Australia's Allco Finance expects $1.4 billion loss for 2008
SYDNEY, Australia—Australia's Allco Finance Group Ltd. said Thursday it may record a loss of more than 1.5 billion Australian dollars ($1.4 billion) in fiscal 2008 due to write-downs, impairment charges and the sale of assets at reduced values.
The expectation of a large loss took the shine off the asset manager's announcement that its financiers will extend a 250 million Australian dollars ($234 million) bridge debt facility to May 30, giving the company another month to deal with problem debts.
"The extension of the bridge facility has been granted to enable the continuation of ongoing negotiations between Allco and its full senior bank group for a restructuring of all of Allco's senior debt facilities," Allco said in a statement.
Allco Finance is one of a handful of Australian companies that have been hurt by fallout from the U.S. subprime mortgage crisis.
In late February, Allco lost more than half its market value in one day after reporting a 10 percent decline in first-half profit and announcing plans to restructure and sell some assets to repay debt.
The fall in Allco Finance's market capitalization below 2 billion Australian dollars provided a trigger for the company's bankers -- which include Commonwealth Bank of Australia, St. George Bank Ltd. and Westpac Banking Corp. -- to review its senior debt facilities.
Under the review process, the company's lenders have the ability to require 900 million Australian dollars ($843 million) in senior debt be repaid within 90 days, a demand Allco has said it would find "very difficult" to meet.
In order to obtain the extension to the bridge debt facility, and to secure a continuation of talks with bankers that were due to end Friday, Allco said Thursday it was required to grant security over all of its assets to the senior banks.
In early March, National Australia Bank Ltd. and Bank of Scotland International Ltd. took possession of 14 percent of Allco's shares after failing to reach an agreement on its margin loans.
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