Valad loses $821m but reaches deal with its bankers Carolyn Cummins Commercial Property Editor March 1, 2009
VALAD Property delivered its half-year results just before the close of the stock exchange reporting deadline late on Friday, reporting a loss of $821 million for the December 2008 half, and confirming the group secured an 11th-hour deal with its bankers.
After excluding a number of asset write-downs totalling $469 million, including one of $315 million on its intangible assets and a $68 million loss on its derivative positions, the group reported a profit of $14 million. For the same time last year the group reported a profit of $21.1 million.
No interim dividend was paid for the December 2008 period, and no earnings guidance was provided for the full year.
Because of the late filing of the results last week Valad is holding an investor briefing today.
Analysts say the group needs to boost its balance sheet significantly to regain market confidence. One analyst said the new debt deal was a step in the right direction.
Valad was one of the many trusts that headed overseas in the halcyon days of 2006 and 2007 with a $2 billion deal with the commercial property group Scarborough. Its securities were trading at close to $4.50 at the time.
After hitting a low of 3.2c on Friday, the group revealed it had been able to come to an agreement with its financiers, some of whom had called in the company administrator KordaMentha to advise on the deal.
Under the latest bank deal, Valad has extended its covenants until September 2011 on an Asia-Pacific security, received an immediate reduction in drawn debt of $121 million, and given the banks' security pool a further $79 million of properties.
In the report it shows the group's Valad Corporate Services took a $324 million hit on its exposure to troubled loans, and the interest in the British Crownstone Investments was written down by $181 million to now stand at $102 million. A deal is still being worked on to sell a further stake in Valad to the British Scarborough group and its director Kevin McCabe. If approved by Valad investors, Mr McCabe, who is a Valad director, will hold a 19.9 per cent interest.
Valad's managing director, Peter Hurley, said the deal was tough to negotiate but he was happy the banks had approved and given the group some "covenant headroom".
Mr Hurley said 2009 would be a year of transition for the group, but that conditions remained too uncertain in the real estate investment trust sector to give any full-year earnings guidance.
Mr Hurley said that to help put Valad back on track senior staff had taken a pay cut, and that 25 per cent of staff had been sacked. That should generate about $30 million in savings, he said.
Source: The Sydney Morning Herald
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