AusGroup defends against "grossly inaccurate" speculation on existing bank facilities

Still has cash to cover guarantees.

AusGroup said speculation that its Existing Bank Facilities have been withdrawn "are grossly inaccurate and misleading."

The Group said that, as previously announced, it has taken significant steps to resolve breaches on lending covenants that have existed since the Group’s announcement on 11 October 2013.

"This had led to the position that all debt is extinguished and we are actively working with the Banks to amend the current lending documents and to ensure the timely release of security under the Existing Bank Facilities. We are grateful for their ongoing support and assistance," it said.

AusGroup assured it continues to have cash over and above that used to back all its guarantees to meet its working capital needs. The finalisation of the new banking arrangements will represent a further injection of working capital into the business.

AusGroup also provided a re-financing update relating to AusGroup’s current club bank facility with Australia & New Zealand Banking Group Limited and HSBC Australia Pty Ltd (together the Banks), which are due to expire in mid-January 2014 (Existing Bank Facilities). In preparation, during November 2013 the Group commenced a planned market led process for participants to provide working capital and contract bonding facilities in early 2014.

"To this end, we have received a good response to our enquiries and have short-listed a number of participants who have provided conditional term sheets. We are in the final stages of undertaking due diligence under those terms sheets and are on track for completion early in the new year," the company said.

"This process will be further assisted by the fact that, as previously announced, we have already fully provided funds for the repayment of the Existing Bank Facilities, including working capital and overdraft, to ensure that any incoming lenders have a clean balance sheet for security when new lending facilities are finalised," it added.

With regards to capital raising, AusGroup said it has been in discussions with a number of potential parties interested in investing in the Group. However, these activities have not been finalised at this stage and discussions and negotiations are ongoing.