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Allied Farmers to raise $19.3m

Tuesday 3rd August 2010

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Allied Farmers plans to raise $19.3 million in a placement and rights issue at a 54% discount to repay debt and shore up its finances while continuing the slow process of selling property assets.

The capital raising, which has been underwritten by McDouall Stuart Group for $9 million, includes an institutional placement at 2.5 cents a share to raise $2.25 million and a rights issue to current shareholders on the basis of one new share at 2.5 cents apiece for every three shares held.

Shares of Allied tumbled 26% to 4 cents after the statement and have sunk 51% in the past six months after the firm was forced to slash the value of loans acquired from Hanover Finance and United Finance.

The finance and rural services company last month gained a six-month extension on its loan facility with Westpac, giving it more time to repay debt and restructure its business. It had $21 million outstanding on the facility as at June 30 and had an overdraft facility of $2.5 million that was set to expire on July 1.

“In a market in which demand and finance for property development was flat, realising good value from further asset sales would continue to take time,” chairman John Loughlin said in a statement.

“We continue to seek opportunities for realising value from those assets and we have a number of initiatives planned for our rural services businesses that will differentiate our business and stimulate our market share,” he said.

“It will take time to fully realise that value, attract fresh capital to implement initiatives and reduce debt levels.”

Loughlin urged existing shareholders to take up their rights, to avoid dilution and to support the business.

The rights to the new shares will be renounceable and will be tradable through the NZX. The offer is to open on August 11 and trading in the rights will cease on August 24. The new shares will begin trading on September 6.

Businesswire.co.nz

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