Enter multiple symbols separated by commas

RAMS Extends Note Refinancing, Shares Plunge

Australian mortgage lender RAMS Home Loans Group said on Thursday it had extended the refinancing period for A$6.17 billion (US$5.1 billion) in maturing notes, slicing its share value in half.

Due to a lack of market liquidity, caused by the fallout from the U.S. subprime mortgage mess, RAMS was unable to roll over the maturing notes, the group said in a statement.

RAMS shares tumbled over 55% after the announcement to a low of A$0.60. It sold shares at A$2.50 each last month in an initial public offer raising A$700 million.

The stock was hit earlier in the week after RAMS said increased costs of funding could have a material negative impact on its earnings. It reiterated that on Thursday.

"The full extent of that effect will be only known when refinancing has been completed, the result of which will depend on market conditions at that time," RAMS said in a statement on Thursday.

RAMS now has 180 days to refinance the loans, known as XCP loans (extendible commercial paper), for which period the interest rates payable have been fixed at LIBOR plus 25 basis points.

"The company is taking active steps to refinance the programs," RAMS said.

The total value of XCP loans in the United States totaled US$139 billion, according to RAMS, meaning RAMS accounted for about 4% of the total XCP loans.

XCP loans offer the issuer the facility to extend the maturity of the note at a step up in pricing, rather than refinancing at maturity.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Why women cheat?

    Is cheating bad? Why do women cheat? The founder and CEO of affair website Ashley Madison tells all, including why he has his eye on China.

  • American Pharoah

    As American Pharoah chases the Triple Crown at the Preakness this Saturday, his earning potential can only go up.

  • Banking on your brand: Mika Brezezinski

    Mika Brezezinski, "Morning Joe" co-host, talks about giving women, entrepreneurs and millennials the tools to live and work to their full potential.

U.S. Video

  • Cramer: Here's a sign the market could rally

    Wall Street's been soaking in red, but "Mad Money" host Jim Cramer has one signal to watch for that could point to another run.

  • Burger war maneuvers

    Cramer looks at the number of company's selling burgers and tries to determine the quality names, as well as those to avoid.

  • Cramer: What's driving defense?

    Cramer says that even though President Obama has made it clear the US can no longer be the world's policeman, the country can become the world's arms dealer. Profiting from defense spending.