BLOOMBERG.COM, JUNE 2008
By Netty Ismail - June 11, 2008 Bloomberg.com
3 Degrees Asset Management Pte, the Singapore-based hedge fund focusing on distressed debt, said it's preparing to scoop up assets in Australia as companies such as Centro Properties Group struggle to refinance loans.
3 Degrees, which oversees an Asian debt fund with $400 million of assets, may buy leveraged buyout loans that trade at a discount, said Jeffrey Tolk, a principal at the firm. The fund is also seeking companies that "took on too much leverage" and are at risk of default, he said.
"There will probably be some defaults in the next year or so on some of those companies, so we're watching for those," said Tolk, who has more than 18 years of structured credit and legal experience, including a stint at Moody's Investors Service as a senior credit officer.
Centro, Allco Finance Group Ltd. and ABC Learning Centres Ltd., all of which expanded overseas with debt, are among the Australian companies that plunged in value because of the global credit crunch. There are "many lesser known names whose debt also trades at a substantial discount,” Tolk said in an interview last week, declining to be more specific.
3 Degrees is focused on Australia, where it expects default rates to increase. Banks such as Australia & New Zealand Banking Group Ltd. are having to set aside additional funds for potential losses as companies struggle to repay their debt.
"With the slowdown and the credit crunch, these companies will have difficulty rolling their funding,'' Tolk said.
"It is a little early in the cycle," Tolk said. "We already have some positions in Australia, and we're looking to add to those for the right opportunities."
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