Hanover turns heat on Allied

NZPA

Thursday 10th February 2011 5 Comments

Hanover Finance, the finance company owned by Eric Watson and Mark Hotchin, is campaigning against Allied Farmers, the company it sold its assets to.

Hanover has set up a website and published a letter alleging that Allied Farmers was deflecting attention from its mismanagement by attacking Hanover.

Allied Farmers managing director Rob Alloway countered by saying that Hanover Finance's public relations campaign was a tactic to divert attention.

Hanover Finance froze its assets in 2008, affecting 13,000 investors with $465 million of assets. Investors agreed to a moratorium but were later told payments would not be honoured. They were presented with a debt-for-equity deal in December 2009 in which they got Allied Farmers' shares, which are now trading at 1.9 cents each, and Allied Farmers bought the assets of Hanover Finance and United Finance.

Not long after purchasing the assets, Allied Farmers complained to the Securities Commission and Serious Fraud Office (SFO). The SFO has said it is investigating.

Allied Nationwide Finance -- Allied Farmers' finance company -- has since collapsed and Allied Farmers and Hanover Finance are in dispute over a $5m payment.

Hotchin's high-living lifestyle in exile on the Gold Coast while former Hanover Finance investors suffer has had wide media coverage.

Today, Hanover Finance chairman David Henry and Mr Hotchin published a letter saying they have been alarmed at the erosion of value of the assets under the ownership of Allied Farmers.

"Allied is ignoring the plan they promoted to investors and ourselves in late 2009. It would appear that the financial difficulties facing Allied at that time were a lot worse than presented," Mr Henry and Hotchin said in the letter.

Further, the assets and cash that were to have been made available to Allied Nationwide Finance to assist in improving its balance sheet and future prospects never materialised.

"We are no longer prepared to sit aside and allow this to happen and will actively campaign on behalf of shareholders, including seeking to have Rob Alloway removed from the board of Allied," they said.

Alloway told NZPA his opinion on "what these guys have done to investors" has been well published in the past.

He said his appointment was a matter for the board and shareholders appointed the board.

Comments from our readers

On 10 February 2011 at 5:06 pm Antoni said:

Who to believe? Hotchin and Watson? I doubt it!!!!

On 10 February 2011 at 10:02 pm Ray Minchin said:

Rogues Chasing rogues, sadly I expect there is some truth in the claim from Hanover but with lot who would you believe RJM

On 11 February 2011 at 9:00 am Bob said:

To hear Hotchin criticising Alloway for not looking after Hanover's previous investors is laughable. It appears that after being saved from Hanover by the knight in shining armour from Allied we are now going to be saved from Allied by the white knight from Hanover. Between the two of them I might get enough money back to buy a lotto ticket in the hope of getting my Hanover investment back.

On 11 February 2011 at 1:06 pm Keith Wallace said:

Rogues- yes. I hope the SFO get serious about chasing these guys and lay charges if appropriate. Small shareholders are fed up of people like Hotchin and Watson. Some integrity needs to come back into business ethics.

On 14 February 2011 at 1:29 pm Barry said:

Just like shares, property assets can fall (and) rise in value from day to day, depending on the market for them. So, Hanover pays a high price for assets but the market collapses and the fall in value is considerable. As the world rating agencies said when challenged over their views of Lehman etc., values are just a matter of opinion and so are rarely correct for other than maybe one day. Why business people take book values seriously bewilders me.