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Allied Farmers gains further extension to Westpac facility

Tuesday 20th July 2010

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Allied Farmers gained a six-month extension of its loan facility with Westpac, giving the finance company more time to repay debt and restructure its business.

Allied had $21 million outstanding on the facility as at June 30 and had an overdraft facility of $2.5 million that was set to expire on July 1. The facilities are secured by a general security agreement over the assets of Allied, its rural business and the loans acquired from Hanover Finance and United Finance. It doesn’t include the assets of Allied Nationwide Finance.

The latest agreement pushes out the due date to March 31 next year from September 24

“The earlier extension was granted to enable both Allied Farmers and Westpac time to consider a number of debt retirement and restructuring initiatives that would have a positive impact for our company,” said managing director Rob Alloway.

While the initiatives are incomplete, “Allied had reached a point whereby Westpac was able to extend its facility.”

Alloway wasn’t immediately available to provide an update on the how much of the facility had been drawn down. Allied has been forced to slash the value of the loans acquired from Hanover and United, which it paid for via the issue of more than 1 billion new shares.

In the latest adjustment it wrote down the value of the loan books by about two-thirds to $124 million. In 2008, the Hanover and United assets were valued at $516.6 million.

The shares rose 4.6% to 4.6 cents today and have slumped 62% this year.

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