Two Rubicon Funds In Race To Pay Off Short-term Loans

Sydney Morning Herald

Thursday March 13, 2008

Danny John

TWO of Allco Finance Group's troubled Rubicon real estate operations are attempting to pay down their big portfolio of short-term loans owed to Credit Suisse.

The move follows consecutive margin calls by the investment bank demanding immediate repayment of almost $35 million.

Both Rubicon America Trust and its sister European fund said yesterday that they would be able to scrape together enough cash from available funds and the payment of an outstanding loan to Rubicon Europe Trust to relieve the financial pressure applied by Credit Suisse.

With financiers to every part of the Allco empire scrambling to ensure they will be able to recover the money owed to them, the latest problems to affect the two Rubicon funds occurred in swift succession, with Credit Suisse marking down the value of their individual loan portfolios.

As part of the terms, the funds have been obliged to meet part of the differences in the lower valuations: the American trust was told on Saturday to repay $US17.2 million ($18.5 million) by yesterday - since extended to tomorrow - and the European fund given until next Tuesday to find EUR9.9 million ($16.4 million).

Rubicon Europe initially told the Australian Stock Exchange yesterday that it was not in a position to meet the cash call in full. But it later said a loan repayment of EUR34 million due to take place on March 20 would cover its debt to Credit Suisse - if the bank agreed to wait.

As for the American trust, it reassured investors in a separate statement that it had now had enough money available to meet its margin call.

Like the debt-ridden Allco, the Rubicon funds are engaged in a battle against time to sell offices and commercial premises across the US, Europe and Japan to reduce their huge liabilities.

However, the announcements put further pressure on the funds' respective share prices, with the American trust falling 2.2 cents to 8.3 cents and the European fund 1.5 cents to 12.5 cents.

Gordon Fell, the executive chairman of Allco Finance's real estate business said that while the payments were not yet made he was confident that a "sensible outcome" would be reached with Credit Suisse, including the different settlement dates.

Mr Fell said wider discussions were taking place with the bank - including its US subsidiary Column Financial which made the margin call on the American trust - to avoid further writedowns of the two loan portfolios and a need for Rubicon to make more payments to cover losses.

"Part of the purpose of the negotiations is to change the terms of the facilities and to eliminate further market to market writedowns and margin calls," he said.

© 2008 Sydney Morning Herald

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