BABCOCK & BROWN

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.
BABCOCK & BROWN SUBORDINATED NOTES 51