Allco On Track To Another Extension

Sydney Morning Herald

Friday May 30, 2008

Stuart Washington

DIFFICULTIES in finalising Allco Finance Group's deal with its banks to extend $250 million in short-term funding means the company is likely to gain yet another extension on its refinancing negotiations.

It is understood that the syndicate of banks, which has already extended the deadline to settle the loan terms three times, is prepared to extend negotiations for a fourth time after today's deadline.

The banking syndicate includes Westpac, Commonwealth Bank and ABN Amro.

It is understood the sticking point in the talks has been the terms of the short-term financing, which was originally due to be repaid or refinanced by the beginning of this month.

But because Allco Finance Group's shares plunged below a market capitalisation benchmark, the syndicate was able to bring forward talks on the $250 million and renegotiate terms surrounding another loan of $900 million.

The negotiations have centred on the terms surrounding the $250 million loan.But it is understood Ferrier Hodgson, employed by the banks, has given them confidence in Allco's business plan, which includes a bank-imposed condition to reduce its debts to $400 million by September next year.

Allco was at the heart of the market meltdown in January. Uncertainty about its prospects forced the share price from a high of $13.23 in February last year to as low as 21c in March. The once highly regarded financial engineer has forecast a loss of more than $1.5 billion this year, capping an extraordinary fall from grace.

© 2008 Sydney Morning Herald

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