Nov. 17 (Bloomberg) -- Babcock & Brown Ltd., the Australian asset manager that's selling assets to repay debt, sold the Enersis wind energy business in Portugal for about 1.15 billion euros ($1.4 billion) to investors led by Magnum Capital.

Babcock & Brown, which owns Enersis jointly with its wind energy fund, received net proceeds of A$285.8 million ($182 million) for its 50 percent stake, the Sydney-based company said today in a statement to the Australian stock exchange.

Babcock has lost more than half its value since Nov. 6, when ABN Amro Holding NV analyst John Heagerty said Babcock may breach loan agreements because the global credit crisis has made selling assets harder. The stock touched a record low today in Sydney after Wachovia Corp. said it may seize collateral on a $112 million loan.

The proceeds from the sale will be used to help pay A$9.6 billion of debt, and don't form part of the A$400 million that the company said in June it will pay its bankers, Babcock spokeswoman Erica Borgelt said today.

Babcock is competing with distressed asset sellers from Detroit to Brisbane to avoid the fate of Allco Finance Group Ltd. and ABC Learning Centres Ltd., two Australian companies that were placed in the hands of outside managers this month. Babcock & Brown Infrastructure Group, one of Babcock's 12 publicly traded funds, said Nov. 5 that divestments are ``extremely difficult.''

France, Greece

Babcock in December 2005 bought the Enersis business for 490 million euros and then sold half to affiliate Babcock & Brown Wind Partners. The company plans to sell its remaining wind assets in Portugal, France, Greece and Germany, it said today.

Babcock & Brown Wind Partners said in a separate statement it will receive net cash proceeds of about A$274 million from the sale of its stake, on which it made a loss of A$11.7 million. Enersis comprises 257 megawatts of operating wind farms and 78 megawatts of projects under construction.

Magnum, based in Madrid and Lisbon, will contribute 65 percent of the equity in the deal, the buyout fund started by former chief executive officers of Banco Santander SA and EDP- Energias de Portugal SA. said yesterday. The rest is funded by mainly Portuguese partners including Espirito Santo Capital, Banco Espirito Santo SA's private equity firm.

Babcock Wind said in February it may sell assets in Europe to benefit from increased valuations for projects not reflected in its own market value. In August it agreed to sell its Spanish assets to Fomento de Construcciones y Contratas SA and said it won't sell assets in Germany after reviewing offers.

Reduced Debt

The process of selling assets in France, comprising 52 megawatts of capacity, is continuing, Rosalie Duff, an investor relations spokeswoman for Babcock Wind, said by telephone.

The sale of Enersis will cut debt by about A$718 million, Babcock Wind said. The cash proceeds will be initially used in a share buyback, which the company last month increased to 30 percent of its issued capital.

Babcock Wind confirmed a forecast dividend to shareholders of at least 9 cents a share in the year ending June 30, 2009.

Babcock Wind, whose shares have slumped 51 percent in the past six months, gained 3.1 percent to 82 cents in Sydney trading. Babcock & Brown Ltd. dropped 15 percent to 41 cents.

The sale price for Enersis, including debt, represents A$3.6 million per megawatt of installed capacity. That compares with Babcock Wind's value today of about A$1.4 million per megawatt, Duff said. Some sales in Europe, ``in different market conditions,'' have been at more than A$4 million per megawatt, while most have been between A$3 million and A$4 million, she said.

Babcock Wind's sale of its Spanish wind assets in August was valued at about A$3.4 million per megawatt. A megawatt of wind turbines can power about 300 average U.S. homes.

Babcock & Brown agreed to pursue asset sales to cut debt on June 30 after its market value slumped below a threshold that allowed bankers to start reviewing the company. It was also forced to pay an additional A$10 million a year in interest.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.netStuart Kelly in Sydney skelly22@bloomberg.net

Last Updated: November 17, 2008 01:14 EST