Allco rejects breach suggestions

Troubled financial services house Allco has differed with the Australian Securities Exchange (ASX) on the question of whether it should have announced the so-called ‘review event’ covering its debt prior to the release of its recent half-year results.

In response to an ASX query late yesterday, Allco argued that it had not been breach of the ASX listing rules and that the facility agreement for its $900 million senior debt facility set out a number of circumstances that constituted a review event. It said these circumstances included where AFG’s market capitalisation fell below $2 billion.

However, it said that the occurrence of a review event did not constitute an event of default under the loan facility.

“A market capitalisation review event occurred on December 18, 2007, but this did not subsist,” the Allco announcement said. “However, following the occurrence of this review event, AFG commenced dialogue with the syndicate banks to restructure the terms and conditions of this facility.

It said that a market capitalisation review event had then occurred on January 9 and that following the review event the company had continued to engage in negotiations with syndicate banks to restructure the terms and conditions of this facility.

“At no time prior to the expiry of the 20 business days from January 9, 2008, did the majority lenders notify AFG that the review event was unacceptable or acceptable subject to review terms, or indicate that they would give such notice if the review event continued to subsist,” the Allco response said.

The company said it remained in constructive discussions with its syndicate banks and had received no indication that it would not be able to achieve a successful outcome in the negotiations.