Allco Finance (AFG), struggling fund manager, announced that its bankers have granted further extension on its senior debt facility of up to $1.5 billion. It further added that its talks with its bankers continue on a positive note. AFG has agreed for an extension for $250 million bridging facility as it received an extension of deadline till July 31. Banks have granted the new deadline to the company to sort out its refinancing while they still continue to call shots inside Allco. Its syndicate of banks includes Westpac, Commonwealth Bank and ABN Amro.

This news comes after Babcock and Brown received similar reprieve from its bankers on $2.8 billion loan facility on Monday. Allco is also working on removal of market capitalisation clause from its agreement of its restructure debt facility like Babcock and Brown.

However, Chief Executive of Allco Finance, David Clarke, stated that till the final negotiations were not over with the banks, nothing could be confirmed about Allco's senior debt facility. He also added that he expected good outcomes from in asset realisation programs and hopes to meet its debt-repayment schedule which would lower its senior debt facility to $400 million by September 2009. A senior debt facility of $31.2 million was repaid yesterday to its banks and since April Allco has already paid $177.1million of its debt after asset sales in businesses including rail, shipping and aviation. It has sold its wind farms in Europe and now it has reached an agreement to sell its wind farms in United States as well. This would further contribute to its debt repayment. Allco's current drawn borrowings stand at $830.6 million after its recent repayment of $31.2 million.

The fund manager with its main businesses in transport and property funds is still recuperating from stock market correction in January earlier this year. It had revealed in May 2008 that it expected a loss of $1.5 billion in fiscal 2008.

The share prices reflected a 15 percent rally upon the announcement as shareholders learn to live with banks on their backs. The share prices initially rose to 6 cents or 15 percent to 46 cents a share and settled to close at 41.5 cents which was 4 percent or 1.5 cents up for the day.