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Australia's Allco Finance to sell assets following refinancing trouble

Australia's Allco Finance to sell assets following refinancing trouble

Allco Finance Group Ltd. said Friday that three listed property trusts it manages will sell up to 2.1 billion Australian dollars (US$1.98 billion; euro1.3 billion) in assets after running into funding difficulties.
Facing a possible referral to the securities regulator for inadequate disclosure of its debt woes, Allco also said it will sell the assets in its subprime lending business Mobius Financial Services.
After reporting a halving of its annual net profit in 2007 to A$50 million (US$47 million; euro31 million), from A$102.7 million a year earlier, Allco's Rubicon America Trust plans to sell up to A$800 million (US$754 million; euro498 million) of assets over the next 12 months.
Allco Finance's acquisition of Rubicon Holdings Ltd. _ the manager of Rubicon America and its European and Japanese counterparts _ late last year was unpopular with investors because it increased Allco's exposure to international property, a sector under pressure.
Rubicon Europe Trust Group believes it can sell A$500 million to A$700 million (US$470 million-US$660 million; euro310 million-euro436 million) of assets at a "fair price" over the next 12 months, and Rubicon Japan Trust believes it can sell A$400 million to A$600 (US$377 million-US$566 million; euro250 million-euro374 million) million of assets, Allco Finance said.
Allco said the "rapid and unanticipated dislocation of credit markets globally has placed considerable pressure on the funding structure" of the trusts. It said "decisive action" is required to improve the liquidity position and reduce the risk profile of the trusts.
The news sent Allco shares plunging. They closed nearly 11 percent lower at A$0.87.
Allco also said it plans to sell the underlying assets of its Mobius Financial Services business, which Allco said last October had a high default rate in its A$700 million (US$660 million; euro436 million) loan book.
Allco Finance is the latest Australian company with complicated financial structures hurt by global repercussions of the U.S. subprime-mortgage crisis.
It lost more than half its market value Monday after reporting a 10 percent fall in first-half profit and announcing plans to restructure and sell some assets to repay debt.
The Australian Securities Exchange indicated Friday it may refer Allco to the Australian Securities & Investments Commission over inadequate disclosure if it isn't happy with Allco's response to the exchange's queries.
The exchange queried Allco Finance on Tuesday over its failure to reveal that on Jan. 9 it was subject to an "event review" by its bankers over A$1.15 billion (US$1.1 billion; euro730 million) in loans after its market value dropped below A$2 billion (US$1.9 billion; euro1.26 billion).


Updated : 2021-08-04 19:32 GMT+08:00