AFTER failing in a legal bid to avoid a credit rating downgrade, Allco Commercial Real Estate Investment Trust (Reit) has received some good news.
The Reit has won in-principle approval for the extension of the maturity date for $550 million of debt by 17 months.The due date of the debt will now be Dec 31, 2009, instead of July 31, this year, said the Reit manager Allco (Singapore) yesterday.
The Reit manager said in a statement that it is currently reviewing the terms and conditions of the extension and will execute binding documentation as soon as practicable.
Global ratings agency Moody’s had on Tuesday downgraded Allco Reit’s rating to Ba2 from Ba1.
It also said that further downgrades were possible. These ratings gauge a company’s credit standing.
A Ba-rated company is judged to have speculative elements and be subject to substantial credit risk, according to Moody’s definitions.
Allco Reit has been in the news lately as it had taken unprecedented legal steps to try to prevent Moody’s from downgrading its rating for the second time in two months.
The ratings agency had downgraded Allco by one notch from Baa3 to Ba1 on Jan 31.
Allco Reit wanted to avoid the second revision as a lower rating could complicate its efforts to raise funds.
This came amid a global credit crunch that has made it harder for companies to secure funding.
Court documents obtained by The Straits Times on Wednesday showed that Allco had felt that a $620 million bank refinancing deal could be jeopardised by a downgrade.
In its statement yesterday, Allco Reit also said that it will repay in full $70 million in debt due to mature on Nov 22, with the proceeds of its sale of the Allco Wholesale Property Fund.
The properties that Allco Reit owns include China Square Central and 55 Market Street in Singapore.
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