0954 [Dow Jones] STOCK CALL: Citi cuts Allco Finance (AFG.AU) to...

0954 [Dow Jones] STOCK CALL: Citi cuts Allco Finance (AFG.AU) to Sell from Hold, drops target price to 40 cents from A$1.22, after NAB (NAB.AU), Bank of Scotland take possession of 14% of AFG shares that were collateral for margin loans to Allco Finance executive trust Allco Principals Trust. AFG last traded at 63 cents. Citi says AFG will now need to write off A$53 million loan to Allco Principals, which is going into administration after APT refused to provide further security other requirements of NAB for standstill agreement with banks. "While Allco doesn't own equity in APT, and lenders to APT don't have recourse to Allco, this appears a moot point given the apparent lack of preparedness by these insiders to support the AFG share price at current levels - providing a significant share overhang but, more importantly, an additional question mark over AFG." Adds news "could well influence the preparedness of Allco's lenders to pursue its business restructure." (RBT)