Allco Finance Group senior debt facility repayments in jeopardy

By Caroline Salls

Pittsburgh, Oct. 21 - Allco Finance Group said its board of directors has decided not to try to sell the company's assets in light of market conditions, resulting in a significant risk that the company will not be able to make the November and December repayments on its senior debt facility, according to a news release.

Allco said the most recent deterioration in market conditions has exceeded the contingencies included in the strategic business plan that sets out the company's asset sale program and expected values.

As a result, Allco said its directors do not believe it is in the interests of stakeholders to attempt to sell the assets at these values, leaving a significant risk that Allco will not be able to meet the debt repayment schedule in its senior debt facility for the months of November and December.

Allco said A$35.5 million is due at the end of November, and A$111.9 million is due at the end of December.

The company said it is continuing to meet all of its interest payments on its senior debt facility.

If Allco fails to meet a scheduled debt repayment, it will be in default under its senior debt facility.

According to the release, the default would occur at the end of November at the earliest unless the company's syndicate banks agree to extend the scheduled repayment.

Allco said it has begun discussions with its syndicate banks seeking their agreement to extend the repayment schedule, including the repayments scheduled for November and December. The agreement of all syndicate banks is required in order to extend the repayment schedule.

As previously announced, the new senior debt facility terms include a repayment schedule under which Allco is required to reduce its senior debt to A$400 million by June 30, 2009.

Senior debt and commitments were A$1.09 billion at Dec. 31, 2007 and since then have been reduced to A$666.7 million as of Oct. 17, the release said.

Allco is an alternative investment firm that operates offices in Sydney, London and San Francisco.

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