Babcock and Brown is preparing a major overhaul of its structure that will see the company limit its operations to infrastructure investment.

Babcock will sell off the remaining divisions, including its real estate and operating lease businesses.

The businesses being put up for sale represent about 50% of net revenues over the last financial year, a spokesperson said yesterday.

"By segregating the infrastructure investment business it should be well-placed to return to growth," Babcock's chief executive Michael Larking said.

The troubled company will cut head count from the current 1450 to 600 people by 2010, to be achieved through redundancies and the transfer of employees working at divisions the company intends to sell.

Babcock has taken the decision because it is struggling to repay $3.1 billion in corporate debt. The company said it plans to approach its lenders to renegotiate debt facilities.

Shares in Babcock plunged 23 per cent after the announcement yesterday morning, with investors seemingly concerned the company will not be able to meet its obligations.

"Given the global financial market conditions and [Babcock's] recent experience, we believe that the company is likely to face significant challenges in selling its assets and businesses, and consequently reducing its debt at the corporate level," Standard & Poor's analyst Sharad Jain said.

Jain lowered the long-term issuer credit ratings for Babcock and Brown International from BB- to CCC+, and said a further downgrade would be likely if Babcock's lenders decided to accelerate the payment of a debt facility.