) a Reset Date to (but not including) the next 

Reset Date, the rate determined under clause 3; 

Margin (expressed as a percentage per annum) means: 

(1) for each Interest Period in the period from (and including) the Settlement Date to (but not including) 

the first Reset Date, the rate determined under the Bookbuild; and 

(2) for the period from (and including) a Reset Date to (but not including) the next Reset Date, the rate 

determined under clause 3; and 

N is the number of days in the relevant Interest Period (or in respect of BBSN issued during an Interest Period, 

for the first Interest Period after such issue, the number of days from (and including) the Business Day prior to 

the date of issue of such BBSN until (but excluding) the Interest Payment Date immediately after such issue). 

(b) For the first Interest Period, the Interest Rate will be the higher of: 

(1) the sum of the Margin and the Bank Bill Swap Rate on the last day the Bookbuild is conducted 

(Minimum Interest Rate); and 

(2) the sum of the Margin and the Bank Bill Swap Rate on the Settlement Date. 


(c) For the purposes of clause 2.1(a), Interest will accrue from (and including): 

(1) for the first issue of BBSN, the Settlement Date; and 

(2) for any subsequent issues of BBSN, the Business Day prior to the date of issue of such BBSN. 

2.2 Payment of Interest 

(a) Subject to clause 2.3, the Issuer must pay Interest accrued on each BBSN in arrears on each Interest Payment Date. 

(b) While BBSN remain on issue, Interest Payment Dates are as follows: 

(1) 15 May 2006 and after that each 15 May and 15 November, or the dates determined under clause 3 

(or if any of such dates is not a Business Day, the next Business Day); and 

(2) in respect only of the relevant BBSN, any Realisation Date (unless the relevant BBSN is Resold). 

2.3 Deferred Interest 

(a) Subject to clause 2.5, payment of any interest which is otherwise due and payable on any Interest Payment 

Date (other than on the Maturity Date), including any Deferred Interest arising from prior operation of this 

clause 2.3(a) and any other Outstanding Interest, may be deferred by the Issuer if: 

(1) the Issuer is insolvent or the interest payment would cause the Issuer to become insolvent; 

(2) the interest payment would cause the Issuer to breach any legal obligation; or 

(3) the Directors determine that the Issuer does not have sufficient cash to make the interest payment 

(including, without limitation, where this arises because Babcock & Brown International Pty Limited 

fails to make payments to the Issuer), 

and will, subject to the further operation of this clause 2.3(a) at that time, fall due for payment on the next 

Interest Payment Date. 

(b) The Issuer will give notice to the Trustee and Holders that payment of interest will be deferred under clause 

2.3(a) as soon as practicable after it makes such determination. 

(c) The deferral of any interest under clause 2.3(a) will not constitute a default by the Issuer for any purpose. 

2.4 Cumulative Interest 

(a) Outstanding Interest means, in relation to each BBSN the aggregate of any: 

(1) unpaid Deferred Interest; and 

(2) other unpaid interest which is due and payable (including any interest accrued under clause 2.4(b)). 

(b) Interest accrues on any Outstanding Interest on a daily basis from and including the relevant Interest 

Payment Date (or any other date it became due and payable) up to, but excluding, the date of payment of the 

Outstanding Interest at a rate equal to the sum of the then applicable Interest Rate determined under clause 

2.1(a) plus 2.00% per annum. 

(c) Subject to clause 2.3, the Issuer must pay Outstanding Interest accrued on each BBSN in arrears on each 

Interest Payment Date. 



2.5 Payment of Outstanding Interest 

The Issuer may pay all or any part of Outstanding Interest on all but not some of BBSN to Holders at any time, 

but may only do so on a date other than an Interest Payment Date after giving such notice to ASX as ASX 

requires in respect of the record date for payment and the amount to be paid. 

2.6 Restrictions on the Issuer 

For so long as any Outstanding Interest or Repayment Amount remains due but unpaid or a payment of interest 

is deferred under clause 2.3(a) or where a Trigger Event has occurred and for so long as such Trigger Event 

subsists, the Issuer must not: 

(a) declare or pay any dividend or make any return of capital or other payment to its shareholders in respect 

of shares of any class; 

(b) set aside any amount of cash or any assets for anything referred to in clause 2.6(a); or 

(c) undertake any arrangement, reconstruction or reorganisation between itself and its members or any class 

of them, or between itself and its creditors or any class of them, which would have a material adverse effect 

on the value of BBSN. 

2.7 Calculation of interest 

All calculations of interest will be rounded to four decimal places. For the purposes of making any interest 

payment in respect of a Holder’s aggregate holding of BBSN, any fraction of a cent will be disregarded. 

2.8 Record Dates 

Interest is only payable to those persons registered as Holders on the relevant Record Date. 

2.9 Deductions 

The Issuer may deduct from any interest or other amounts payable to a Holder the amount of any withholding 

or other tax, duty or levy which a qualified legal or taxation advisor advises that it is required by law to deduct in 

respect of such interest or other amount. If any such deduction has been made and the amount of the deduction 

accounted for by the Issuer to the relevant revenue authority and the balance of the interest or other amount 

payable has been paid to the Holder concerned, then the full amount payable to such Holder shall be deemed 

to have been duly paid and satisfied by the Issuer. 

The Issuer shall pay the full amount required to be deducted to the relevant revenue authority within the time 

allowed for such payment without incurring penalty under the applicable law and shall, if required by any Holder, 

deliver to that Holder a copy of the relevant receipt issued by the revenue authority without unreasonable delay 

after it is received by the Issuer. 

2.10 No set off 

A Holder has no right to set off any amounts owing by it to the Issuer against claims owing by the Issuer 

to the Holder. 


2.11 Method of payment 

Any amount which is payable to Holders in respect of BBSN will, unless the Issuer and Holders otherwise agree, 

be paid by direct credit into a nominated account at a financial institution offering such a facility for direct credit 

of amounts denominated in Australian currency. If a Holder fails to nominate such an account, the amount may 

be deposited by the Issuer in a bank account in the Issuer’s name established for the purpose and held by the Issuer 

until the Holder nominates an account. An amount so deposited shall be taken to have been duly paid to the 

Holder and shall not bear interest. Any interest accruing on any such account shall be paid to the Issuer. 

3 Reset of terms 

3.1 The Issuer may change terms 

(a) Prior to any Reset Date, the Issuer may by notice given to the Holders under clause 3.2 (Reset Notice) 

specify or (as applicable) make changes to any or all of the following terms: 

(1) the next Reset Date, provided that each Reset Date will be no less than 12 months after the immediately 

preceding Reset Date and will also be an Interest Payment Date; 

(2) the Exchange Discount; 

(3) the Market Rate (including, but not limited to, changes to the basis of calculation of the Market Rate from 

a Market Rate based on a Bank Bill Swap Rate to a Fixed Rate or other floating or fixed rate basis or 

vice versa); 

(4) the Margin; and 

(5) the Interest Payment Dates referred to in clause 2.2(b)(1). 

(b) These new terms will apply from (and including) the relevant Reset Date until (but excluding) the next Reset 

Date. If the Issuer does not change one of the terms set out in clause 3.1(a), or purports to change terms other 

than as set out in clause 3.1(a), no change with respect to such term(s) shall be deemed to have occurred and 

the relevant term(s) will remain the same as prior to the Reset Date. 

3.2 Notification 

(a) For any change to terms made under clause 3.1 to be effective, the Reset Notice must be sent to all Holders 

no later than 50 Business Days (but no more than six months) immediately preceding the relevant Reset Date. 

The non-receipt of a Reset Notice by any Holder or an accidental omission to send a Reset Notice to a 

Holder will not invalidate any change under clause 3.1 either in respect of that Holder or generally. 

(b) If the Issuer does not send a Reset Notice to Holders, the terms applying as at the relevant Reset Date will 

continue and the next Reset Date will be such that the period to the next Reset Date is the same as the period 

that has passed from the immediately preceding Reset Date (or in the case of the first Reset Date — the Issue 

Date) until the relevant Reset Date (provided that no Reset Date may be later than the Maturity Date). 

(c) The Issuer must give notice to all Holders, no later than 50 Business Days (but no more than six months) 

immediately preceding the relevant Reset Date, of the Reset Date and of Holders’ rights to give Exit Notices 

under clause 4.1. This notice may be included in a Reset Notice. 



4 Holder exit rights 

4.1 Reset Date or the Maturity Date 

A Holder may request Exchange of all of their BBSN (or, in relation to a Reset Date, some of their BBSN, but 

only if after such Exchange, the Holder will hold at least 100 BBSN) by providing an Exit Notice to the Issuer 

requesting Exchange at least 35 Business Days (but no more than 50 Business Days) prior to each of: 

(a) any Reset Date; and 

(b) the Maturity Date. 

