Wellington, June 18 NZPA - A buzz of speculation is building around the future ownership of electricity and gas lines company Powerco as a crisis in investor confidence affects Australian investment bank Babcock & Brown.

Powerco has 305,000 customers on its electricity networks, which cover Coromandel, Western Bay of Plenty, Hauraki Plains, parts of Waikato, Taranaki, Wanganui, Rangitikei, Manawatu and Wairarapa.

It also has a gas network in the lower North Island, serving 100,000 customers, The Dominion Post reported today.

Powerco is part of Babcock & Brown Infrastructure, an Australian-listed fund set up and managed by Babcock & Brown, which is also part of an investment consortium with a half share in Manawatu wind farm Te Rere Hau.

Babcock & Brown is in talks with its bankers after its plunging share price triggered their right to review a three-year $A2.8 billion (NZ$3.5 billion) debt facility negotiated in April.

On Monday, B&B announced it would accelerate a review of its listed funds, including BBI, and appoint independent chairmen to their boards.

Commonwealth Securities analyst Paul Johnston said the fundamental problem for BBI was that its share price level did not reflect the underlying value of its assets, The Dominion Post said.

He thought BBI would move first to see what the impact was from selling some of its minority stakes.

"But ultimately, I think they will look to lower gearing and, to do that, they might look at selling some of their more significant assets ... I would put Powerco down as one of those.

"A Powerco sale is a way off, but you can't rule it out."

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