RAMS gets boost but $1.25 billion needed by February
Written on January 11, 2008
THE listed shell of non-bank lender RAMS is to get its hands on much-needed funding by issuing $750 million in residential mortgage-backed securities.
However the company must still find another $1.25 billion by February 11.
The RMS Trust UniCredit (1) offer, backed by Italian bank UniCredit, will be sold privately, ratings agency Standard & Poor’s said.
Standard & Poor’s has rated $732.5 million worth of the notes the best possible rating of AAA, with the remaining $17.5 million rated AA.
More than half of the loans backing the securities have low documentation, and 30 per cent are interest-only, S&P said.
The deal does not end RHG Home Loans Group’s finance woes.
Last month the company told the stock exchange it had signed deals to refinance $3.5 billion of $5.5 billion in debt it had previously raised on the US market.
Westpac took on $1.5 billion and another bank believed to be NAB, $2 billion.
Yesterday’s deal soaks up another $750 million, leaving the company four weeks to find a home for the remaining $1.25 billion.
Earlier in the day, RHG told the market it was still to receive the $750 million agreed to last month.
The company has signed documentation on the $750 million loan, but has yet to meet “various conditions precedent, which must be satisfied prior to drawdown”, it told the stock exchange.
The company “continues to work to find funding solutions for the remaining part of its extendable commercial paper program,” it said.
RAMS completed the $140 million sale of its brand name and distribution business to Westpac last week.
The deal leaves the listed vehicle, renamed RHG Home Loans Group, to administer the back RAMS home loan book and service debts.
In August, RAMS became the first Australian victim of the US credit crisis when it revealed it was having difficulty refinancing its US commercial paper.
RAMS scrip listed on the ASX in July at $2.50 free credit reports. Yesterday it closed up 1c, or 3.7 per cent, at 28c.