Queensland cotton giant Cubbie Station has reportedly breached its banking covenants and is facing its third successive year of heavy losses due to the drought.
According to the Australian Financial Review, the main bankers to the Cubbie Group, the National Australia Bank and Suncorp, have demanded extra funds to be injected to shore up the balance sheet.
AFR reports that the Cubbie Group has been given until the end of the year to fix the situation.
The company posted a $26 million loss in 2005/06, a $19.3m loss in 2006/07, and is likely to post another in 2007/08.
AFR reports that the banks extended Cubbie an additional $29m in a facility that expired in November 2007, and have since renegotiated a further facility at rates substantially above the market.
"I think it would be fair to say the banks have been pretty tough with us," Cubbie Group chairman Keith de Lacy told the AFR.
As such the group has been seeking private investment support to ensure its survival beyond the December deadline set by the banks.
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