Babcock woes hit Killalea resort plans

Investment house Babcock & Brown's financial woes throw doubt over its plans for the Killalea State Park resort, say Illawarra opponents to the commercial development.Investors continued to dump shares in Babcock & Brown yesterday but a spokeswoman said it was business as usual until the banks met and decided whether to hold a four-month review of the investment company.South Coast Labour Council secretary Arthur Rorris said the multinational's instability put the Killalea proposal on shaky ground.Last April, NSW Lands Minister Tony Kelly signed an agreement to lease three chunks of parkland for 50 years to Killalea Coastal Investments, a joint venture by Babcock & Brown and Mariner Financial, to build 202 units, a conference centre, tennis courts, swimming pools and restaurants.Mr Rorris said Babcock's situation gave the Government another reason to can the project, along with intense public concern over the commercial project."This shows the problems with the private management of public assets when the private sector is prone to these sorts of uncertain futures," Mr Rorris said."Given the precarious nature of Babcock & Brown's finances at the moment, one would think the shareholders would be getting edgy about a questionable investment such as Killalea." A spokesperson for Mr Kelly said the Government could not comment on the market position of one of the partners.Merrill Lynch called for Babcock to consider sacking key executives to regain market confidence. UBS said a management buy-out or break-up of the company couldn't be ruled out. Citigroup downgraded Babcock to a "speculative" risk rating after the bank review option was triggered when its market capitalisation fell below $2.5 billion, or about $7.50 a share.[PI9017] A community family fun day is being held at Killalea tomorrow from noon at the first car park.