UPDATE 1-Babcock awaiting lenders' response on debt plan

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SYDNEY, Jan 6 (Reuters) - Australian investment firm Babcock and Brown Ltd (BNB.AX) expects its lenders to decide next week whether to accept its plan to repay short-term debt, the firm said, after its shares soared 54 percent on Tuesday.

The share move came on speculation Babcock would unveil a new business plan to satisfy its banking syndicate.

In a statement to the stock exchange, Babcock & Brown also reminded investors its plans might involve a debt-for-equity swap.

"Any debt-for-equity swap or similar arrangement to allow Babcock & Brown to continue operating its business and selling assets as appropriate will significantly reduce the value of existing equity," the company said.

The firm, which won a reprieve from its creditors last month with a A$150 million ($107 million) lifeline, said it had submitted a plan to repay the short-term facility, with a response likely slightly later than flagged last month.

Babcock & Brown shares closed at A$0.39. They have lost about 99 percent in value from a peak of A$35 in 2007 as worries over its debt position gripped investors.

The bank, struggling after a debt-funded expansion binge, is now trying to sell more than half its asset base, including real estate, leasing and corporate and structured finance businesses, to focus on infrastructure investments. ($1=1.40 Australian Dollars) (Reporting by Sonali Paul; Editing by James Thornhill)