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Allied Farmers granted waiver for $1.2M loan for bobby calf business

Wednesday 25th July 2012

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Allied Farmers, the company whose market value was all but wiped out when it acquired the financial assets of Hanover Finance, has been granted a waiver to borrow up to $1.2 million for the operations of its bobby calf venture.

The waiver, granted by NZX Markets Supervision, was required because the loan would exceed 10 percent of Allied's average market capitalisation of about $2.5 million and would have needed approval of shareholders.

The loan, or working capital facility, would be from Garry Bluett and Brian Train, making it a related party transaction as Bluett is chairman of Allied. The bobby calf business is operated by NZ Farmers Livestock, which is 67.7 percent owned by Allied.

The company argued to the regulator that any delay in receiving the funding "could significantly destroy the value of the business and put the business at risk." It needed to make its first draw down on July 20.

Alternative sources of funding weren't realistic because bobby calf/veal products weren't considered as attractive security, the company said.

Allied would pay 12 percent annual interest, monthly in arrears, for the facility, with default interest of 17 percent and a repayment date of Dec. 31

The arrangement was approved on the basis it was done at arm's length with no involvement director of Bluett.

Shares of Allied fell 3.9 percent to 2.5 cents, valuing the company at $2.7 million.

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