4.2 Trigger Event or Change in Control Event 

(a) The Issuer must give notice to Holders that a Trigger Event or a Change in Control Event (as applicable) 

has occurred as soon as reasonably practicable after it becomes aware of such occurrence. 

(b) A Holder may request Exchange or Repayment of all (but not some only) of their BBSN by providing an Exit 

Notice to the Issuer after the occurrence of a Trigger Event — no later than 15 Business Days after the date of 

the notice issued by the Issuer under clause 4.2(a). 

(c) A Holder may request Exchange of all (but not some only) of their BBSN by providing an Exit Notice to the 

Issuer after the occurrence of a Change in Control Event — no later than 15 Business Days after the date of 

the notice issued by the Issuer under clause 4.2(a). 

4.3 Issuer obligations on receipt of an Exit Notice 

(a) On receipt of a valid Exit Notice given under clauses 4.1 or 4.2, the Issuer must give the Holder a Repayment 

Notice no later than 25 Business Days prior to the Realisation Date, specifying: 

(1) in relation to a Reset Date or a Change in Control Event, whether it will Exchange, Repay or Resell 

(or a combination of Exchange, Repay and Resell); 

(2) in relation to the Maturity Date, whether it will Exchange or Repay (or a combination of Exchange and 

Repay); and 

(3) in relation to Trigger Events: 

(A) to the extent the Exit Notice requests Repayment of BBSN, whether it will Repay or Resell 

(or a combination of Repay and Resell); 

(B) 

to the extent the Exit Notice requests Exchange of BBSN, whether it will Exchange, Repay or 

Resell (or a combination of Exchange, Repay and Resell) 

the relevant BBSN the subject of the Exit Notice. 

(b) In determining which mechanism or mechanisms referred to in clause 4.3(a) is to apply, the Issuer must 

endeavour to treat Holders on an approximately proportionate basis, but may discriminate to take account 

of the effect on marketable parcels and other logistical considerations. 

(c) The Issuer must do as it has specified in the Repayment Notice given under clause 4.3 on the Realisation Date. 

(d) If the Issuer fails to give a Repayment Notice under this clause 4.3, it must Exchange or Repay BBSN 

as requested in the Exit Notice on the Realisation Date. 


4.4 Exit Notices 

(a) Once given by a Holder, an Exit Notice cannot be withdrawn without the written consent of the Issuer. 

(b) An Exit Notice must be accompanied by evidence of title reasonably acceptable to the Issuer for BBSN 

the subject of the Exit Notice and is not taken to be a valid notice unless and until such evidence is actually 

received by the Issuer. 

(c) A Holder must not deal with, transfer, dispose of or encumber any BBSN the subject of an Exit Notice once 

that notice has been given. 

(d) Where the Issuer has received a valid Exit Notice in respect of any particular BBSN, any Exit Notice 

subsequently received will be taken to apply only to BBSN which were not the subject of the prior Exit 

Notice. The Directors may apply such adjustments (if any) as the Directors consider to be reasonably necessary 

to reflect this. 

5 Issuer exit rights 

5.1 Issuer exit rights 

(a) The Issuer may give a Repayment Notice to Holders, no later than 25 Business Days (but no more than three 

months) prior to a Reset Date — to Repay some or all BBSN. 

(b) The Issuer must (except to the extent it has already given a Realisation Notice under clause 4.3 in response to 

an Exit Notice) give a Repayment Notice to Holders, no later than 25 Business Days (but no more than three 

months) prior to the Maturity Date — to Repay all (but not some only) BBSN. 

(c) On occurrence of a Change in Law Event, a Change in Control Event or a Delisting Event, the Issuer may 

give a Repayment Notice to Holders, given at the same time as or no later than 10 Business Days after the 

date of the notice under clause 5.1(e) issued by the Issuer of the occurrence of the Change in Law Event, 

Change in Control Event or Delisting Event — to Repay all (but not some only) BBSN. 

(d) If the aggregate Face Value of BBSN on issue is less than $50 million, the Issuer may give a Repayment 

Notice to Holders, given at the same time as or no later than 10 Business Days after the date of the notice 

under clause 5.1(e) issued by the Issuer of the occurrence of an event described in this clause 5.1(e) — to 

Repay all (but not some only) BBSN. 

(e) The Issuer must give notice to Holders that an event as described in clauses 5.1(c) or 5.1(d) has occurred 

as soon as reasonably practicable after it becomes aware of such occurrence. 

5.2 Repayment Notices 

(a) The Issuer must do as it has specified in the Repayment Notice given under clause 5.1 on the Realisation Date. 

(b) Where a Holder has sent an Exit Notice and the Issuer has sent that Holder a Repayment Notice under clause 

5.1, such Repayment Notice shall be deemed to be a Repayment Notice under clause 4.3 in relation to 

BBSN the subject of the Exit Notice to the extent there are sufficient BBSN the subject of the Exit Notice, 

and a Repayment Notice under clause 5.1 in respect of any balance of BBSN. 

(c) Any Repayment Notice given by the Issuer is irrevocable. 



6 Exchange 

6.1 Exchange 

(a) Where BBSN are to be Exchanged under clause 4, the Issuer must cause to be delivered to the Holder 

(whether by way of issue of new Ordinary Shares or transfer of existing Ordinary Shares) the number of 

Ordinary Shares calculated according to the Exchange Ratio. The relevant BBSN will then be cancelled. 

(b) The relevant Holder irrevocably and unconditionally: 

(1) acknowledges that compliance with the above process is in full and final satisfaction of the Holder’s rights 

in respect of the relevant BBSN (whether as to Face Value, interest or otherwise); and 

(2) consents to be a member of the Issuer and agrees to be bound by the constitution of the Issuer. 

(c) Any issue or transfer of Ordinary Shares under this clause 6.1 will have effect on and from, and be deemed 

to have been made on, the Realisation Date. 

6.2 Exchange Ratio 

(a) Subject to clause 6.2(b), the number of Ordinary Shares to which a Holder is entitled upon Exchange for each 

BBSN that is being Exchanged is the Exchange Ratio calculated according to the following formula: 

Exchange Ratio = 

Repayment Amount 

VWAP x (1-ED) 

Where: 

VWAP means the VWAP for the Reference Period; 

Reference Period means the 20 Business Days immediately preceding: 

(1) if the Ordinary Shares are suspended from trading on ASX, on the Realisation Date or during the 

20 Business Days immediately preceding the Realisation Date, the first day of suspension; and 

(2) in all other cases, the Realisation Date; and 

ED means the Exchange Discount. 

(b) Where the total number of Ordinary Shares to be issued to a Holder under clause 6.2(a) includes a fraction, 

that fraction will be disregarded. 

6.3 Adjustments to VWAP 

For the purposes of calculating VWAP in the formula in clause 6.2(a): 

(a) where, on some or all of the Business Days in the Reference Period, Ordinary Shares have been quoted 

on ASX as cum dividend or cum any other distribution or entitlement and BBSN will be Exchanged into 

Ordinary Shares after the date those Ordinary Shares no longer carry that dividend, distribution or entitlement 

(Ex Date), then the VWAP on the Business Days on which those Ordinary Shares have been quoted cum 

dividend or cum any other distribution or entitlement shall be reduced by an amount (Cum Value) equal to: 

(1) (in the case of a dividend or any other distribution) the amount of that dividend or distribution including, 

if the dividend or distribution is franked, the amount that would be included in the assessable income of a 

recipient of the dividend or distribution who is a natural person resident in Australia under the Tax Act; 


(2) (in the case of an entitlement which is traded on ASX on any of those Business Days) the volume weighted 

average sale price of all such entitlements sold on ASX during the Reference Period on the Business Days 

on which those entitlements were traded; or 

(3) (in the case of an entitlement which is not traded on ASX during the Reference Period for more than 

three Business Days) the value of the entitlement as reasonably determined by the Directors; 

(b) where, on some or all of the Business Days in the Reference Period, Ordinary Shares have been quoted ex 

dividend, or ex any other distribution or entitlement, and BBSN will be Exchanged into Ordinary Shares 

which would be entitled to receive the relevant dividend, distribution or entitlement, the VWAP on the 

Business Days on which those Ordinary Shares have been quoted ex dividend, or ex any other distribution 

or entitlement, shall be increased by the Cum Value; and 

(c) where the Ordinary Shares are reconstructed, consolidated, divided or reclassified into a lesser or greater number 

of securities during a Reference Period, the VWAP shall be adjusted by the Directors as they reasonably consider 

appropriate. Any adjustment made by the Directors will be binding on all Holders and these Terms of Issue will 

be construed accordingly. Any such adjustment will promptly be notified to all Holders. 

