Engineering and infrastructure group Downer EDI
(ASX:DOW) says the $357 million funding facility needed to complete the Waratah Train carriages project is not at risk despite news that one of its loan guarantors may default.
Downer’s 49% owned carriage manufacturing company Reliance Rail has informed Downer that it received a reservation of rights notice from loan guarantor Syncora Guarantee relating to its financial position.
According to a report by the Australian Associated Press, Syncora Guarantee is believed to be materially short of meeting its remediation plan as ordered by the New York Insurance Department in June.
Under the terms of Reliance Rails bank debt facility, default by the financial guarantors would give the banks a right to terminate any undrawn commitments, including the $357 million.
For the 2009 financial year Downer EDI reported profit of $189.38 million.
