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Allco reviews mortgage trust

Vishal Teckchandani
— 1 minute read
Allco will rebate management fees and delay its right to receive distributions in its mortgage trust.
Deterioration in credit markets has forced Allco Finance to review its Allco Max Securities and Mortgage Trust (Max).

Allco will rebate $1.9 million in management fees per year for the next two years and waive its right to receive distributions on the 10 million Max units it owns for the same period.

"Allco believes this will assist Max unit holders as Max moves from its current developmental stage into a more established business," Allco's statement to the Australian Securities Exchange said.

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The company had received $523,000 in distributions in the 2007 financial year from Max.

"Market conditions following its initial public offering of Max in September 2005 and the historically low credit margins evidenced in the first two years of Max's operations have made it difficult for Max to build up and achieved the desired volume and profitability," the statement said.

Allco has set aside funds to acquire up to $10 million worth of units in Max over the next year.

According to Allco Max's November update, the trust had no exposure to the US subprime market but had lost book value through the flow from the credit markets' re-pricing risk.

 

Allco reviews mortgage trust
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