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Allco Finance collapses, leaving CBA and Westpac holding debt

Allco Finance collapses, leaving CBA and Westpac holding debt
Australian investment banking and funds management group Allco Finance announced late last night its bankers had called in receivers and administrators after its banks failed to agree on restructuring almost A$700 million of debt. Commonwealth Bank of Australia (CBA) and Westpac are reported by to be owed "low hundreds of millions" each by Allco. Separately, Australian newspapers reported that heavily indebted childcare group ABC Learning had also called in administrators, leaving CBA exposed through the underwriting of some of a A$450 million note issue. CBA owns ASB in New Zealand, which yesterday was the first major New Zealand bank to be approved as a guaranteed deposit taker. "The Directors of Allco Finance Group today announced the appointment of Tony McGrath and Joseph Hayes of McGrathNicol as the Voluntary Administrators of Allco and certain of its subsidiaries," Allco said in the brief statement to the stock exchange late last night. "The action was taken following the Directors careful review of the company's future. Subsequent to the appointment of administrators to Allco, the company's banking syndicate appointed Steve Sherman and Peter Gothard of Ferrier Hodgson as receivers of the companies." The list did not include Allco HIT, the listed funds management group controlled by Allco Finance. Allco HIT still owns Strategic Finance, which is also battling for its survival. The collapse of Allco Finance will further complicate the sale of Strategic and add extra pressure to Australia's main banks as they work to raise capital to further bolster their own balance sheets.  

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