SPECULATION IS mounting in Australia that troubled investment group Babcock & Brown (B&B), which is an indirect shareholder in Eircom, could be placed into receivership this week, unless its management can resolve a dispute over a frozen A$70 million (€35.2 million) bank deposit.

This followed the resignation yesterday of two directors - Dieter Rampl and Joe Roby - and the company's decision to request that its shares remain suspended until the week beginning December 1st.

"Babcock & Brown is still seeking to resolve the dispute with a bank, which holds a deposit of a material amount, relating to the release of that deposit," the company said, without naming the financial institution involved.

"Babcock & Brown is in continuing discussions with its banking syndicate in relation to a restructure of its corporate banking arrangements."

Shares in B&B have plummeted this year and the group needs to repay about A$3 billion in debt over the next three years.

Mr Rampl's decision to quit the B&B board was seen as highly significant. He is chairman of UniCredit, the parent company of HypoVereinsbank, which is believed to be withholding the bank deposit from B&B.

B&B owns about 8 per cent of Babcock Brown Capital Management (BCM), a satellite fund that is the majority shareholder in Eircom. An Eircom spokesman declined to comment on the possible implications of B&B being placed into receivership.

A B&B spokesman told The Irish Times that it was "still in discussions with the institution" that was withholding the deposit. He denied reports that B&B might be placed into receivership this week.

On November 10th, BCM said it had reached agreement with B&B to terminate a management contract relating to Eircom. This involves payment of A$32.5 million up front and a possible A$17.5 million if Eircom changes ownership by April 30th, 2010.

BCM was reported last weekend to have hired investment bank UBS to advise on the sale of Eircom.