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Allied Farmers wins $6 mill in court battle

Monday 14th June 2010

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Allied Farmers has won more than $6 million in a dispute involving luxury condominiums in California’s Beverley Hills.

The good news was tempered by the company flagging more write-downs for its finance unit.  The finance company and rural services provider was granted permission to make an interim distribution of $6 million plus interest from cash held in trust by the receiver of Mark Cooper’s Pacific Northstar Property Group. Allied expects the ruling will make it easier for it to claw back cash when more condos are sold, and the money held in trust increases by a forecast range of between $11.5 million and $13.5 million.  

Hanover provided more than $20 million to finance Cooper’s Reeves Maison development, and had tried to recover its money after the property market collapsed in the US.

Pacific Northstar filed for a Chapter 11 bankruptcy in California after Hanover appointed a receiver, and has disputed the nature of Hanover’s involvement, claiming it was an equity agreement rather than debt. Hanover kept the legal liability of the court action as part of its sale agreement with Allied.  

Still, the news wasn’t all good, with managing director Rob Alloway saying the company’s finance subsidiary, Allied Nationwide Finance, will need more write-downs in its carrying value after “recent asset impairments, followed by a credit rating downgrade, and issues surrounding the finance sector in general.”  

Last week, Allied announced it secured a conditional buyer for the second stage of its Five Mile property development in Queenstown, that will bring in more than $23.2 million valuation as at December 31. Shares of Allied were unchanged at 5 cents and have fallen 56% this year.

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