This morning, Allco Commercial REIT requested for a trading halt. This comes in the light of recent developments in the listed entity.
- 19th March 2008 – Resignation of 3 non-executive directors linked to the parent company, Allco Finance Group, and appointment of 1 new executive director. The reason provided by the company is that the board of directors have decided to have a majority of independent directors “in the interest of good corporate governance”.
- 18th March 2008 – Downgrade of Allco REIT’s corporate family credit rating by Moody from Ba1 to Ba2. This followed a previous downgrade on 31st Jan 2008.
- An attempt made last week by Allco to prevent or delay the Moody downgrade via a court injunction. A downgrade could hurt a $620 million financing deal sought by the company which is needed to repay some short term debts.
- 9th March 2008 – Announcement of strategic portfolio focus. According to the manager, Allco REIT is trading at a sustantial discount to its net asset value and the manager is evaluating ways to close this gap. This includes the possibility of divesting their Australian assets.
The trading of the shares is currently suspended pending a further announcement from Allco.
The timing of the resignation of the executive directors could mean that there will be sort of restructuring happening.
The parent company of Allco REIT, Allco Finance Group is not in very good financial shape. Since this news one month ago, their share price has dropped further by 90%. Allco Finance owns Rubicon Holdings, the manager of Rubicon Japan Trust. The trust said on Tuesday it would not be able to meet an expected A$30 million ($28 million) margin call due on Wednesday.
Allco Finance had also announced in late February that it will be disposing of non-core assets to raise funds. A divestment of Allco REIT might be one of those.