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allco enters voluntary administration

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    Allco becomes latest victim of the credit crisis as it enters voluntary administration
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    Allco becomes latest victim of the credit crisis as it enters voluntary administration
     8:07 PM

    The financially troubled and debt-laden Allco Finance Group says it has appointed Tony McGrath and Joseph Hayes of McGrathMcNicol as its voluntary administrators.

    Allco said in a statement the action was taken following a "careful review" of the company's future by its directors

    "Subsequent to the appointment of the administrators to Allco, the company's banking syndicate appointed Steve Sherman and Peter Gothard of Ferrier Hodgson as receivers of the company," the company said.

    Trading in Allco's ordinary shares as well as those in Allco notes will now be suspended.

    Allco's shares were placed in a trading halt on Monday while it continued last-minute talks with its bankers, led by Commonwealth Bank of Australia, about extending the troubled group's debt repayment schedule.

    Allco last traded at 14 cents. The trading halt was to last no longer than Wednesday.

    Allco has now become one of the highest profile victims of the credit crunch after talks with its syndicate of bankers broke down over $667 million of senior debt.

    Two weeks ago Allco, whose share price has fallen from a high of $10.46 in August 2007, warned that it would have trouble extending its debt repayment schedule because of the difficulty in selling assets due to the global credit crunch and volatility in world financial markets.

    Allco posted a $1.73 billion loss for fiscal 2008 - one of the Australia's largest corporate earnings losses.

    Managing director David Clarke described the company as "fragile" at the time.

    He said it would rely on upcoming asset sales and the favour of large, offshore institutions to repay $1 billion of debt.

    The company has scrapped its investment banking

    business model and is transforming itself into a funds manager.

    Mr Clarke told Allco's annual meeting on

    October 23 that the company "remained fragile" and had commenced talks with its bankers given the "significant risk" it would not meet the November and December 2008 instalments on its senior debt despite continuing to meet interest payments.

    Allco gave the banking syndicate until October 31 to advise on an extension.

    "If the banks do not agree to an extension, the directors need to determine whether the business can continue as a going concern or appoint a voluntary administrator," Allco said in a statement on October 24.

    The fallout from the from the global credit crisis and the subsequent run on the shares of the debt-laden Allco cost its founder David Coe his job as executive chairman earlier this year.
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