7 Repayment 

7.1 Repayment Amount 

Where BBSN are to be Repaid under clauses 4 or 5, the Issuer must pay the Holder an amount equal to the 

Repayment Amount for the relevant BBSN on the relevant Realisation Date. 

7.2 Proportionate basis 

In a Repayment of some but not all BBSN under clause 5, the Issuer must endeavour to treat Holders on an 

approximately proportionate basis, but may discriminate to take account of the effect on marketable parcels and 

other logistical considerations. 

7.3 Holder action 

Where the Issuer is entitled to Repay, the Holder must, if required by the Issuer to enable the Issuer to effect 

Repayment: 

(1) vote in favour (to the extent the Holder is entitled to do so) or otherwise abstain from any required resolution; 

(2) provide all documentation and execute any authorisation or power necessary; and 

(3) take all other action necessary or desirable. 

8 Resale 

8.1 Transfer 

Where BBSN are to be Resold under clause 4, the Issuer must procure the acquisition of those BBSN by a third 

party on the Realisation Date. On the transfer of those BBSN under this clause 8.1, the Issuer must ensure that the 

Holder is paid on the Realisation Date an amount equal to the Repayment Amount in respect of those BBSN. 



8.2 Offer 

Where BBSN are to be Resold under clause 4, each Holder is taken irrevocably to offer to sell those BBSN. 

8.3 Power of attorney 

Each Holder irrevocably appoints the Issuer and any director, liquidator or administrator of the Issuer (each an 

Authorised Person) severally to be the attorney of the Holder and the agent of the Holder with power in the 

name and on behalf of the Holder to do all such acts and things, including signing all documents or transfers as 

may in the reasonable opinion of the Authorised Person be necessary or desirable to be done in order to record 

or perfect the Resale of any BBSN. 

9 Maturity 

10 Transactions 

11 Enforcement 

The Issuer must on the Maturity Date, Exchange or Repay BBSN the subject of an Exit Notice and otherwise 

Repay all BBSN outstanding at that date in accordance with these Terms. 

The Issuer may enter into or vary any borrowing, other financial accommodation, guarantee and indemnity and 

may acquire, dispose of, create any security interest over or otherwise deal with any assets without requiring any 

consents from Holders or the Trustee. 

11.1 Events of default 

(a) Subject to clause 11.1(b), each of the following is an Event of Default: 

(1) the Issuer fails to pay any interest or the Repayment Amount within 20 Business Days of it becoming 

due and payable; 

(2) the Issuer fails to Resell or Exchange BBSN within 20 Business Days of it being required to do so; or 

(3) the Issuer fails in a material respect to comply with any of its other material obligations under the Trust Deed 

or these Terms of Issue and, if in the reasonable opinion of the Trustee that failure can be remedied, that 

failure is not remedied to the reasonable satisfaction of the Trustee within 20 Business Days (or such longer 

period as the Trustee may permit) after notice of the failure has been given to the Issuer by the Trustee. 

(b) The deferral of any interest payment under clause 2.3(a) does not constitute an Event of Default. 

11.2 Consequences 

If an Event of Default occurs, and continues, the Trustee may (subject to the following provisions of this clause 

11) institute such proceedings against the Issuer as it may think fit on account of that Event of Default except that 

upon the occurrence of an Event of Default under clause 11.1(a)(1) the remedies available to the Trustee shall be 

limited to taking action to Wind Up or prove in a Winding Up. 

11.3 Trustee not bound to enforce 

The Trustee shall not in any event be bound to take any action referred to in clause 11.2 unless: 

(a) it shall have been so requested by Holders holding between them at least 25% of BBSN on issue or it shall 

have been so directed by a Special Resolution; and 


(b) it shall have been indemnified to its satisfaction against all costs, charges, liabilities and expenses which may be 

incurred by it in connection with that action. 

11.4 No remedy against the Issuer 

Except as specifically provided by this clause 11 or the Trust Deed, no remedy against the Issuer shall be available 

to the Trustee or the Holders whether for the recovery of amounts owing in respect of any breach by the Issuer 

or any of its obligations under the Trust Deed (including these Terms of Issue) or otherwise. 

11.5 Holders’ right to enforce 

No Holder shall be entitled to proceed directly against the Issuer to enforce any right or remedy under or in respect 

of any BBSN unless the Trustee, having become bound to proceed, fails to do so within 30 days and such failure shall 

be continuing, in which case any such Holder may, upon giving an indemnity satisfactory to the Trustee, in the name 

of the Trustee (but not otherwise), itself institute proceedings against the Issuer for the relevant remedy to the same 

extent (but not further or otherwise) that the Trustee would have been entitled to do so. 

12 General 

12.1 Ranking 

BBSN are unsecured notes and rank equally without any preference among themselves. 

12.2 Issue of additional equity or debt securities 

The Issuer may from time to time without the consent of Holders or the Trustee create and issue further BBSN, 

any class of share capital or other equity or debt securities and create, issue, secure or guarantee any indebtedness 

upon such terms, including as to return of contribution or repayment in a Winding Up, as the Issuer may think fit 

(and including, for the avoidance of doubt, whether ranking ahead of, behind or equally with the claims of Holders). 

12.3 Subordination 

(a) Relevant Claims are, to the extent permitted by law and subject to the exception in clause 12.3(b), 

subordinated to the Priority Claims of all Creditors. 

(b) No amount is payable by the Issuer in respect of any Relevant Claim if any amount is owing or outstanding by 

the Issuer to any Creditor in respect of any Priority Claim except that the Issuer must make payment under or 

in relation to a Relevant Claim as and when that payment, but for this clause 12.3, is due so long as (and only 

so long as): 

(1) no Winding Up of the Issuer has occurred; and 

(2) no amount is due and payable by the Issuer to any Creditor in respect of a Priority Claim which 

remains unpaid. 

(c) Amounts payable by the Issuer in respect of Relevant Claims shall in a liquidation of the Issuer following 

a Winding Up of the Issuer rank: 

(1) ahead of all holders of Ordinary Shares; and 

(2) after the Priority Claims of Creditors; and 

(3) equally with or, as the case may be, ahead of the Excluded Claims of Creditors. 



(d) The Trustee and each Holder waives, to the fullest extent permitted by law, any right to prove in any 

liquidation following a Winding Up of the Issuer as a creditor ranking for payment equally with any Creditor 

in respect of any Priority Claim referred to in clause 12.3(c)(2). 

12.4 Repayment 

Subject to clause 12.3, BBSN will be repayable only upon Repayment or upon Winding Up. 

12.5 Further documents 

The Issuer may require the Trustee to execute, on behalf of all Holders, such documents as the Issuer considers 

necessary or desirable for the purpose of the subordination of BBSN to any Priority Claim (provided that the 

Trustee is indemnified to its satisfaction, acting reasonably, against any expense or liability which it may incur 

as a result of doing so). 

12.6 Voting rights 

Holders may not attend or vote at meetings of members of the Issuer unless provided for by the ASX Listing 

Rules or the Corporations Act. 

12.7 Quotation 

The Issuer must use all reasonable endeavours and furnish all such documents, information and undertakings as 

may be reasonably necessary in order to procure quotation of BBSN and any Ordinary Shares issued or delivered 

on Exchange on a stock market conducted by ASX. 

12.8 Ranking of Ordinary Shares 

Each Ordinary Share issued or delivered on Exchange will, as from the Realisation Date, rank equally in all 

respects with Ordinary Shares, except that they will not be entitled to any dividend or any other distribution 

or entitlement that has been declared or determined but not paid as at the Realisation Date. 

12.9 Participation in new issues 

BBSN confer no rights to subscribe for new securities in the Issuer, and Holders acknowledge and agree that 

the Issuer is free to issue further BBSN or other securities (and to buy back or otherwise acquire BBSN or other 

securities) without further reference to Holders. 

12.10 Reporting requirements 

(a) In addition to any requirements of the Corporations Act and the ASX Listing Rules, each Holder (if requested 

by that Holder) will be provided with copies of all annual and half-yearly reports and financial statements 

provided to holders of Ordinary Shares. 

(b) If requested by a Holder, the Holder is entitled to the annual and half-yearly reports and financial statements at 

the same time as, or as soon as reasonably practicable after, these are sent to the holders of Ordinary Shares. 

12.11 Delivery of Ordinary Shares and payments to Holders 

(a) Ordinary Shares which are to be issued or transferred to a Holder upon Exchange of BBSN are to be 

registered in the name of the relevant Holder and a holding notice in respect of those Ordinary Shares is to be 

sent to the Holder (at its registered address in respect of the relevant BBSN). 

(b) Any amount (including for the avoidance of doubt any amount payable on Redemption or Resale of BBSN) 

which is payable to Holders in respect of BBSN is to be paid in the manner provided in clause 2.11. 


