22 Oct 2009

Breach of banking covenants by Allied Farmers

12:29 pm on 22 October 2009

Allied Farmers breached its banking covenants in the September quarter, due to tough trading conditions.

Following a loss of $33 million last financial year, the rural services company says it is undergoing a strategic review, in a bid to improve its performance.

It is undergoing an extensive review of its structure, market presence and operations.

Chairman John Loughlin was unavailable for comment on Thursday, but in a note to the sharemarket he said the company breached its banking covenants in the September quarter due to tough trading conditions.

Westpac has since waived the breach and promised to continue to provide banking support.

The company is in discussions with number of parties, with a view to achieving consolidation. It also says it's also aware of opportunities in the current environment for capital raising and securitisation.

Mr Loughlin said farmers are still taking a cautious approach to spending and it will take it will take some time before the increased Fonterra payout filters into the wider rural economy.

The news knocked 1 cent off shares in Allied Farmers, which are currently trading at 27 cents. This is down from $1.08 a year ago.