After being suspended since February 13, shares in Allco Finance Group resumed trading this morning after a deluge of seven ASX announcements, including the twice-delayed half year profit.
While the claimed 14% drop in net profit to $87.4 million seemed okay, the market meted out a savage bloodbath as AFG shares hit a low of $1.02 before settling at $1.28, a 58% dive from the last traded price of $3.05.
The key announcements were as follows:
- 3-page summary of overall situation.
- 66-page results presentation by CEO David Clarke and CFO Tim Dodd.
- 45-pages of statutory results complete with signatures yesterday from chairman Coe, deputy chairman Bob Mansfield and, remarkably, KPMG audit partner Chris Whittington.
- Allco Hybrid Investments Trust one-pager saying previously, announcement margin lending deals have not actually been formalised and all parties are now analysing the results. Given the cancellation of dividend and share price route, this looks very ugly.
- Rubicon Japan Trust reveals Allco vehicle forced to sell 9.3 million units on February 19 to avoid injecting cash into $70 million margin loan.
The only tangible Allco asset sale we got was a deal with Gary Weaven’s union mates at Industry Funds Management, which has agreed to take on Allco’s share of that $1.65 billion US power station deal announced on December 10.
Allco’s original equity commitment was $US287.3 million for a 37.6% stake. They’ve now walked away from these 29 US generating units with a book loss of $72 million or 22.5% in just 10 weeks. And IFM, which is an amalgam of 40 industry funds, now finds itself with an asset allocation of 12% to a portfolio of power stations that it now says have already fallen in value by more than 10% since the original deal. Ouch.
Allco is promising a calm restructure to get its debt down to acceptable levels by June 2009. It will be selling the loss-making mortgage business Mobius, which lost $31 million for the half on rising bad debts, and also getting out of infrastructure such as the New York to New Jersey transmission line and a 3500mW of wind farms.
The only problem here is the plunging share price. Allco admitted that it owes a $250 million bridge facility by May 1 and the banks can demand another $900 million be repaid within 90 days based on market capitalisation triggers which are already in play, but not yet executed.
After today’s share price bloodbath, surely it is only a matter of time.
By late morning, AFG was capitalised at $474 million, yet we’ve just been given accounts which claim a big profit and net assets of $2.4 billion.
This is utterly delusional. AFG’s investment in various associated funds such as Record Realty, Allco Equity Group and the Rubicon trusts, are collectively in the accounts at $605 million. Despite facing $370 million in paper losses, the board and auditor have somehow decided not to take even a modest write down.
Can you believe Timbercorp shareholders received a packet of woodchips in the shareholder show bag. Check out this Mayne Report video.