13 Amendments to these Terms of Issue 

13.1 Alteration without consent 

Subject to complying with all applicable laws, providing the Trustee with a copy of the alteration and the 

alteration not altering or conflicting with any of the rights and obligations of the Trustee, the Issuer may, by an 

instrument in writing and without the authority, assent or approval of Holders, alter these Terms of Issue if such 

alteration is, in the opinion of an independent law firm appointed by the Issuer: 

(a) of a formal, minor or technical nature; 

(b) made to correct a manifest error; 

(c) made to comply with any law or the ASX Listing Rules; 

(d) made to comply with the listing or quotation requirements of any securities exchange on which the Issuer 

may propose to seek quotation of BBSN or is convenient for the purpose of obtaining or maintaining the 

listing or quotation of BBSN; or 

(e) is not likely (taken as a whole and in conjunction with all other alterations, if any, to be made 

contemporaneously with that alteration) to be prejudicial to the interests of the Holders. 

The Trustee shall not be required to approve or comment on any such alteration. 

13.2 Alteration by Special Resolution 

Without limiting paragraph 13.1, the Issuer may by an instrument in writing alter these Terms of Issue if the 

alteration has been approved by Holders by a Special Resolution and provided the alteration does not alter or 

conflict with, without its consent, any of the rights and obligations of the Trustee. 

The Trustee shall not be required to approve or comment on any such alteration. 

13.3 Alteration 

In this paragraph ‘alter’ includes modify, cancel, amend or add to. 

14 Interpretation 

14.1 Interpretation 

(a) Unless the context otherwise requires, if there is any inconsistency between the Terms of Issue and the Trust 

Deed, then, to the maximum extent permitted by law, the Terms of Issue will prevail. 

(b) Unless otherwise specified, the Directors may exercise all powers of the Issuer under these Terms of Issue as 

are not, by the Corporations Act or by the constitution of the Issuer required to be exercised by the Issuer in 

general meeting. 

(c) Notices may be given by the Issuer to a Holder in the manner prescribed by the Trust Deed. 

(d) If a calculation is required under these Terms of Issue, unless the contrary intention is expressed, the 

calculation will be rounded to four decimal places. For the purposes of making any payment in respect of a 

Holder’s aggregate holding of BBSN, any fraction of a cent will be disregarded. For the purposes of issuing or 

transferring Ordinary Shares in respect of a Holder’s aggregate holding of BBSN, any fraction of an Ordinary 

Share will be disregarded. 



(e) Calculations, elections and determinations made by the Issuer under these Terms of Issue are binding on 

Holders in the absence of manifest error. 

(f) A reference to $ or cents in these Terms of Issue is a reference to Australian currency. A reference to time 

in these Terms of Issue is a reference to Sydney time. 

(g) The terms ‘associate’, ‘relevant interest’, ‘scheme of arrangement’ and ‘takeover bid’ when used in these Terms 

of Issue have the meaning given in the Corporations Act. 

(h) A reference to a statute, ordinance, code or other law includes regulations and other instruments under it and 

consolidations, amendments, re-enactments or replacements of any of them. 

(i) If an event under these Terms of Issue must occur on a stipulated day which is not a Business Day, then the 

stipulated day will be taken to be the next Business Day. 

(j) If a term is given a defined meaning, different grammatical forms of the term have corresponding meanings. 

14.2 Definitions 

Terms defined in the Trust Deed have the same meanings in these Terms of Issue, subject to clause 14.1(a). 

In addition, the following expressions have the following meanings: 

ASX means Australian Stock Exchange Limited (ABN 98 008 624 691). 

ASX Listing Rules means the listing rules of ASX as amended or replaced from time to time, except to the 

extent of any express written waiver by ASX. 

ASX Market Rules means the market rules of ASX as amended or replaced from time to time, except to the 

extent of any express written waiver by ASX. 

Bank Bill Swap Rate means for each Interest Period, the rate, expressed as a percentage per annum, calculated 

as the average mid Bank Bill Swap Reference Rate for bills of a term approximately equivalent to a period of six 

months as displayed on the Reuters page BBSW (or any page which replaces that page) at 10.30am on the first 

Business Day of the Interest Period, or if there is a manifest error in the calculation of that average mid rate or 

that average mid rate is not displayed at 10.30am on that date, the rate specified in good faith by the Issuer having 

regard, to the extent possible, to: 

(a) the rate otherwise bid and offered for bills of that term or for funds of that tenor displayed on the Reuters 

page BBSW (or any page which replaces that page) at that time on the date; 

(b) if bid and offer rates for bills of that term are not otherwise available, the rates otherwise bid and offered for 

funds of that tenor at or around that time; 

(c) if the average mid rate is not displayed on that date due to that date being a day that the Australian Financial 

Markets Association is closed, the relevant rate as displayed on the Reuters page BBSW (or any page which 

replaces that page) at 10.30am on the following Business Day. 

BBSN means Babcock & Brown Subordinated Notes which are cumulative, subordinated, repayable, resettable 

notes issued by the Issuer under the Trust Deed and these Terms of Issue. 

Bookbuild means the process conducted by UBS AG on behalf of the Issuer prior to the opening of the Offer 

whereby certain investors lodge bids for BBSN and, on the basis of those bids, the Issuer determines the Margin 

for the period to the first Reset Date, and announces its determination prior to the opening of the Offer. 

Business Day means a day other than a Saturday or a Sunday on which trading banks are open for general 

banking business in Sydney and Melbourne and ASX is conducting trading in Sydney and Melbourne. 


Change in Control Event means each of: 

(a) a takeover bid is made to acquire all of the Ordinary Shares and the offer under the takeover bid is, or 

becomes, unconditional and: 

(1) the bidder has acquired at any time during the offer period a relevant interest in more than 50% of the 

Ordinary Shares on issue; or 

(2) the directors of the Issuer unanimously recommend acceptance of the offer under the takeover bid, and 

acceptance of that offer would result in the bidder having a relevant interest in 100% of the Ordinary 

Shares on issue; and 

(b) a court approves a proposed scheme of arrangement which, when implemented, will result in a person having 

a relevant interest in 100% of the Ordinary Shares on issue. 

Change in Law Event means each of the following: 

(a) in the opinion of the Directors (having obtained an opinion from reputable legal counsel) there is more than 

an insubstantial risk that any entity in the Issuer’s Group (or the members or unitholders of, or any class of 

persons (other than creditors in their capacity as such) holding an interest in, that entity) (for the purposes 

of this clause, each a Protected Person) will be exposed to additional costs or the imposition of additional 

requirements which the Directors determine at their sole discretion to be unacceptable, as a result of the 

occurrence of any of the following on or after the Issue Date: 

(1) the introduction, enactment, amendment, change, repeal, replacement or revocation of any law or 

regulation affecting securities or any amendment or change to ASX Listing Rules, or the announcement 

(including on a prospective basis) of any of the foregoing by a Governmental Agency or ASX; or 

(2) any pronouncement, action or decision of a Governmental Agency or ASX interpreting or applying any 

such law or regulation or ASX Listing Rules; and 

(b) in the opinion of the Directors (having obtained an opinion from a reputable legal counsel or other tax 

advisor), there is more than an insubstantial risk that a Protected Person would be exposed to more than a 

de minimus increase in its costs (having regard to any tax deductions available to that Protected Person in 

connection with the payment of Interest) in relation to BBSN as a result of, but not limited to, increased 

taxes, duties or other governmental charges or civil liabilities as a result of the occurrence of any of the 

following on or after the Issue Date: 

(1) any amendment to, clarification of, or change (including any announcement prospective change), in the 

laws or treaties or any regulations of Australia or any political subdivision or taxing authority of Australia 

affecting taxation; 

(2) any judicial decision, official administrative pronouncement, published or private ruling, regulatory 

procedure, notice or announcement (including any notice or announcement of intent to adopt such 

procedures or regulations) (Administrative Action); or 

(3) any amendment to, clarification of, or change in the pronouncement that provides for a position with 

respect to an Administrative Action that differs from the current generally accepted position, in each case, 

by any legislative body, court, governmental authority or regulatory body, irrespective of the manner in 

which such amendment, clarification, change or Administrative Action is made known. 

Claim means, in respect of any person, any claim, action, demand, suit or proceeding for damages or other 

monetary compensation, debt, restitution, equitable compensation, account, injunction, specific performance or 

other remedy that person has or may have, whether under contract, statute or otherwise, against the Issuer. 



Corporations Act means Corporations Act 2001 (Cth). 

Creditor means all creditors of the Issuer from time to time other than the Trustee and the Holders 

(in their capacities as such). 

Deferred Interest means any interest deferred under clause 2.3(a). 

Delisting Event means each of: 

(a) the Issuer ceases to be listed on ASX; and 

(b) Ordinary Shares are suspended from trading on ASX for a period of 20 consecutive Business Days. 

