City Pacific's flagship First Mortgage Fund (FMF) has slashed $60 million of debt owned to its lenders.
The de-leveraging came after one of the fund's largest borrowers repaid a loan following work on a Queensland property project late last week.
"The FMF's remaining debt to the bank will represent a gearing level for the $1 billion fund of less than 14 per cent," a City Pacific statement to the Australian Securities Exchange (ASX) said.
Before the $60 million repayment, City Pacific's FMF owed $180 million to its lenders by July 31, 2008.
The company however gave no indication when investors will be able to redeem their money from the FMF.
FMF investors have had their money unredeemable since March 3, the day when City Pacific stock plunged 49 per cent due to debt concerns and ceased fund redemptions.
On June 5 City Pacific announced it was considering a range of options to allow investors to take their money out of the FMF.
One option was allowing FMF investors to swap their units for City Pacific's shares.
"City Pacific remains focused on preserving the quality of the fund's assets through the effect management of the fund's loan portfolio," City Pacific chief executive Philip Sullivan said.
The fund had continued to pay monthly and quarterly distributions to investors, he added.
