Mortgage provider Rams Home Loans (RHG) said on Wednesday it is continuing to fund new loans and settle approved loans, however, to finance the existing mortgage book the company needs to refinance its two debt facilities by February 2008.
In a statement to the stock exchange, Rams directors said negotiations with various parties are in progress, and while credit market conditions remain difficult, the directors are confident at least one of the extendable commercial paper market (XCP) facilities will be refinanced.
The brand and franchise operations in the troubled mortgage business were acquired by Westpac for $140 million last month, with the bank careful to distance itself from the RAMS' existing mortgage book.
In addition, Westpac has commenced funding of up to $500 million of loan settlements from 15 November 2007.
"This funding proposal will cease if shareholder approval to the Westpac proposal is not obtained at the general meeting," the company said.
RAMS reassured shareholders it continues to settle approved loans and to approve new loans, and that all warehouse facilities have been fully drawn.
Despite a hopeful outlook, the announcement underscored the fragility of RAMS' business model. As a result, the shares slid 5.5% to 25.5 cents.
