The king is dead! Long live the King. Babcock & Brown, the global financial behemoth, is being broken up. The company was just a financial creation to use equity as a currency to buy and sell energy assets around the world. The question is what is the value of the DP&L contract to buy 200 megawatts of off-shore wind off of Delaware’s coast considering the $2.2 billion capital investment necessary to make this investment? The short answer is nothing.
As has been stated in the international press, the Australian investment company and one-time investment bank Babcock & Brown Ltd. will embark on a “controlled liquidation” of its assets as it seeks to repay bankers more than A$3.4 billion ($2.2 billion). The Sydney company announced late Friday there would be no value for shareholders in a company that had a market capitalization of nearly $12 billion just over a year ago, and no or negligible value for the owners of A$600 million of subordinated notes.
I believe that we need the off-shore wind farm. I always have. I’ve always held that the small state of Delaware with ~30,000 low-income rate payers was not the correct financing entity. Energy independence is a national security issue, period. I have advocated for a regional solution since day one. We need participation from the Federal Government and the “tri-state” region (Maryland, Delaware, New Jersey). You would have thought that given the importance of the “green” vote to President Obama and the Democrats that alternative energy stimulus would have had a large role in the “stimulus” bill that now resides in conference committee. Unfortunately, the Federal Government continues to talk a good line, but fail to make the investment necessary to jump start America’s energy future.
I will be on with Alan Loudell at 4:35 to discuss this issue. For more on the local take, please see Jeff Montgomery’s News Journal article from this morning.