Director means a director of the Issuer. 

Event of Default has the meaning given in clause 11.1. 

Exchange means a Holder ceasing to hold BBSN and receiving Ordinary Shares by either of the mechanisms 

set out in clause 6. 

Exchange Discount means 2.5%, or as determined under clause 3. 

Exchange Ratio has the meaning given in clause 6.2. 

Excluded Claim means a Claim which by its terms is expressed to rank equally with or after Relevant Claims. 

Exit Notice means a notice given by a Holder to the Issuer under clause 4.1 or 4.2. 

Face Value has the meaning given in clause 1.2. 

Fixed Rate (expressed as a percentage per annum) means the rate calculated as the average of the mid-points of the 

quoted average swap reference rates for a term corresponding as closely as practicable (in the reasonable opinion 

of the Issuer) to the period from the relevant Reset Date until the next Reset Date at three predetermined times 

(determined by the Issuer) on Reuters page CMBE (or any page which replaces that page) on the relevant date. 

Governmental Agency means a government or a governmental, semi-government, administrative, fiscal or 

judicial body, department, commission, authority, tribunal, agency or entity. 

Holder means a person whose name is for the time being registered in the Register as the holder of BBSN. 

Interest has the meaning given in clause 2.1. 

Interest Payment Date has the meaning given in clause 2.2 whether or not Interest is paid on that date. 

Interest Period means in respect of: 

(a) the first Interest Period, the period from (and including) the Settlement Date until (but excluding) the first 

Interest Payment Date; and 

(b) each subsequent Interest Period, the period from (and including) the preceding Interest Payment Date until 

(but excluding) the next Interest Payment Date. 

Interest Rate has the meaning given in clause 2.1. 

Issue Date means the date on which BBSN are issued, which is expected to be on or about 14 December 2005. 

Issuer means Babcock & Brown Limited ABN 53 108 614 955. 


Issuer’s Group means the Issuer and any company, trust or other entity the financial results of which are consolidated 

into the Issuer’s consolidated financial statements as required under Chapter 2M of the Corporations Act. 

Margin has the meaning given in clause 2.1(a). 

Market Rate has the meaning given in clause 2.1(a). 

Maturity Date means 15 November 2015. 

Minimum Interest Rate has the meaning given in clause 2.1(b)(1). 

Offer means the invitation made under the Prospectus. 

Ordinary Share means an ordinary fully paid share in the capital of the Issuer. 

Outstanding Interest has the meaning given in clause 2.4(a). 

Priority Claim means a Claim other than an Excluded Claim or a Relevant Claim. 

Prospectus means the prospectus dated 9 November 2005 issued by the Issuer for persons to subscribe for BBSN. 

Realisation Date means each of the following dates: 

(a) where the Issuer has received an Exit Notice under clause 4.1(a) — the Reset Date immediately following 

the receipt of the relevant Exit Notice; or 

(b) where the Issuer has received an Exit Notice under clause 4.2(b) or 4.2(c) — 60 Business Days after the date 

of the notice issued by the Issuer under clause 4.2(a); or 

(c) where the Issuer has given a: 

(1) Repayment Notice to Holders under clause 5.1(a) — the Reset Date immediately following the giving 

of the relevant notice; or 

(2) Repayment Notice to Holders under clauses 5.1(c) or 5.1(d) — 25 Business Days after the date of the 

notice issued by the Issuer under those clauses; or 

(d) where BBSN are being Repaid or Exchanged on the Maturity Date — the Maturity Date. 

Record Date means, for a payment of Interest, 7.00pm on the date which is seven days before the Interest 

Payment Date for that Interest or where such date is not a business day, the preceding business day (business day 

in this context is defined under the ASX Listing Rules), or such other date as may be required by ASX. 

Reference Period has the meaning given in clause 6.2. 

Register means the register of BBSN maintained by the Issuer and includes any sub-register established and 

maintained under the Clearing House Electronic Sub-Register System (as defined in ASX Listing Rules). 

Relevant Claim means a Claim of the Trustee or a Holder under or in respect of its BBSN. 

Repayment means the repayment of BBSN in accordance with clause 7. 

Repayment Amount in respect of a BBSN means the Face Value plus any Outstanding Interest as at the 

Realisation Date that will not be separately paid in cash as interest on the Realisation Date. 

Repayment Notice means a notice given by the Issuer to a Holder under clauses 5.1 or 4.3. 



Resale has the meaning given in clause 8. 

Reset Date is 15 November 2010 for the first Reset Date and after that as determined under clause 3. 

Reset Notice has the meaning given in clause 3.1. 

Settlement Date means the Business Day prior to the Issue Date. 

Shareholder means a holder of an Ordinary Share. 

Special Resolution means a resolution passed by a majority of Holders of at least 75% of the votes validly cast 

by Holders in person or by proxy and entitled to vote on the resolution. 

Tax Act means: 

(a) the Income Tax Assessment Act 1936 (Cth) or the Income Tax Assessment Act 1997 (Cth) as the case may be, 

as amended, and a reference to any section of the Income Tax Assessment Act 1936 (Cth) includes a reference 

to that section as rewritten in the Income Tax Assessment Act 1997 (Cth); and 

(b) any other Act setting the rate of income tax payable and any regulation promulgated thereunder. 

Terms of Issue means these terms of issue for BBSN. 

Trigger Event means any of the following: 

(a) the Issuer resolves in general meeting to be Wound Up; 

(b) a provisional liquidator is appointed to the Issuer; 

(c) a court makes an order to Wind Up the Issuer (other than to effect a solvent reconstruction); 

(d) an administrator of the Issuer is appointed under sections 436A, 436B or 436C of the Corporations Act; 

(e) the Issuer executes a deed of company arrangement; 

(f) the Issuer resolves in general meeting to be Wound Up; 

(g) a receiver or receiver and manager is appointed over the assets or the undertaking of the Issuer; 

(h) interest remains due but unpaid for more than 20 Business Days (for the avoidance of doubt, excluding any 

interest payment of which is deferred under clause 2.3(a)); and 

(i) a Delisting Event occurs. 

Trust Deed means the deed dated on or around 9 November 2005 between the Issuer and the Trustee. 

Trustee means the person from time to time acting as trustee of the trusts constituted by the Trust Deed in its 

capacity as such, initially being Permanent Trust Company Limited. 

VWAP means, subject to any adjustments under clause 6.3, the average of the daily volume weighted average sale 

prices (rounded to the nearest full cent) of Ordinary Shares sold on ASX for each Business Day during the relevant 

period but does not include any transaction defined in the ASX Market Rules as ‘special’, crossings prior to the 

commencement of normal trading, crossings during the closing phase and the after hours adjust phase nor any 

overseas trades or trades pursuant to the exercise of options over Ordinary Shares or any overnight crossings. 

Winding Up means in respect of a person the appointment of a liquidator or provisional liquidator of that person 

(and where the appointment is made by a court, by a court of competent jurisdiction in Australia). 


APPENDIX C – 

arranger’s financial services guide 


FINANCIAL SERVICES GUIDE 

Financial Services Guide of Babcock & Brown Asset Holdings Pty Limited 

(ABN 58 002 332 345, AFSL No. 247385) in relation to the offer of BBSN. The 

Arranger is liable and responsible for the contents of the Financial Services Guide. 

Babcock & Brown has liability under the Corporations Act for this Prospectus. 

Babcock & Brown Asset Holdings Pty Ltd 

ABN: 58 002 332 345 

AFSL No: 247385 

Preparation date: 9 November 2005 

What is the purpose of this Financial Services Guide (FSG)? 

This FSG is an important document that tells you about the services and products that Babcock & Brown Asset Holdings Pty Ltd 

(BBAH, we, us or our) is authorised to provide you under our Australian Financial Services Licence (AFSL). 

This FSG contains important information about: 

• Who we are; 

• The financial services we offer; 

• The financial products to which those services relate; 

• How we and others are paid in connection with those services; 

• Your privacy; 

• How we deal with complaints; and 

• How we can be contacted. 

This FSG is designed to assist you in deciding whether to use any of the products and services we offer. 

When someone gives you personal advice recommending a financial product or offers to sell or issue to you a financial product 

you may receive a Product Disclosure Statement (PDS) or prospectus (depending on the type of financial product) relating 

to that product before you acquire it. You should read the PDS or prospectus (as applicable) carefully as it contains important 

information to assist you in making an informed decision about the product. 

What financial services and products does BBAH offer? 

BBAH is authorised under its AFSL to provide financial product advice and deal in the following classes of financial products 

to retail and wholesale clients: 

• Derivatives; 

• Foreign exchange contracts; 

• Debentures, stocks or bonds issued or proposed to be issued by a government; 

• Interests in managed investment schemes excluding investor directed portfolio services; and 

• Securities. 

