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Allco Finance Group (ASX: AFG) – Update on the renegotiation of senior debt facilities
Allco Finance Group (Allco) advises that it has reached agreement with its banks to further extend both the $250 million bridge facility and the review period consequent on the Review Event until 30 June 2008.
This latest extension enables the continuation of ongoing negotiations between Allco and its full senior bank group for a restructuring of all of Allco's senior debt facilities.
From 30 May 2008, Allco has agreed to increase the margin payable under its senior debt facilities from 70-95 bps above the relevant currency borrowing reference rate (for A$: BBR, for Euro: EURIBOR, for US$: LIBOR) to 300 bps above.
Allco has delivered a business plan to the banks which entails restructuring the business to focus on its core asset classes, and an asset sale program to support the pay down of senior debt to a target of $400 million by September 2009. Allco continues to meet its scheduled repayments of principal and interest under this plan.
As anticipated in Allco's ASX announcement on 1 May 2008, a further $78.3 million will be repaid to Allco’s senior banks today from the proceeds of completed asset sales, bringing the total repayments since April 2008 to $145.8 million. Allco’s drawn borrowings under its senior debt facilities, after repayment of the $78.3 million noted above, will be $862.1 million. Actual and anticipated contingent commitments, such as letters of credit, under the facilities will be $63.5 million (compared to $45.0 million as at 30 April 2008). This results in a net reduction of outstanding senior debt and contingent commitments of $58.9 million (after currency fluctuations).
Whilst positive progress continues to be made, it should be noted that until negotiations are finalised and restructuring documentation is signed, there can be no assurance that a restructure of Allco’s senior debt facilities will be concluded successfully.