Babylon clears NAB hurdles with water rental strategy ready

NAB debt conditions cleared

Babylon Pump & Power Limited (ASX:BPP) has removed a major obstacle to the potential reinstatement of its suspended securities, with National Australia Bank confirming that the conditions attached to the company’s revised debt arrangements have been met.

The agreement removes testing of Babylon’s existing financial covenants, but replaces them with a rolling 12-month minimum EBITDA test of $3.0 million at December 2026 and $4.0 million at March 2027. The facilities now expire on 1 July 2027, while the company has permanently reduced debt by $1.2 million through cancellation of its invoice finance facility and a paydown of the Corporate Markets Loan.

Recapitalisation supports balance sheet reset

NAB’s confirmation follows completion of the minimum $3.5 million equity requirement through Babylon’s recapitalisation, the conversion of at least A$5.0 million of deferred Blue Hire vendor consideration into shares, and the divestment of Primepower Queensland, which satisfied the lender’s requirement to sell or shut down the maintenance business.

Babylon says the recapitalisation has left it with sufficient working capital to continue operating and pursue the objectives set out in its prospectus. Its September investor presentation shows pro forma cash of $4.7 million after the entitlement offer, interest-bearing debt of $21.6 million and total assets of $40.6 million at 30 June 2026 on a post-offer basis. Those figures provide a clearer picture of the reset, but the working-capital assessment remains based on the Board’s operating expectations and projected net operating cashflows.

Water-management rental becomes the growth case

The strategic pitch is now notably narrower. Babylon says its specialist water-management and rental operation generated approximately $26 million of FY26 revenue and $9.1 million of underlying segment EBITDA before corporate costs. The business provides high-pressure pumping, dewatering, test pumping and project water-management services, with the presentation identifying opportunities among existing Tier 1 customers and new projects.

Management also says corporate overhead has been reduced to about $1.5 million a year and that selective fleet investment could lift utilisation and earnings. Its presentation estimates that each additional $1 of capital expenditure has historically generated about $0.90 of revenue and $0.35 of EBITDA, though that is an annualised management estimate rather than a guarantee of future returns.

Reinstatement still requires an ASX decision

Babylon says its directors remain satisfied that the Group can pay debts as they fall due, and that it is compliant with the ASX Listing Rules with no outstanding periodic reports or other documents identified under Listing Rule 17.5. The company also says it is not aware of any reason its securities should not be reinstated.

That is a company confirmation, not an announcement that the ASX has formally approved a trading resumption. The next meaningful milestone is therefore the exchange’s reinstatement decision, followed by the new EBITDA tests that will measure whether the streamlined business can convert its rental growth ambitions into the cash generation required by the revised lending arrangements.