High-flying finance giant Allco Finance Group has finally collapsed under the weight of $1.1 billon in debt.
High-flying finance giant Allco Finance Group has finally collapsed under the weight of $1.1 billon in debt.
Allco’s banking syndicate – led by Commonwealth Bank, which is owed $500 million – finally gave up attempts to rescue the company last night and have appointed insolvency firm Ferrier Hodgson to act as receivers for the group.
The receivers will now attempt to break the company up and sell its assets, which include an aircraft leasing business, shipping assets and a large number of real estate and financial services assets, such as mortgage funder Mobius.
The speed with which Allco has fallen from grace is spectacular. At the top of the bull market in 2006, the company was worth a staggering $5 billion and founders and major shareholders David Coe and John Kinghorn were market darlings.
In December 2006, Allco announced it would invest $300 million in the private equity bid for Qantas. About eight months later, the company posted a profit for 2006-07 of $211.7 million.
Then the credit crunch hit. In the first weeks of 2008, Allco’s shares dived, the banks were forced to review the company’s loans and Allco executives were forced to dump large parcels of shares as a result of margin loans. In March, David Coe stepped down from the company’s board, although John Kinghorn has spent $70 million buying more Allco shares this year.
The carve up of Allco’s assets is likely to attract plenty of interest. The Liberman family – which is valued at around $2.2 billion – is said to be very keen to have a look at Allco’s aircraft leasing business.
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