Suddenly banks are being generous with some of their highly indebted clients.
Monday it was Babcock and Brown on the receiving end of a waiver of a particularly nasty covenant which would have seen the banks have the power to review the investment bank’s $2.8) billion loan deal that was only fixed up several months ago. It was linked to the share market value falling below a certain level.
And in exchange for that waiver, BNB has agreed to pay 0.50% in interest to the banks.
Now one of the early basket cases, Allco, has received some extra time from a banking group covering $250 million of short term loans.
Allco told the ASX yesterday that the group of banks had given a third one month extension on the loans.
Banks including ABN Amro, Commonwealth Bank of Australia and Westpac granted Allco a 30-day extension on the loan to July 31.
The shares ended hitting a high for the day of 46c, but the early enthusiasm died and they closed up 1.5c, or 3.7% at 41.5c.
That’s still more than 90% down from the start of 2008 and it still has around $1 billion in debt, and it has indicated that the June 30 accounts will include a $1 billion plus write-down in the value of its intangible assets. It has forecast a loss of around $1.5 billion for the June 30 year.
Allco this week repaid $31.2 million, bringing its total outstanding long-term debt to $831 million. The repayment takes to $177 million the amount repaid since April.
The company said last month it would raise $165 million by selling a wind farm project in California.
The loan extended yesterday is more expensive: a month ago the banks forced Allco to triple the yield margin on the $250 million bridging loan in exchange for the 30-day extension on repayment to today.
The banks can force it to repay all of its liabilities within 90 days if the company’s plan to sell assets fails to meet their expectations.
