Survival of Frasers Commercial at stake: Auditors

Posted by luxuryasiahome on April 4, 2009
FRASERS Commercial Trust (FCOT) is in big trouble over its hefty borrowings.
Its survival as a going concern will depend on whether it can refinance debts totalling $550 million, the bulk of which is due in four months.
This was the warning from external auditors KPMG, accompanying the trust’s annual report for the year ended Dec 31, 2008.
In its report, KPMG noted that the current liabilities of the group and the trust exceeded the current assets by $597 million and $623 million, respectively.
‘This arose principally due to loan notes issued by the group and the trust totalling $550 million, of which $400 million matures on July 31, 2009, while the remaining $150 million matures on Dec 31, 2009.’
The trust manager is currently negotiating with financial institutions to refinance the entire $550 million.
‘These conditions indicate the existence of a material uncertainty which may cast significant doubt on the group’s and trust’s ability to continue as a going concern,’ KPMG noted.
Although its situation is dire, analysts do not believe FCOT will go under as it is likely to be supported by parent Fraser & Neave (F&N).
In November last year, F&N loaned FCOT $70 million to repay loan notes issued to Australia’s Commonwealth Bank.
To alleviate its debt burden, FCOT, formerly known as Allco Commercial Reit, will have to shed some of its assets.
It had earlier said it might sell assets in Japan and Australia worth over $98 million as it restructures its portfolio following a strategic review.
FCOT units yesterday rose 1.5 cents or 10.3 per cent to 16 cents, riding on a broad stock market rally.
Source : Straits Times - 4 Apr 2009