ID :
17467
Sat, 08/30/2008 - 10:54
Auther :
Shortlink :
https://oananews.org//node/17467
The shortlink copeid
Allco Finance posts loss of $1.73b
(AA) - Allco Finance Group Ltd is relying on upcoming asset sales and the favour of large offshore institutions to repay debt after posting one of the largest corporate earnings losses ever seen in Australia.
Chief executive David Clarke described the Sydney-based asset manager's position as
"fragile" and said it "deeply regrets" the loss of shareholder value that led to the
massive $1.73 billion annual loss.
Allco's shares are currently trading around 38.5 cents, having fallen from a high of
$10.46 in August 2007.
Allco's annual loss came on a day when shopping centre owner Centro Properties Group
also booked a very large net loss of $2.1 billion for 2007/08.
Both companies have suffered after turmoil in financial markets reduced debt
refinancing options and resulted in writedowns of asset valuations.
Allco plans to simplify its business by restructuring to focus on its core
capabilities and selling non-core assets and exiting some businesses.
"The reconstruction of the group is progressing, however the business remains in a
fragile position and the continued market weakness is making the task difficult," Mr
Clarke said in a statement.
The task of restoring investor confidence in Allco will take longer in Australia
than elsewhere, Mr Clarke said.
Current investor interest, which Allco needs to help find buyers for assets to repay
debt and refinance obligations, is confined to a number of large northern hemisphere
institutions, he said.
"We're relying on them to look through our brand. We'd hope they'd put money in but
it's too early to say."
Allco's 2007/08 result was down 918 per cent down on the previous year's net profit
of $211.67 million.
The result reflected impairment charges of $1.43 billion, including writedowns of
investments, and losses on the sale of some assets as a business model dependent
upon cheap credit took its toll.
The bottom line result was in line with its guidance in May for a loss of more than
$1.5 billion.
Its normalised net profit was $29.2 million.
Because of its need to preserve capital, Allco did not pay a final dividend for the
financial year just ended, and won't pay a dividend for 2008/09, while the broader
investment market waits indefinitely for performance guidance.
Allco expects to sell assets worth more than $300 million before June 2009.
It plans to further cut its senior debt by $304 million to $400 million by June 2009
to reduce its current gearing ratio of 75 per cent.
Debt repayments will take place as Allco off-loads a raft of non-core leasing and
financial assets and progresses its transition to a fiduciary funds manager.
A radical change to its business model will see Allco become a manager of investment
funds in the aviation, shipping and private equity markets.
Allco will exit its financial assets and infrastructure business and as well as rail
and real estate.
"When the credit crisis hit we were in transition from a balance sheet investor to a
funds manager," Mr Clarke said.
The year-long financial markets crisis had left Allco with a balance sheet "in a
less than robust shape" with a net worth of just $20 million.
"The ubiquitous use of debt is a thing of the past," he said.
Allco is one of the highest profile Australian companies to suffer from the global
credit crunch.
Its woes are partially due to the $320 million acquisition of property business
Rubicon Holdings (Aust) Ltd last October.
By March, the business was worth just $80 million.
"The acquisition of Rubicon was a mistake - that's clear," Mr Clarke said.
But there were buyers interested in Rubicon, he added.
Mr Clarke said given agreements struck with its 12 member bank lending group meant
it was be "absolutely inappropriate" to issue any guidance for the 2008/09 year.
Allco on Friday also confirmed the refinancing of its senior debt facilities.
Commonwealth Bank, Westpac Banking Group and St George Bank are the only local major
banks in the syndicate, which includes offshore institutions, Clarke said.
The new financial year will also be a time to deal with legacy issues at the group,
including the appointment of a new chairman, now expected in early 2009.
"We're not being bowled over with volunteers," Mr Clarke said, adding discussions
were continuing with two candidates.
Allco also said redundancies will be accelerated as it cuts staff numbers to around
150 by 2010, from 480 at the end of June 2008.
Shares in Allco fell one cent to finish at $38.5 cents.
Chief executive David Clarke described the Sydney-based asset manager's position as
"fragile" and said it "deeply regrets" the loss of shareholder value that led to the
massive $1.73 billion annual loss.
Allco's shares are currently trading around 38.5 cents, having fallen from a high of
$10.46 in August 2007.
Allco's annual loss came on a day when shopping centre owner Centro Properties Group
also booked a very large net loss of $2.1 billion for 2007/08.
Both companies have suffered after turmoil in financial markets reduced debt
refinancing options and resulted in writedowns of asset valuations.
Allco plans to simplify its business by restructuring to focus on its core
capabilities and selling non-core assets and exiting some businesses.
"The reconstruction of the group is progressing, however the business remains in a
fragile position and the continued market weakness is making the task difficult," Mr
Clarke said in a statement.
The task of restoring investor confidence in Allco will take longer in Australia
than elsewhere, Mr Clarke said.
Current investor interest, which Allco needs to help find buyers for assets to repay
debt and refinance obligations, is confined to a number of large northern hemisphere
institutions, he said.
"We're relying on them to look through our brand. We'd hope they'd put money in but
it's too early to say."
Allco's 2007/08 result was down 918 per cent down on the previous year's net profit
of $211.67 million.
The result reflected impairment charges of $1.43 billion, including writedowns of
investments, and losses on the sale of some assets as a business model dependent
upon cheap credit took its toll.
The bottom line result was in line with its guidance in May for a loss of more than
$1.5 billion.
Its normalised net profit was $29.2 million.
Because of its need to preserve capital, Allco did not pay a final dividend for the
financial year just ended, and won't pay a dividend for 2008/09, while the broader
investment market waits indefinitely for performance guidance.
Allco expects to sell assets worth more than $300 million before June 2009.
It plans to further cut its senior debt by $304 million to $400 million by June 2009
to reduce its current gearing ratio of 75 per cent.
Debt repayments will take place as Allco off-loads a raft of non-core leasing and
financial assets and progresses its transition to a fiduciary funds manager.
A radical change to its business model will see Allco become a manager of investment
funds in the aviation, shipping and private equity markets.
Allco will exit its financial assets and infrastructure business and as well as rail
and real estate.
"When the credit crisis hit we were in transition from a balance sheet investor to a
funds manager," Mr Clarke said.
The year-long financial markets crisis had left Allco with a balance sheet "in a
less than robust shape" with a net worth of just $20 million.
"The ubiquitous use of debt is a thing of the past," he said.
Allco is one of the highest profile Australian companies to suffer from the global
credit crunch.
Its woes are partially due to the $320 million acquisition of property business
Rubicon Holdings (Aust) Ltd last October.
By March, the business was worth just $80 million.
"The acquisition of Rubicon was a mistake - that's clear," Mr Clarke said.
But there were buyers interested in Rubicon, he added.
Mr Clarke said given agreements struck with its 12 member bank lending group meant
it was be "absolutely inappropriate" to issue any guidance for the 2008/09 year.
Allco on Friday also confirmed the refinancing of its senior debt facilities.
Commonwealth Bank, Westpac Banking Group and St George Bank are the only local major
banks in the syndicate, which includes offshore institutions, Clarke said.
The new financial year will also be a time to deal with legacy issues at the group,
including the appointment of a new chairman, now expected in early 2009.
"We're not being bowled over with volunteers," Mr Clarke said, adding discussions
were continuing with two candidates.
Allco also said redundancies will be accelerated as it cuts staff numbers to around
150 by 2010, from 480 at the end of June 2008.
Shares in Allco fell one cent to finish at $38.5 cents.
