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End of Days Approaches:-

RAMS Home Loans looks to refinance

Article from: Herald Sun
Ben Butler
December 29, 2007 12:00am

TROUBLED non-bank lender RAMS Home Loans is racing against deadline to refinance $1.25 billion, just as the credit crunch threatens to slash another $US34 billion from US banks.

RAMS announced yesterday it had signed conditional deals to refinance $3.5 billion of $5.5 billion in commercial paper due on February 11, and is in "advanced stages of documentation" for $750 million more.

But a financier for the remaining $1.25 billion has yet to be found, RAMS told the stock exchange.

The company is trying to raise money while the markets are still digesting the full effects of the credit meltdown.

Bloomberg reports that new research shows three major US banks, including America's biggest, Citigroup, are likely to write down an additional $US34 billion in securities linked to the collapse of the US sub-prime mortgage market.

Losses and writedowns by big US banks this year so far total $US97 billion.

RAMS plans to refinance $1.5 billion of its extendable commercial paper with Westpac, and another $2 billion with an un-named financial institution, believed to be NAB.

Another funding facility worth $750 million is in "advanced stages of documentation" with another un-named financier, RAMS said.

But RAMS has yet to meet "various conditions precedent" in order to get access to the money, the company said.

"RAMS hopes to satisfy these conditions precedent as soon as possible to facilitate progressive refinancing of the relevant extendible commercial paper in January and February," the company told the ASX.

RAMS has just six weeks, until February 11, to find the remaining $1.25 billion.

If it does not, the company will lose the economic value of the home loans backing that portion of the XCP program.

But the company would still be have to pay trailing commissions on the affected loans.

Yesterday, RAMS also announced it had rolled over two warehouse debt facilities, worth a total of $750 million, which would have become payable on new year's eve.

The two facilities, of $250 million and $500 million, have been consolidated into existing facilities, the company said.

A RAMS spokesman declined to say which of the company's previously disclosed facilities the debts had been rolled into.

But the company's previous announcements to the ASX indicate the company has added the $250 million debt to a $1.25 billion facility due on January 31.

The $500 billion appears to join a $400 million facility due on May 2.

American banks have been hit hard by the US credit meltdown.

Citigroup, the biggest US bank, may write down $US18.7 billion, Goldman Sachs analyst William Tanona wrote in a research report released on Boxing Day.

Merrill Lynch may write off $US11.5 billion and JPMorgan Chase $US3.4 billion, he wrote.