Allied Capital Shares Rise On Debt Restructuring

NEW YORK (AP) — Shares of Allied Capital Corp., which provides financing for buyouts, advanced Wednesday after the firm announced a private debt restructuring.

The firm's stock rose 9 cents, or 3.1 percent, to $3.03.

The debt restructuring announced Tuesday alters Allied Capital's covenants, providing it with more financial flexibility. However, Fox-Pitt analyst Matt Howlett noted the restructuring comes with significant costs, including about $170 million in fees.

Citing those costs, Howlett lowered his earnings estimate for Allied Capital. The estimate for 2009 was dropped to 43 cents per share and to 38 cents per share for 2010. The forecast for both years was previously 48 cents per share.

Despite the high cost of the restructuring, Howlett noted that Allied has an attractive amortization schedule and low probability of re-default.

Howlett maintained his "In Line" rating.