GENERAL: ALF: Allied Farmers Decision Made to Protect Shareholder Value

23 Aug 2010 8:30 am

ALF 23/08/2010 GENERAL

REL: 0830 HRS Allied Farmers Limited

GENERAL: ALF: Allied Farmers Decision Made to Protect Shareholder Value

August 20, 2010

Allied Farmers Decision Made to Protect Shareholder Value

Allied Farmers confirmed today that the Trustee's requirement for significant additional liquidity for its subsidiary Allied Nationwide Finance had resulted in its decision to not provide it with additional support. This decision was regrettable, as it is one of the key factors behind the Trustee's decision to place Allied Nationwide Finance into receivership.

The fact that Allied Nationwide Finance is going into receivership should not provide any credence to the alleged breach, but is the direct result of withdrawing the debenture prospectus, as the board of Allied Nationwide Finance was required to do.

Allied Farmers Managing Director, Mr Rob Alloway said Allied Nationwide Finance had been significantly affected by the withdrawal of its prospectus following the allegation of a breach of its Trust Deed received by the company on 6 August 2010. This alleged breach, which the Allied Nationwide Finance board and management continue to dispute, had a significant impact on the company's ability to manage liquidity and capital over the coming months. Allied Nationwide Finance continued to require funding from Allied Farmers on a scale that it could not justify in the interests of its shareholders.

"As a result of the Trustee's actions Allied Farmers has been asked to support its finance subsidiary with levels of funding that we cannot sustain. " he said.

"We believe the assets of Allied Farmers, including those acquired in the Hanover transaction, are best utilised for the benefit of our shareholders, most investors in Allied Nationwide Finance would have their principal and interest covered by the existing Crown Retail Deposit Guarantee Scheme."

"That process may take several weeks to work through but in the meantime it is business as usual for Allied Farmers as we continue to work on creating value for our shareholders."

Mr Alloway said the company was in constructive discussions with the underwriter involved in Allied Farmers $19.3 million capital raising which was put on hold when the Allied Nationwide Finance prospectus was withdrawn 14 days ago and will make an announcement when it has further information available.

Finally, it is with regret that the Board announces the resignation of Mr John Loughlin as Chairman of Allied Farmers. John joined the board in 2004 and also chaired the board of Allied Nationwide Finance. He has worked extremely hard throughout what has been a very difficult period for the company. The company expects to announce a replacement Chairman shortly.

Media Inquiries to: Alan McDonald or Malcolm Boyle Star Public Relations 09 912 7827 or 0212 813 004 (Alan) 021 922 022 (Malcolm) End CA:00198654 For:ALF Type:GENERAL Time:2010-08-23:08:30:16

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