1 Sep 2008

Deal in the works for Strategic Finance

12:26 pm on 1 September 2008

The Australian owner of Strategic Finance has reached a tentative deal to sell the ailing finance company.

Strategic Finance is controlled by Allco HIT. It will be bought by Clarence Investments, which is made up of Strategic's previous owners and current senior management, and British-owned bank, BOS International.

Strategic Finance lost $15.7 million in the year to June and has stopped 15,000 investors from withdrawing their $325 million in funds.

However, the deal is complex and has a number of hurdles to overcome, including ontaining approval from its Trustee and investors to restructure its capital base.

Chief executive Kerry Finnigan says he hopes to complete the deal by late October.

Allco will lose heavily under the deal, with Clarence Investments, which takes an 80% stake, paying them $25 million in cash plus Allco shares.

Clarence will inject $15 million in new funds into Strategic Finance.

BOS International will take a 20% stake and increase the funding available to Strategic from 100 million to 150 million dollars, which gives it the ability to lift its holding to just under half.

Strategic Finance will also acquire loans it shared with Allco that have a face value of about $67.3 million, for $50 million, of which $10 million will be deferred for two years.