We are also authorised to operate custodial or depository services (other than investor directed portfolio services). 

Although we are authorised under our AFSL to do so, we do not provide personal financial product advice, which is advice that 

takes into account your personal financial situation, needs or objectives. If you would like personal advice, you should contact a 

licensed financial advisor. The advisor is obliged to provide you with a Statement of Advice in respect of any personal financial 

product advice given to you. The Statement of Advice must set out the advice. It must also include information about the basis 

for the advice, the provider, certain other people and relevant remuneration. 

BBAH primarily provides financial services to wholesale clients, including other Babcock & Brown related entities. These financial 

services include investment advisory, dealing, underwriting and custodial services. 


From time to time BBAH may act under an intermediary authorization pursuant to section 911A(2)(b) of the Corporations 

Act 2001 (Cth). An intermediary authorisation involves a product provider (who is not adequately licensed) appointing an 

“intermediary” (who is appropriately licensed) to make offers to potential investors to issue, vary or dispose of financial products. 

If such an offer is accepted, the product provider may then proceed to issue, vary or dispose of (as applicable) the relevant 

financial product. The offers may be made by the licensee or its authorized representatives. 

Specifically, BBAH has entered into an arrangement deed with Babcock & Brown Limited (Babcock & Brown) under which 

BBAH is appointed to act as intermediary for the offer of unsecured notes known as “Babcock & Brown Subordinated Notes” 

to be issued by Babcock & Brown under a prospectus lodged with ASIC (Prospectus). 

Who is BBAH? 

BBAH is a member of the Babcock & Brown group of companies (Babcock & Brown Group). The Babcock & Brown Group 

is a global investment and advisory firm with longstanding capabilities in structured finance and the creation, syndication and 

management of asset and cash-flow based investments. The Babcock & Brown Group was formed in 1977 as an advisor and 

arranger of US leveraged leases. In the ensuing 28 years, the Babcock & Brown Group has consistently built upon its expertise 

in asset-based finance to expand its activities both functionally and geographically into areas where these core strengths continue 

to provide it with a competitive advantage. 

The Babcock & Brown Group operates from 18 offices worldwide, anchored by administrative hub-offices in Sydney, San Francisco, 

New York, Munich and London. 

Payments to BBAH and others for the services provided 

BBAH is not receiving any remuneration for acting under the intermediary authorisation for the Babcock & Brown 

Subordinated Notes. 

In relation to its advisory, dealing, and underwriting and custodial activities for wholesale clients, BBAH receives remuneration 

which is negotiated on a case by case basis having regard to the terms of the relevant transaction. For example: 

• Advisory and dealing activities – a percentage of the value of assets under advice or management/administration. 

• Underwriting – a percentage of funds raised. 

• Custodial – a percentage of the value of assets under custodianship. 

Neither Babcock & Brown nor any other member of the Babcock & Brown Group is entitled to receive fees in 

respect of the offer or issue of the Babcock & Brown Subordinated Notes. Please refer to section 3.2 of the Prospectus 

for details of the use of funds raised under the offer and issue of the Notes. Ultimately the funds raised will be used to fund the 

investment activities of Babcock & Brown, from which it may receive investment returns. 

Financial advisors may receive fees if they provide advice to you or arrange for you to acquire an investment in any of our 

financial products. Details of the fees the advisor receives should be disclosed in a Financial Services Guide and/or Statement 

of Advice you should receive from the advisor. If commission is to be payable in respect of personal advice provided to you, 

the Statement of Advice must set out the amount of the commission, or if not ascertainable at the time the Statement of Advice 

is given, the manner in which the commission is to be calculated. 

Our employees, directors and other staff are paid a salary but do not receive any commissions. However, they may be eligible for 

bonus payments from us based on their performance in meeting or exceeding individual, team or company performance objectives. 

The privacy of your personal information 

At BBAH, the privacy of your personal information is important to us. Any personal information collected will be handled in 

accordance with our privacy policy and our obligations under relevant privacy laws (including the Privacy Act 1988 (Cth) and 

the Spam Act 2003 (Cth)). 


FINANCIAL SERVICES GUIDE 

Our privacy policy sets out details of how we comply with our legal obligations in the handling of your personal information. 

A copy of our privacy policy can be obtained by visiting the following website: 


Alternatively, you can contact us and we will provide you with a copy. 

Complaints handling 

We have established procedures to properly consider and address any complaint you may have. If you wish to make a complaint 

about any of our products or services, please contact our Complaints Officer using our contact information set out below. 

Complaints Officer 





Telephone (02) 9229 1800 

If you are not satisfied with our response to your complaint, you may lodge a written complaint with the Financial Industry 

Complaints Service (FICS) for an independent review of your matter. 

Financial Industry Complaints Service Limited 

PO Box 579, Collins Street West 

Melbourne VIC 8007 

Telephone (03) 8623 2000 

Toll free 1300 780 808 

Facsimile (03) 9621 2291 

Email 

Website 

fics@fics.asn.au 

www.fics.asn.au 

This external dispute resolution body is established to assist you to resolve your complaint where you have been unable to do 

so with us. However, it is important that you contact us in the first instance so we can endeavour to address your concerns. 

How you can contact BBAH 

Mail 





Telephone (02) 9229 1800 

Facsimile (02) 9223 2907 

Website 



Pin 

cheque(s) 

here 

(do not 

staple) 

A 

C 

BABCOCK & BROWN LIMITED 

ABN 53 108 614 955 

Babcock & Brown Subordinated Notes (BBSN) Application Form 

This Application Form is important. If you are in any doubt as to how to deal with it, please contact your accountant, stockbroker, lawyer, Australian 

financial services licensee, authorised representative or other professional adviser. You should read the entire Prospectus carefully before 

completing this form. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless attached to, or 

accompanied by the Prospectus. Applications for Babcock & Brown Subordinated Notes (BBSN) will only be accepted if made on an Application 

Form issued together with the Prospectus. Your Application is, to the extent permitted by law, irrevocable. 

Capitalised words and certain terms used in this form have the same meaning given to them in the Prospectus. 

By returning this Application Form and paying the moneys payable on an Application, you make the declarations and acknowledgements set 

out on the back of this Application Form. 

Number of BBSN applied for Offer price per BBSN I/We lodge full Application money 

, , 

(minimum 50 BBSN, thereafter in multiples of 10 BBSN) 

at A$100 B A$ , , . 

PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) 

Applicant surname / company name 

Title First name Middle name 

Joint Applicant #2 surname 


Designated account e.g. (or joint Applicant #3) 

D 

PLEASE COMPLETE ADDRESS DETAILS 

PO Box / RMB / Locked bag / Care of (c/-) / Property name / Building name (if applicable) 

Unit number / Level Street number Street name 

Suburb/City/Town State Postcode 

Email address (only for purpose of electronic communication of Holder information) 

E 

CHESS HIN (if you want to add this holding to a specific CHESS holder, please provide your CHESS HIN in the box below). 

X 

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the 

registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any BBSN issued as a result of 

the Offer will be held on the issuer sponsored sub-register. 

Telephone number where you can be contacted during business hours 

F ( ) 

Contact name (PRINT) 

G 

APPLICATION PAYMENTS 

General Applicants – Cheque(s) or money order(s) should be made payable to “Babcock & Brown Limited – BBSN Offer Account” 

in Australian currency and crossed “Not Negotiable”. 

Broker Firm Applicants – Cheque(s) or money order(s) should be made payable in accordance with the instructions from the Retail 

Broker from which you received your allocation of BBSN. 

Cheque or money order number BSB Account number 

- 

LODGEMENT INSTRUCTIONS 

General Applicants: You must return your Application Form and Application monies so they are received before the General Offer 

Closing Date at 5:00pm (Sydney time) on 14 December 2005 (subject to change without notice) to: Link Market Services Limited, 

Locked Bag A14, Sydney South, NSW, 1235; or hand deliver to Level 8, 580 George Street, Sydney NSW 2000. 

Broker Firm Offer Applicants: Investors should complete and lodge their Application Form, in accordance with the instructions of 

the Retail Broker from which they received their Allocation of BBSN. The Broker Firm Offer Closing Date is 10:00am on Monday 

19 December 2005 (subject to change without notice). 

If you require further information on how to complete this form, or if any of the above details 

are incorrect, please contact your Broker or the BBSN InfoLine on 1800 818 562 (Monday to 

Friday 8:30am to 5:00pm). 

BNB IPO001 

*BNB IPO001*

Your guide to the Application Form 

This Application Form relates to the prospectus lodged with ASIC on 9 November 2005, as supplemented by the supplementary prospectus lodged with ASIC on 21 

November 2005 (Prospectus), issued by Babcock & Brown. The Prospectus contains important information about investing in the BBSN. You should read the entire 

Prospectus before applying for BBSN. The Prospectus will expire 13 months after the date of the Prospectus. 

