Story just out....including this poignat comment from the company:
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A company spokesperson said there had been heavy interest in the Alleasing business.
``As of today there have been 20 interested parties with offers in excess of the debt,'' he said.
Alleasing said it had a ``good relationship'' with its lenders and if circumstances changed due to a confirmed sale of the Alleasing business, then it would have to readdress its lenders.
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Allco mulls Alleasing sale Email Print Normal font Large font AdvertisementApril 8, 2008 - 5:31PM
Beleaguered Allco Finance Group has flagged a possible sale of its listed investment trust, Alleasing, to help pay down part of its $1.1 billion debt.
Alleasing has been given a three-month extension to June 30 by the lenders of its senior debt facility as it seeks to refinance at least $40 million of debt.
The company said this facility would be paid down from the current debt of $40.5 million to $33 million by June 30, when the facility would require renegotiating or refinancing.
However, Alleasing has admitted that AFG's debt problems are affecting its own renegotiations with its lenders.
Alleasing is managed by AFG and provides finance for leasing companies in Australia and New Zealand.
Alleasing said previously it was facing a ``challenging'' operating environment, given the turmoil in capital markets, its sub-optimal capital structure and negative publicity associated with parent company Allco.
AFG has about $250 million of debt due to expire by May 1 and $900 million by September 2009.
``This has led to some nervousness amongst customers and new business funders,'' it said.
Last month, Allco said it would start an ``orderly run-off and sale of the underlying assets'' in its underperforming mortgage business, Mobius. This was the first step in a wider ``non-core'' asset sale program to pay down debt.
Allco had already noted the possible sale of the Alleasing business at the Alleasing half year results presentation in March.
A company spokesperson said there had been heavy interest in the Alleasing business.
``As of today there have been 20 interested parties with offers in excess of the debt,'' he said.
Alleasing said it had a ``good relationship'' with its lenders and if circumstances changed due to a confirmed sale of the Alleasing business, then it would have to readdress its lenders.
Allco company secretary Tom Lennox said it was appointing corporate advisers to manage a sale process.
``If a sale is undertaken, the consent of the Alleasing hybrid holders will be sought and further details will be provided to enable hybrid holders to make an informed decision,'' he said.
Allco, which has financed more than $60 billion of assets in the aviation, rail, shipping and property sectors, has run into trouble recently with the Australian Securities Exchange over a possible breach of its disclosure obligations.
Listed litigation funder IMF Australia Ltd said it would fund shareholder action against Allco, as well as MFS Ltd, Centro Properties Ltd and Centro Retail Ltd.
The claims relate to alleged breaches by the finance firms of their continuous disclosure obligations between August last year and January and February this year.
Allco Finance Group closed up 1 cent to 43 cents, while Allco Hybrid Investment Trust was steady at $4.00.
Company made $85 million for thr half juse ended....prior to that almost $200m. Its market cap today is $150 million.
The parent Allco business model leverages airline, rail freight, shipping, windpower and mostly aussie real estate. Assets at last valuation exceeded all loans by $1.5 billion....no hint whatsoever of lower values within the parent core business. (unlike Centro whereby their US business took a hit, to the extend that laons almost match equity).
So market cap of $150 million verse asset backing of $1.5 billion......(and probably annual profits of $100m PA.
So what is the problem.....we will find out on Friday, if in fact they have a problem.
Company said last week....a decision by the banks on the modest $250 m due owing on 1st May, 2008 will be made on 11th April 2008. Company has about $500 million in cash and the like. The $900m loan due for Sept 2009 9and inplay because of Allco low market cap can also be lauyed to rest on Friday).
Allco were confident when we last heard from them re these two amount.
Since then confirmation of refinancing of some of their smaller associated entities....and a number of stories whereby their ssets eg windpower - are much sort after.
I am going to hold into the Friday decision....funding out of the way such se a big gap....even a share price of a $1....would still put the company on a PE of 3 (based on halved annual profits.
It is the standout of thesee beaton down financials....in my view.
AFG Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)