Strategic purchase falters, parties resume talks

Wednesday 15th October 2008

Australia's Allco HIT said the sale of Strategic Finance has hit a snag and it will resume negotiations with the investment group seeking to buy the finance company.

Allco agreed to the sale to a group comprising managers and directors of Strategic and a unit of BOS International on August 29.

"We believe that completion of the conditions precedent is unlikely to be achieved" by the due date of Oct. 31," Allco company secretary Tom Lennox said in a letter to the ASX, requesting a trading halt on its shares.

Parties to the sale "are intending to reopen discussions regarding the progress of the transaction," he said.

The purchasing group had agreed to pay NZ$25 million cash, inject NZ$15 million of new funds into Strategic and buy loans for NZ$50.2 million as part of the acquisition. BOS International would increase its debt facilities to the company to NZ$150 million from NZ$100 million.

Under the acquisition plan, holders of Strategic's debentures, notes and preference shares will be asked to accept new terms, with the bulk of the securities to be replaced by new debt instruments that trade on the NZX.

Shares of Allco have slumped 99% in the past 12 months and last traded at 1.7 Australian cents.

By Jonathan Underhill

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