Babylon Pump & Power Ltd Eyes August Trading Return on Rental Revenue Surge
Babylon Pump & Power charts recapitalisation path with rental revenue set to surge ~160%
Babylon Pump & Power Limited (ASX: BPP) has outlined a recapitalisation and debt refinancing package designed to support the resumption of trading, anchored by a specialist rental business that is performing strongly. The Company expects FY26 rental revenue of approximately $26 million, up ~160% on FY25.
The update positions Babylon for its transition to a focused water management rental business, supported by revised funding arrangements with its senior lender. Shares have been suspended since 22 April 2026, with trading expected to resume during August 2026, subject to ASX being satisfied the Company complies with the Listing Rules, including Listing Rule 12.2. The release was authorised by Managing Director Michael Shelby.
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Rental business performing ahead of expectations
The specialist rental business has continued to perform strongly throughout FY26, with the Blue Hire and Matrix acquisitions successfully integrated and both performing ahead of expectations. Fleet utilisation has continued to improve, while customer demand remains strong across key water management markets.
The pressure on the Company’s balance sheet has stemmed from elsewhere. Weakness in the maintenance segment, largely driven by exposure to the subdued Queensland coal sector, together with the unsuccessful acquisition process, has impacted the balance sheet and access to growth capital. The underlying rental business itself has continued to perform strongly.
| Metric | FY26 Guidance |
|---|---|
| Rental revenue | ~$26 million (up ~160% on FY25) |
| Normalised rental segment EBITDA | $9.4m – $9.8m |
| Group underlying EBITDA | $4.6m – $5.0m |
The normalised rental segment EBITDA of $9.4 million to $9.8 million excludes corporate costs and the impact of trading in the maintenance business. This should not be conflated with the full year group underlying EBITDA, which the Company expects to be approximately $4.6 million to $5.0 million. For investors, the rental segment’s resilience demonstrates earnings quality despite the sharp downturn in the maintenance segment.
Why the suspension happened, and the road back to trading
Babylon’s shares have been in suspension since 22 April 2026 while the Company pursued a transformational acquisition and an associated institutional capital raising in the order of $60 million. The proposed raising had a dual purpose: to fund the acquisition and to provide the rental business with growth capital to meet customer demand.
As announced on 19 May 2026, the proposed acquisition did not proceed after the parties were unable to agree final terms. The Board has since focused on strengthening the balance sheet, refinancing its debt facilities and progressing a standalone capital raise to support Babylon’s growth strategy.
Subject to completion of these initiatives and the receipt of required approvals, the Company expects trading to resume during August 2026, noting this remains subject to ASX being satisfied that Babylon complies with the Listing Rules, including Listing Rule 12.2.
NAB agrees revised funding to support next growth phase
In parallel with its strategic reset, the Company has agreed revised funding arrangements with its senior secured lender, National Australia Bank Limited (NAB). Notably, Babylon has been meeting its interest payments and $1 million per quarter principal repayments.
Subject to formal documentation, NAB has agreed to:
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Waive quarterly principal repayments for the June 2026 and September 2026 quarters (subject to satisfactory financial performance).
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Reduce quarterly payments going forward.
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Extend the maturity date of the Company’s facilities to July 2027.
NAB’s agreement is subject to conditions, including:
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The Company securing at least $3.5 million via an equity capital raise during August 2026, with $1.25 million to be paid to NAB on completion of the raise.
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At least $5.0 million of the deferred consideration payable to the Blue Hire vendors (contingent on Blue Hire’s FY26 EBITDA) being satisfied through the issue of Shares, with any additional deferred cash consideration deferred post 1 July 2027, after the repayment date for NAB’s facilities.
The Blue Hire vendors are entitled to deferred consideration of up to $6.97 million in cash and $1.23 million in Shares, subject to the FY26 EBITDA performance of the Blue Hire business. The Company currently anticipates that the full deferred consideration of $8.2 million will be earned. The vendors have indicated a willingness to agree to NAB’s requirements, subject to agreeing formal documentation.
The maturity extension and repayment relief are intended to de-risk the near-term balance sheet, providing the Company with increased flexibility as it pursues its standalone growth path.
Inside the recapitalisation and capital raise
The Board is progressing a capital raise designed to strengthen the balance sheet, fund growth capital expenditure, satisfy NAB’s requirements and position Babylon to capitalise on opportunities across the broader water management market.
The Capital Raise is expected to comprise unsecured convertible loans and a pro rata entitlement issue, though the exact structure and details are currently being resolved. The Company is in discussions with brokers with a view to the raise being partially underwritten.
Substantial shareholders have indicated they are supportive of the Capital Raise, providing a strong foundation for the proposed recapitalisation. Subject to successful completion of the raise, the Company proposes to appoint Mr Byron Ynema, a Blue Hire vendor and currently the Company’s Chief Operating Officer, to the Board as Executive Director of Operations.
Board Outlook
While disappointed the proposed acquisition did not proceed, the Board remains confident in the underlying strength of Babylon’s rental business and its strategy to build a scaled water management platform.
Understanding the water management rental model
A specialist water management, or dewatering, rental business supplies high-pressure pumping and dewatering equipment to mining and resources operations on a rental basis.
Babylon has been actively simplifying its portfolio to create a focused water management rental platform characterised by higher margins, recurring revenues and improved earnings visibility.
Babylon’s pivot away from the maintenance business, with its exposure to the subdued Queensland coal sector, toward this rental model is what the Company expects to improve its earnings quality over time.
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A simpler, higher-quality business: what comes next
The strategic reset has been underway for several months. Babylon exited the Ausblast business in January 2026, and the Board continues to work toward an exit from the maintenance business during the first quarter of FY27 (the July to September 2026 period), further advancing the transition to a pure-play rental business.
The Ausblast divestment completed in January 2026 at a 5.6x EBITDA multiple, generating $2.8 million in cash proceeds that reduced net debt by $1.5 million while freeing capital to support the integration of the Matrix Hydro Services and Blue Hire acquisitions.
Following these exits, Babylon expects to operate as a focused water management rental business with:
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Growing recurring revenue streams
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Improving fleet utilisation
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Strong exposure to mining and dewatering markets
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Enhanced earnings quality
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A clear pathway to growth
The Board believes the combination of portfolio simplification, revised banking support and the recapitalisation plan is expected to position the Company for renewed growth and the resumption of trading. Proceeds from the raise are expected to support fleet expansion, refurbishment of existing assets, increased utilisation and the pursuit of identified growth opportunities across the broader water management market.
Key dates for investors to note:
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Maintenance business exit: Q1 FY27
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Equity capital raise: August 2026
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Expected trading resumption: August 2026
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NAB facility maturity: July 2027
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