Wild ride for Allied Farmers shareholders not over as stock drops below post-consolidation value

Wednesday 16th November 2011 1 Comment

Shares of Allied Farmers, the finance company now controlled by former note holders, shed 41 percent of their theoretical value when they resumed trading after converting the debt to equity and undertaking a one-for-100 consolidation.

The conversion of capital notes and an issue of ‘price adjustment rights’ pushed total shares to 9.1 billion. That shrank to 90.8 million shares after the consolidation with a paper value of 20 cents a share, up from the 0.2 cent issue price.

The stock, which was halted for the changes, fell 41 percent to 11.9 cents when they resumed trading on the NZX today, valuing the company at $10.8 million. The volume was small, at just 5,447 shares traded, according to Reuters.

The changes to the company’s capital structure also sees control of the firm shift to the former note holders, who had held securities valued at twice the market value of the shares before the debt was converted.

Previously, the share register was dominated by former investors in Hanover Finance and United Finance, who were issued stock in Allied as part of the company’s disastrous acquisition of those loan books.

The loans were valued at $396 million when Allied Farmers acquired them at the end of 2009. Since then, the company had written down about three-quarters of their value. Meantime, the company’s biggest unit, Allied Nationwide, was put in receivership.

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

On 17 November 2011 at 9:54 am Ivan said:

The bosses of this company are pure scum.