Allco Finance Group has reached a refinancing agreement with its syndicate banks on the new senior debt facility which would see the asset manager to bring down its debt to $400 million in next one year. Allco has not only gained support of its bankers, but it shall also be working on two new investment funds housing up to $1 billion in aviation and shipping.

Allco's Chief Executive, David Clarke, informed that the consortium of its 12 banks have agreed for the loan extension till September 2009 and has allowed it to work on its restructured business. Allco has been under tough negotiations with its banks since past six months to get an extended term on its senior debt facility. It witnessed a steep rise in its share prices after the announcement of its new debt facility. It also stated that the banks may recall the loans early if the share prices fell at the stock market. The market reacted strongly to the news and the share prices surged for the Sydney based company.

The Australian asset manager, Allco Finance Group shall be able to cut its long term debt from A$830 million to A$400 million by June 2009 after refinancing its loan with its bankers. It shall sell its Thachapi Wind Power development in California which would enable it to pay off its long terms A$631 million debt by end of July this year. Apart from the sale of assets, it shall also pay a borrowing reference rate of 3.5 percent for the principal amount greater than A$600 million. This rate shall also fall once Allco manages to reduce its debt. The current outstanding debt for the company is A$691 million for which the borrowing rate is 3.50 percent. This rate would fall to 2.75 percent once the debt falls below A$400 million.

Allco had witnessed nearly 90 percent fall in value of its share prices this year. However, after the news the prices surged eight cents or 21.3 percent higher at 45.5 Australian cents at midday trading in Sydney which lent a firm market value of $169.8 million.