ASIC requires that a person who provides access to an electronic Application Form must provide access, by the same means and at the same time, to the relevant 

Prospectus and any replacement or supplementary Prospectus. This Application Form is attached to the Prospectus. During the Offer Period, Babcock & Brown will 

send paper copies of the Prospectus, any replacement or supplementary prospectus and the Application Form, free of charge on request. 

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each 

section of the form. 

A Insert the number of BBSN you wish to apply for. You may be issued all of number shown on this form. Our privacy policy is available on our website 

the BBSN applied for or a lesser number. 

(www.linkmarketservices.com.au). 

B 

C 

D 

E 

F 

G 

Insert the relevant amount of Application money. To calculate your 

Application money, multiply the number of BBSN applied for by A$100. 

Amounts should be in Australian dollars. Please make sure the amount of 

your Application money/cheque(s) equals this amount. 

Write the full name you wish to appear on the statement of BBSN. This must 

be either your own name or the name of a company. Up to three joint Applicants 

may register. You should refer to the table below for the correct registrable 

title. Applications using the wrong form of names may be rejected. 

Please enter your postal address for all correspondence. All communications 

to you from Babcock & Brown and the Registry will be mailed to the person(s) 

and address as shown. For joint Applicants, only one address can be entered. 

If you are already a CHESS participant or sponsored by a CHESS participant, 

write your HIN here. 

Please enter your telephone number(s) and contact name in case we need 

to contact you in relation to your application. 

Please complete payment details as follows: 

• If you are a General Applicant, make your cheque(s) payable to “Babcock 

& Brown Limited – BBSN Offer Account”. Cheques must also be drawn on 

an Australian branch of a financial institution and should be crossed “Not 

Negotiable”. 

• If you are a Broker Firm Applicant, make your cheque(s) payable in 

accordance with the instructions from the Retail Broker from whom you 

received your Allocation of BBSN. 

• The amount should agree with the amount shown in Section B. 

• Sufficient cleared funds should be held in your account, as cheque(s) 

returned unpaid are likely to result in your Application being rejected. 

• Pin (do not staple) your cheque(s) to the Application Form where indicated. 

PERSONAL INFORMATION 

Link Market Services Limited advises that Chapter 2C of the Corporations Act 

requires information about you as a securityholder (including your name, address 

and details of the securities you hold) to be included in the public register of the 

entity in which you hold securities. Information is collected to administer your 

securityholding and if some or all of the information is not collected then it might 

not be possible to administer your securityholding. Your personal information 

may be disclosed to the entity in which you hold securities. You can obtain 

access to your personal information by contacting us at the address or telephone 

DECLARATION 

By returning this Application Form and paying the moneys payable on an 

Application I/we: 

1 represent and warrant that I/we have personally received a paper or electronic 

copy of the Prospectus and any replacement or supplementary document 

accompanying this Application Form and have read them in full; 

2 accept the terms and conditions of the Offer as set out in the Prospectus, 

including this Application Form; 

3 accept and agree to be bound by the Terms, the Trust Deed, the terms of the 

Prospectus and upon Exchange, the Constitution, all as amended from time 

to time; 

4 represent and warrant that I am / we are, if a natural person, over the age of 

18 years and not under any legal disability; 

5 authorise the Lead Manager and Babcock & Brown and their respective officers 

or agents, to do anything on my/our behalf necessary for BBSN to be issued 

to me/us, including without limitation to sign any necessary documents and 

to act on instructions received by the Registry on using the contact details in 

box D or F; 

6 represent and warrant that: 

(a) I am / we are not in the United States, I am / we are not a US Person, I am 

/ we are not acting for the account or benefit of another person who is a 

US Person or within the United States and I/we will not offer, sell or resell 

BBSN in the United States or to, or for the account or benefit of, any US 

Person; and 

(b) the law of any other place does not prohibit me from being given the 

Prospectus and any replacement or supplementary prospectus or making 

an Application on this Application Form; 

7 represent and warrant that all details and statements in the Application Form 

are complete and accurate; 

8 apply for the number of BBSN on the front of this Application Form and agree 

to being issued such number of BBSN or a lesser number; and 

9 acknowledge that the information contained in the Prospectus (and any 

supplementary or replacement prospectus) is not investment advice or a 

recommendation that BBSN are suitable for me/us and information in the 

Prospectus is provided without taking into account my/our investment 

objectives, financial situation or particular needs. 

CORRECT FORMS OF REGISTRABLE NAMES 

Note that ONLY legal entities are allowed to hold BBSN. Applications must be in the name(s) of natural persons or companies. At least one full given name and the 

surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if 

completed exactly as described in the examples of correct forms below. 

Type of investor Correct form of registration Incorrect form of registration 

Individual 

Mrs Katherine Clare Edwards 

K C Edwards 

Use given names in full, not initials 

Company 

Use company’s full title, not abbreviations 

Liz Biz Pty Ltd 

Liz Biz P/L or Liz Biz Co. 

Mr Peter Paul Tranche & 

Peter Paul & 

Ms Mary Orlando Tranche 

Mary Tranche 

Joint holdings 

Use full and complete names 

Trusts 

Use the trustee(s) personal name(s) 

Deceased estates 

Use the executor(s) personal name(s) 

Minor (a person under the age of 18 years) 

Use the name of a responsible adult with an appropriate designation 

Mrs Alessandra Herbert Smith 

 

Ms Sophia Garnet Post & 

Mr Alexander Traverse Post 

 

Mrs Sally Hamilton 

 

Alessandra Smith 

Family Trust 

Estate of late Harold Post 

or 

Harold Post Deceased 

Master Henry Hamilton 

Partnerships 

Mr Frederick Samuel Smith & 

Fred Smith & Son 

Use the partners’ personal names 

Mr Samuel Lawrence Smith 

 

Long names Mr Hugh Adrian John Smith-Jones Mr Hugh A J Smith Jones 

Clubs / Unincorporated bodies / Business names 

Use office bearer(s) personal name(s) 

Superannuation funds 

Use the name of the trustee of the fund 

Mr Alistair Edward Lilley 

 

XYZ Pty Ltd 

 

Vintage Wine Club 

XYZ Pty Ltd 

Superannuation Fund 

• Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application.

Pin 

cheque(s) 

here 

(do not 

staple) 

A 

C 

BABCOCK & BROWN LIMITED 

ABN 53 108 614 955 

Babcock & Brown Subordinated Notes (BBSN) Application Form 

This Application Form is important. If you are in any doubt as to how to deal with it, please contact your accountant, stockbroker, lawyer, Australian 

financial services licensee, authorised representative or other professional adviser. You should read the entire Prospectus carefully before 

completing this form. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless attached to, or 

accompanied by the Prospectus. Applications for Babcock & Brown Subordinated Notes (BBSN) will only be accepted if made on an Application 

Form issued together with the Prospectus. Your Application is, to the extent permitted by law, irrevocable. 

Capitalised words and certain terms used in this form have the same meaning given to them in the Prospectus. 

By returning this Application Form and paying the moneys payable on an Application, you make the declarations and acknowledgements set 

out on the back of this Application Form. 

Number of BBSN applied for Offer price per BBSN I/We lodge full Application money 

, , 

(minimum 50 BBSN, thereafter in multiples of 10 BBSN) 

at A$100 B A$ , , . 

PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) 

Applicant surname / company name 


Joint Applicant #2 surname 


Designated account e.g. (or joint Applicant #3) 

D 

PLEASE COMPLETE ADDRESS DETAILS 

PO Box / RMB / Locked bag / Care of (c/-) / Property name / Building name (if applicable) 

Unit number / Level Street number Street name 

Suburb/City/Town State Postcode 

Email address (only for purpose of electronic communication of Holder information) 

E 

CHESS HIN (if you want to add this holding to a specific CHESS holder, please provide your CHESS HIN in the box below). 

X 

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the 

registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any BBSN issued as a result of 

the Offer will be held on the issuer sponsored sub-register. 

Telephone number where you can be contacted during business hours 

F ( ) 

Contact name (PRINT) 

G 

APPLICATION PAYMENTS 

General Applicants – Cheque(s) or money order(s) should be made payable to “Babcock & Brown Limited – BBSN Offer Account” 

in Australian currency and crossed “Not Negotiable”. 

Broker Firm Applicants – Cheque(s) or money order(s) should be made payable in accordance with the instructions from the Retail 

Broker from which you received your allocation of BBSN. 

Cheque or money order number BSB Account number 

- 

LODGEMENT INSTRUCTIONS 

General Applicants: You must return your Application Form and Application monies so they are received before the General Offer 

Closing Date at 5:00pm (Sydney time) on 14 December 2005 (subject to change without notice) to: Link Market Services Limited, 

Locked Bag A14, Sydney South, NSW, 1235; or hand deliver to Level 8, 580 George Street, Sydney NSW 2000. 

