AIB takes hit on €237m loan in Brisbane as toll firm seeks talks
AIB is among a group of banks having to take a major hit on a €237m loan used to fund a major toll road company in Brisbane, Australia.
BNP, HSBC, Westpac, Chinese Banking Corporation and AIB have sold off debt in Rivercity Motorway at less than 50 cents in the dollar, although AIB is believed to have provided one of the smallest portions of the loan.
Hedge funds are believed to have bought the AUS$318m of debt and are hoping to extract value from the assets as Rivercity Motorway enters debt talks.
AIB declined to comment on precisely how much it sold the debt for as part of the consortium.
Other banks could soon follow, including Unicredit, Royal Bank of Scotland and West LB. AIB is not a frequent lender into the Australian market, but it is understood it did some syndicated loan work there, mainly for infrastructure projects, over recent years.
The loan has become less valuable because of fears over the debt levels taken on by the company.
This is due to problems faced by Rivercity Motorway's core project, a tolled tunnel road in Brisbane where traffic is only going through at 1,000 cars an hour.
The company has been facing difficulties meeting its interest bill and may seek a stand-still agreement from lenders, the Australian media is reporting this week.
Rivercity has said it has enough cash to meet interest payments until September this year.
But it has been hoping to sign a stand-still agreement with its bankers that would guarantee it could trade until the completion of an airport link project in mid-2012.