Small Cap Monitor:

Babcock In Tricom Recapitalisation.

International investment and specialised fund and asset management group Babcock & Brown Ltd (BNB) said it has increased its exposure to troubled stockbroking firm Tricom.

Babcock & Brown has increased its existing exposure of $35 million to a maximum of $40 million through underwriting a further $5 million of additional funding.

The company said the maximum exposure has already been reduced to $37.5 million.

“Babcock & Brown’s total exposure remains secured and no further capital injection by Babcock & Brown is contemplated following the recapitalisation,” the company said.

The recapitalisation takes the form of new equity from parties other than Babcock & Brown and a standstill agreement from Tricom’s secured lenders ANZ and Babcock & Brown.

Babcock & Brown said it is participating in the recapitalisation to protect Babcock & Brown’s exposure and to ensure an orderly rundown of the balance of Tricom’s securities loan book. This will in turn facilitate the best possible outcome for Tricom’s clients and ensure that market trading in the companies represented in the book is conducted in an orderly fashion in the normal course of business.

Shares in BNB traded between $13.30 and $13.98 during the day. Volume of 2.7 million had changed hands, which is slightly down on the daily average volume, suggesting investors are staying clear of the stock until they interpret the news.

Shares closed 10 cents down at $13.60. This is far from the height it reached in July of $34.78.

Cromwell Refinances Debt.

Property and funds manager Cromwell Group (CMW) has refinanced its debt facilities totalling $248 million for the Cromwell Property Fund.

The group said the refinancing arrangements are for a term of three years.

In addition, a $40.5 million facility associated with the TGA Complex in Canberra has been extended for an additional three year term with Westpac.

Both facilities were due to expire 31 March 2008.

“The cost of the facilities is on line with our forecasts for the Fund and should provide investors with confidence,” Cromwell Chairman Paul Weightman said.

“We are acutely aware that debt management is of particular interest in the current market, and we hope that in securing these facilities investors are further assured of the fundamental quality of the CPF assets and their associated debt arrangement,” he said.

The Cromwell Property Fund is an unlisted direct property fund with a diversified portfolio of 11 properties valued at more than $464 million.

Shares in CMW added 4 cents or 5% to 83 cents.

Webjet Upgrades Profit Guidance.

Online travel service provider, Webjet (WEB) today updated for the second time its profit guidance for fiscal 2008 “based on its best understanding of the likely trading conditions for the quarter of April to June”.

Webjet upgraded its net profit guidance to $6.4 million, from the previous guidance of $5.9 million.

Managing director David Clarke said a number of factors still remain which cannot be fully quantified at this time, such as interest rates and mortgage repayments, bowser petrol prices and a drop in consumer confidence.

In a statement to the stock exchange, the company said:

“These potential negatives were highlighted in our half year release and although they have not yet become evident in demand for travel in the quarter ended 31 March , it is unlikely that they will not have some negative impact in the April to June quarter.”

While it is sensitive to petrol prices, travel prices and consumer confidence, these factors are to some degree counterbalanced by various positive macro economic factors such as continued full employment, wage growth and airline competition.

In February, Webjet upgraded its net profit guidance in February to $5.9 million from $5.2 million.

More than likely, the strength of the Australian dollar is leading to an increase in overseas travel, benefiting companies like Webjet.

“We remain of the view that on balance this mix of pluses and minuses will mean that the market will be more price sensitive over the next 6 months than was the case in the preceding 6 months, but we also consider that it is likely that competition will continue to intensify at a supply level and that consumers will become more value conscious, and that as a result those values will be sought through airline aggregation sites.”

In October, Webjet launched a takeover bid for

However, this was superseded by a superior offer from rival online travel agent Wotif.

Webjet rose 4% or 6 cents to $1.54.

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