26 August 2010

New CBA Loan Agreement

Balmain Trilogy (BT) has struck a deal with the CBA that will allow redemptions to start flowing to Pacific First Mortgage Fund unitholders in October in accordance with the New Strategy.

The loan agreement with CBA replaces the existing facility to the Fund. The new loan has been extended for two years to 31 August 2012, and will be moved from CBA's "intensive care" loan management unit to its mainstream banking operations. This now removes the last hurdle to restarting the redemption program that will begin with a $35m redemption in October and a total targeted return to unitholders of $295 million before October 2012.

Although the facility is subject to documentation, an agreement between BT and the CBA regarding the essential terms of the loan was finalised on 25 August 2010. The essential terms of the facility were reached following BT performance to reduce the Funds debt facility over the last year from more than $90 million to $30 million. No further debt reductions from the $30 million will be required until the debt exceeds 10% of the gross assets of the Fund which means that that the bulk of the Fund's current liquidity of $42m can be used for redemptions immediately.