new senior debt facility signed

Allco Finance Group (ASX: AFG) – New senior debt facility signed

Allco Finance Group (Allco) is pleased to announce that its new senior debt facility has been
signed today with its syndicate banks.
Mr David Clarke, Managing Director of Allco, said “The signing of our new senior debt facility is
a breakthrough for Allco, after a lengthy process. We still have a long way to go in rebuilding
shareholder value but we are pressing ahead with the implementation of our business
restructuring program, steadily reducing our borrowings and the interest payments associated
with them.
“The final agreement with our bank syndicate is a key step in our program to create a
sustainable business”, he added.
The new facility, which will be drawn when certain conditions precedent are satisfied, will be
used to repay Allco’s three existing senior debt facilities. Allco anticipates that the conditions to
drawing under the new facility will be satisfied before the end of August 2008. By refinancing
its existing senior debt facilities, Allco will no longer be subject to any market capitalisation
review event.
When the new facility is drawn, the amount drawn will match the outstanding borrowings under
Allco’s existing debt facilities, which are expected to be approximately $702 million as at
financial close. This increase since Allco’s last ASX announcement on 14 August 2008 is
primarily attributable to foreign currency fluctuations although the amount is offset by cash on
hand in the relevant currencies.
The key terms of Allco’s new senior debt facility are as follows:
– A maturity date of 30 September 2009;
– No market capitalisation review event;
– A repayment schedule under which Allco is required to reduce its senior debt to
$400 million by 30 June 2009;
– A margin above the relevant currency borrowing reference rate (for A$: BBR, for Euro:
EURIBOR, for US$: LIBOR) that reduces as the level of senior debt declines as set out in
the table below, provided that Allco’s gearing levels based on the value of its assets is not
greater than certain target amounts:
Outstanding Principal plus
any Undrawn Facility Limit
Margin %p.a. above relevant borrowing
reference rate
$600 million or greater 3.50%
Less than $600 million but equal to or
greater than $400 million 3.00%
Less than $400 million 2.75%
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AFG – New senior debt facility signed 210808
– The borrowings will be secured by guarantees and security provided by numerous Allco
subsidiaries (including those which are already guarantors under the existing debt
facilities);
– Apart from the debt repayment schedule, the new facility contains no events of default tied
to gearing, interest coverage, debt service or other financial ratios;
– A review event will arise under the new facility if:
(a) Allco enters into a merger or consolidation;
(b) Allco becomes controlled by another person or by a group of persons acting
together, which will be deemed to occur if that person or persons acquire a relevant
interest (as defined in the Corporations Act) in more than 35% of the voting shares
in Allco;
(c) Allco’s shares are suspended from trading on ASX for more than 5 consecutive
business days; or
(d) If two or more of the acting chairman and certain senior executives of Allco leave
within a 12 month period and a replacement is not appointed within 90 days.
If a review event described in paragraphs (a) or (b) above were to occur, Allco must notify the
bank syndicate, and will have four business days to repay each bank syndicate member its
share of outstanding debt and other financial exposures (including hedges etc.), unless the
relevant bank syndicate member elects not to require that debt repayment acceleration.
If a review event described in paragraphs (c) or (d) above were to occur, Allco must notify the
bank syndicate, at which point the bank syndicate has 20 business days to inform Allco
whether the review event is unacceptable or acceptable subject to revised finance terms. If
that review event is unacceptable to the bank syndicate, or Allco were to receive revised
finance terms which were unacceptable to Allco, Allco would be required to repay the entire
senior debt then outstanding within 90 days of initially notifying the banks of the occurrence of
the review event.
Debt restructuring costs
The total costs incurred by Allco to restructure its senior debt facilities are approximately $28.1
million. These costs cover fees for financial advisors ($6.2 million), our senior banks ($16.7
million including $7 million which is payable on maturity of the new loan) and lawyers for the
banks and Allco ($5.2 million).
Yours sincerely,
Tom Lennox
Company Secretary
For further information:
Christine Bowen
Director - External Relations
Allco Finance Group
Tel: + 61 2 8916 7739