Up to $225 million of local investor money is at risk as Australian investment firm Babcock & Brown restructures its corporate debt facilities and sells down assets.

The troubled infrastructure company announced on Friday that it had agreed with its bankers on a restructure designed to reduce debt.

Under the agreement Babcock & Brown’s existing corporate debt facilities will be restructured, with about $2.12 billion of principal repayments to be made on a “pay if you can” basis.

In 2006, Babcock & Brown raised $225 million via a subordinated notes issue on the NZDX.

The subordinated notes offered a higher yield than most corporate debt on issue. The notes carried a coupon rate of 9.01% and mature next year.

Babcock's shares and its subordinated notes are suspended while negotiations continue on the debt notes.

Babcock said it would not be in a position to resume paying interest on the subordinated notes or dividends on its shares.

“Having reached an agreement with the banking syndicate with respect to the restructure of the corporate debt, the board is now considering the position in relation to the subordinated notes,” Babcock said in its statement.

Babcock has said there would be no value for equity holders and unlikely much value for note holders after it has implemented the revised business plan.