The embattled Allco Finance Group has been granted an extension on its bridging loan but will have to pay more margins on its senior debt.
The Sydney-based asset manager will have until June 30, 2008 to pay back a $250 million bridging loan to banks including ABN Amro and Westpac.
But Allco has suffered a setback as the banks are forcing it to pay more margins on its senior debt.
The company will have to pay 300 basis points above the interbank borrowing rates offered by the United States, Britain and European Union on its senior debt of $862.1 million.
Senior debt is a bond or other type of debt that is typically lent by banks.
If a company goes bankrupt, senior debt lenders get repaid first, before other creditors.
“While positive progress continues to be made, it should be noted that until negotiations are finalised and restructuring documentation is signed, there can be no assurance that a restructure of Allco’s senior debt facilities will be concluded successfully,” an Allco statement to the Australian Securities Exchange said.
On Friday the firm paid back $78.3 million to senior debt lenders after it sold off undisclosed assets.
The company cited it plans to continue selling assets to trim its debt, in order to focus on its key businesses of aircraft leasing, ports and railways.
Allco’s shares slumped 14 per cent to 44 cents at the close of trading on Friday.
