It's Rothschild Australia's turn to be the meat in the sandwich at debt-riddled electricity transmission company Basslink.

Street Talk understands Basslink has called in Rothschild's bankers and McGrathNicol and is seeking to cut a deal with its lenders, who are owed about $700 million by the end of the year. The lending group is represented by insolvency specialists from KPMG, sources said.

Rothschild and McGrathNicol have been drafted in to advise Basslink, the world's longest interconnector. John Woudstra JZW

Basslink would like an amend-and-extend deal, which would provide near-term breathing space and see maturity of its $700 million-odd syndicated loan pushed back a couple of years, in return for a higher margin for lenders.

The lending group, which is spearheaded by domestic heavyweight National Australia Bank, wants more.

The banks have had a rough ride at Basslink in recent years, starting when Basslink's interconnector cable failed in late 2015, which caused the company to miss its minimum debt service coverage ratio covenant. [Basslink owns the cable that transports electricity between Victoria and Tasmania]. Basslink has also had numerous disputes with its biggest customer, the government-owned Hydro Tasmania, and remains in arbitration.