Broker Firm Offer Applicants: Investors should complete and lodge their Application Form, in accordance with the instructions of 

the Retail Broker from which they received their Allocation of BBSN. The Broker Firm Offer Closing Date is 10:00am on Monday 

19 December 2005 (subject to change without notice). 

If you require further information on how to complete this form, or if any of the above details 

are incorrect, please contact your Broker or the BBSN InfoLine on 1800 818 562 (Monday to 

Friday 8:30am to 5:00pm). 

BNB IPO001 

*BNB IPO001*

Your guide to the Application Form 

This Application Form relates to the prospectus lodged with ASIC on 9 November 2005, as supplemented by the supplementary prospectus lodged with ASIC on 21 

November 2005 (Prospectus), issued by Babcock & Brown. The Prospectus contains important information about investing in the BBSN. You should read the entire 

Prospectus before applying for BBSN. The Prospectus will expire 13 months after the date of the Prospectus. 

ASIC requires that a person who provides access to an electronic Application Form must provide access, by the same means and at the same time, to the relevant 

Prospectus and any replacement or supplementary Prospectus. This Application Form is attached to the Prospectus. During the Offer Period, Babcock & Brown will 

send paper copies of the Prospectus, any replacement or supplementary prospectus and the Application Form, free of charge on request. 

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each 

section of the form. 

A Insert the number of BBSN you wish to apply for. You may be issued all of number shown on this form. Our privacy policy is available on our website 

the BBSN applied for or a lesser number. 

(www.linkmarketservices.com.au). 

B 

C 

D 

E 

F 

G 

Insert the relevant amount of Application money. To calculate your 

Application money, multiply the number of BBSN applied for by A$100. 

Amounts should be in Australian dollars. Please make sure the amount of 

your Application money/cheque(s) equals this amount. 

Write the full name you wish to appear on the statement of BBSN. This must 

be either your own name or the name of a company. Up to three joint Applicants 

may register. You should refer to the table below for the correct registrable 

title. Applications using the wrong form of names may be rejected. 

Please enter your postal address for all correspondence. All communications 

to you from Babcock & Brown and the Registry will be mailed to the person(s) 

and address as shown. For joint Applicants, only one address can be entered. 

If you are already a CHESS participant or sponsored by a CHESS participant, 

write your HIN here. 

Please enter your telephone number(s) and contact name in case we need 

to contact you in relation to your application. 

Please complete payment details as follows: 

• If you are a General Applicant, make your cheque(s) payable to “Babcock 

& Brown Limited – BBSN Offer Account”. Cheques must also be drawn on 

an Australian branch of a financial institution and should be crossed “Not 

Negotiable”. 

• If you are a Broker Firm Applicant, make your cheque(s) payable in 

accordance with the instructions from the Retail Broker from whom you 

received your Allocation of BBSN. 

• The amount should agree with the amount shown in Section B. 

• Sufficient cleared funds should be held in your account, as cheque(s) 

returned unpaid are likely to result in your Application being rejected. 

• Pin (do not staple) your cheque(s) to the Application Form where indicated. 

PERSONAL INFORMATION 

Link Market Services Limited advises that Chapter 2C of the Corporations Act 

requires information about you as a securityholder (including your name, address 

and details of the securities you hold) to be included in the public register of the 

entity in which you hold securities. Information is collected to administer your 

securityholding and if some or all of the information is not collected then it might 

not be possible to administer your securityholding. Your personal information 

may be disclosed to the entity in which you hold securities. You can obtain 

access to your personal information by contacting us at the address or telephone 

DECLARATION 

By returning this Application Form and paying the moneys payable on an 

Application I/we: 

1 represent and warrant that I/we have personally received a paper or electronic 

copy of the Prospectus and any replacement or supplementary document 

accompanying this Application Form and have read them in full; 

2 accept the terms and conditions of the Offer as set out in the Prospectus, 

including this Application Form; 

3 accept and agree to be bound by the Terms, the Trust Deed, the terms of the 

Prospectus and upon Exchange, the Constitution, all as amended from time 

to time; 

4 represent and warrant that I am / we are, if a natural person, over the age of 

18 years and not under any legal disability; 

5 authorise the Lead Manager and Babcock & Brown and their respective officers 

or agents, to do anything on my/our behalf necessary for BBSN to be issued 

to me/us, including without limitation to sign any necessary documents and 

to act on instructions received by the Registry on using the contact details in 

box D or F; 

6 represent and warrant that: 

(a) I am / we are not in the United States, I am / we are not a US Person, I am 

/ we are not acting for the account or benefit of another person who is a 

US Person or within the United States and I/we will not offer, sell or resell 

BBSN in the United States or to, or for the account or benefit of, any US 

Person; and 

(b) the law of any other place does not prohibit me from being given the 

Prospectus and any replacement or supplementary prospectus or making 

an Application on this Application Form; 

7 represent and warrant that all details and statements in the Application Form 

are complete and accurate; 

8 apply for the number of BBSN on the front of this Application Form and agree 

to being issued such number of BBSN or a lesser number; and 

9 acknowledge that the information contained in the Prospectus (and any 

supplementary or replacement prospectus) is not investment advice or a 

recommendation that BBSN are suitable for me/us and information in the 

Prospectus is provided without taking into account my/our investment 

objectives, financial situation or particular needs. 

CORRECT FORMS OF REGISTRABLE NAMES 

Note that ONLY legal entities are allowed to hold BBSN. Applications must be in the name(s) of natural persons or companies. At least one full given name and the 

surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if 

completed exactly as described in the examples of correct forms below. 

Type of investor Correct form of registration Incorrect form of registration 

Individual 

Mrs Katherine Clare Edwards 

K C Edwards 

Use given names in full, not initials 

Company 

Use company’s full title, not abbreviations 

Liz Biz Pty Ltd 

Liz Biz P/L or Liz Biz Co. 

Mr Peter Paul Tranche & 

Peter Paul & 

Ms Mary Orlando Tranche 

Mary Tranche 

Joint holdings 

Use full and complete names 

Trusts 

Use the trustee(s) personal name(s) 

Deceased estates 

Use the executor(s) personal name(s) 

Minor (a person under the age of 18 years) 

Use the name of a responsible adult with an appropriate designation 

Mrs Alessandra Herbert Smith 

 

Ms Sophia Garnet Post & 

Mr Alexander Traverse Post 

 

Mrs Sally Hamilton 

 

Alessandra Smith 

Family Trust 

Estate of late Harold Post 

or 

Harold Post Deceased 

Master Henry Hamilton 

Partnerships 

Mr Frederick Samuel Smith & 

Fred Smith & Son 

Use the partners’ personal names 

Mr Samuel Lawrence Smith 

 

Long names Mr Hugh Adrian John Smith-Jones Mr Hugh A J Smith Jones 

Clubs / Unincorporated bodies / Business names 

Use office bearer(s) personal name(s) 

Superannuation funds 

Use the name of the trustee of the fund 

Mr Alistair Edward Lilley 

 

XYZ Pty Ltd 

 

Vintage Wine Club 

XYZ Pty Ltd 

Superannuation Fund 

• Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application.

CORPORATE DIRECTORY 

Issuer 





Arranger 

Babcock & Brown Asset Holdings Pty Limited 




Directors 

James Babcock, Executive Chairman 

Elizabeth Nosworthy, Deputy Chairman 

and Non-Executive Director 

Phillip Green, Managing Director 

James Fantaci, Executive Director 

Dieter Rampl, Non-Executive Director 

Ian Martin, Non-Executive Director 

Martin Rey, Executive Director 

Michael Sharpe, Non-Executive Director 

Company Secretaries 

Judith Howard 

Paul Ferguson 

Legal advisor 

Freehills 

MLC Centre 

19-29 Martin Place 


Tax advisor 

Greenwoods & Freehills Pty Limited 

MLC Centre 

19-29 Martin Place 


Registry 




Trustee 

Permanent Trustee Company Limited 

Level 4, 35 Clarence Street 


Auditor 

Ernst & Young 

680 George Street 


Lead Manager & Bookrunner 

UBS AG, Australia Branch 

Level 25, Governor Phillip Tower 

1 Farrer Place 




Level 33, 264 George St 


Co-Managers 


Level 33, Grosvenor Place 

225 George St 



Level 18, 363 George St 



Level 8, NAB House 

255 George St 



Level 9, Exchange House 

10 Bridge St 


UBS Private Clients Australia Limited 

Level 27, Governor Phillip Tower 

1 Farrer Place 


BBSN InfoLine 

1800 818 562 

Monday to Friday — 8.30am to 5.30pm 



www.babcockbrown.com

BABCOCK & BROWN

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