Shares of Allied (ALD) Slammed 40% on Asset Coverage Ratio and Possible Dividend Cut

January 28, 2009 11:05 AM EST

Shares of Allied Capital (NYSE: ALD) are getting absolutely smashed today on reports that the company has re-opened discussions with the lenders under its revolving credit facility and the holders of its outstanding private notes. The stock is currently down 43% to $2.05.

According to a press release issued by Allied this morning, the company believes its asset coverage ratio will be less than the 200% that is required under the revolving credit facility and the private notes. Allied said it is now seeking relief under the relevant terms of both the credit facility and the private notes.

If Allied cannot sustain a 200% asset coverage ratio, at least, a default would occur. Further, failing to meet the 200% requirement would also result in Allied not being allowed to pay dividends or other distributions to its shareholders.

Notably, Allied's current dividend is $0.65 per quarter, meaning the company is paying out $2.60 annually per share. With shares trading just over $2 today, the dividend is yielding more than 125%. Yikes.

Related Categories

Corporate News
Dividends
Momentum Movers

Stocks Mentioned

Related Entities

• Dividend

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?