likely she will close her doors

Sydney - Wednesday - Feb 27: (RWE Australian Business News) -
Allco Finance Group (ASX:AFG) late today responded to ASX queries over
recent events.

ASX: 1. When was the Company first aware that a Review Event had
been triggered?

AFG: The Facility Agreement for AFG's $900 million senior debt
facility sets out a number of circumstances which constitute a Review
Event. These circumstances include where AFG's market capitalisation
falls below $2 billion.
If a Review Event occurs, AFG must notify the syndicate banks'
agent. While the Review Event subsists, the Majority Lenders (those who
have lent at least two-thirds of the aggregate borrowings) may notify
AFG, within 20 business days, if the Review Event is unacceptable or, if
acceptable subject to revised finance terms, those revised terms.
If the Majority Lenders notify AFG that the Review Event is
unacceptable, AFG must repay the facility in full within 3 months.
If the Majority Lenders notify AFG that the Review Event is
acceptable subject to specified revised finance terms, AFG must either
implement those revised terms or, if the revised terms are not
acceptable to AFG, AFG must repay the facility within 3 months.
If the Majority Lenders do not give the contemplated notice
within 20 business days they cannot subsequently do so or take any other
action.
The occurrence of a Review Event does not constitute an event of
default under the loan facility.
A market capitalisation Review Event occurred on 18 December
2007 but this did not subsist.
However, following the occurrence of this Review Event, AFG
commenced dialogue with the syndicate banks to restructure the terms and
conditions of this facility.
A market capitalisation Review Event then occurred on 9 January
2008. This has subsisted since that time.
Following the occurrence of this Review Event AFG continued to
engage in negotiations with the syndicate banks to restructure the terms
and conditions of this facility.
At no time prior to the expiry of the 20 business days from 9
January 2008 did the Majority Lenders notify AFG that the Review Event
was unacceptable or acceptable subject to revised finance terms, or
indicate that they would give such notice if the Review Event continued
to subsist.
AFG's operations continued unimpeded during this time. AFG is in
compliance with the financial covenants under the facility.
Just prior to the expiry of the 20 business day period following
9 January 2008, AFG at the syndicate banks' request agreed to an
extension to that period until 31 March 2008.
As noted in AFG's Half Year Report, AFG remains in constructive
discussions with its syndicate banks to restructure the terms and
conditions of this facility and to seek approval of the Group's plans to
reduce debt, and these negotiations continue.
AFG has received no indication that it will not be able to
achieve a successful outcome in these negotiations.
It was also noted in AFG's Half Year Report that, although AFG
is taking all measures possible, there is a risk that if negotiations
with the senior bank financiers which have provided the $900 million
senior debt facility are unsuccessful and/or if refinancing, repayment
and/or extension of the $250 million Syndicate Financing Facility due in
May 2008 does not occur, repayment of all facilities may be required in
advance of their current maturity dates.
Whilst AFG believes that these facilities will be successfully
renegotiated, refinanced or reduced there is a heightened risk of
this not being satisfactorily achieved due to the current serious
dislocation in global credit markets and the other issues outlined in
the Half Year Report affecting the Group’s business.
Subject to any changes that may arise from the above matters,
the $900m senior debt facility remains scheduled to mature in September
2009.

*****

2. Does the Company consider the triggering of the Review Event
to be material to the price or value of the Company’s securities?

The occurrence of the Review Event cannot be considered in
isolation from other information relevant to it. Other relevant
information was set out in response to question 1. Please refer also
to the response to question 5.

*****

3. If the Company does not consider the triggering of the Review
Event to be material, please advise the basis on which the Company does
not consider the triggering of the Review Event to be material.

As noted in response to question 2, the occurrence of the Review
Event cannot be considered in isolation from other information relevant
to it. Other relevant information was set out in response to question 1.
Please refer also to the response to question 5.

*****

4. If the answer to question 2 is "yes", please identify an
announcement from the Company earlier than the release of the Company's
Half-Year Report which disclosed this information.

This question does not arise. Please refer also to the response
to question 5.

*****

5. If there was no earlier announcement, and the Company became
aware of the triggering of the Review Event prior to the release of the
Half-Year Report, why was the information not released to the market at
an earlier time? Please comment specifically on the application of
listing rule 3.1 and the exceptions to the rule in listing rule 3.1A.

Listing Rule 3.1A sets out an exception to the requirement in
Listing Rule 3.1 to make immediate disclosure if certain conditions are
satisfied. To the extent (if any) that the totality of the information
relevant to the Review Event constituted information within Listing Rule
3.1, the conditions in Listing Rule 3.1A were satisfied.
Those conditions are, relevantly:
That the information is confidential.
AFG believes that its negotiations with the syndicate banks
concerning the Review Event remained confidential until the release of
AFG's Half Year Report.
That the information concerns an incomplete proposal or
negotiation; or comprises matters of supposition or is insufficiently
definite to warrant disclosure.
AFG considers that in the circumstances described in the
response to question 1 above, this condition was satisfied.
That a reasonable person would not expect disclosure.
ASX Guidance Note 8 states at paragraph 31:
"A reasonable person would not expect information to be
disclosed if the result would be unreasonably prejudicial to the
entity".
and at paragraph 33:
"ASX will balance the needs of the market and the interests of
the entity, bearing in mind the principle on which the listing rule is
based, when considering if this requirement is satisfied."
AFG considers that the premature disclosure of AFG's
negotiations with its lenders in relation to the Review Event and its
assessment of the prospective outcome of those negotiations would have
been unreasonably prejudicial to the outcome of those negotiations.
Disclosure merely that a Review Event had occurred, without reference to
AFG’s negotiations with its lenders and its assessment of the
prospective outcome of those negotiations, would have been inadequate
and would have led to uninformed negative speculation unreasonably
prejudicial to the interests of AFG and its shareholders.

*****

6. Please confirm that the Company is in compliance with listing
rule 3.1.

AFG confirms that it is in compliance with Listing Rule 3.1.