Sharechat Logo

Allied Farmers stock sinks on covenant breach

Thursday 22nd October 2009

Text too small?

Allied Farmers stock sank, extending its six-month decline to more than 45%, after the rural services and finance group said it breached a lending covenant and said trading conditions are “tough.”

The shares fell 3.6% to 27 cents, valuing the company at $11.3 million. Chairman John Loughlin said the company is embarking on a strategic review of its capital structure, market presence and operations after posting a loss in 2009.

Westpac Banking Corp. has granted a waiver to the company after it breached banking covenants in the September quarter, Loughlin said in a market update today. He didn’t immediately return calls seeking more details.

“We are continuing to experience tough trading conditions, a situation which has been ongoing for a number of months, and we are carefully examining how we can improve operating performance,” he said.

Allied posted a pretax operating loss of $5.7 million in the year to June 30, which swelled to a net loss of $33 million once a $20.5 million reduction in the carrying value of its Allied Nationwide Finance unit and $9.7 million of loan provisioning was included.

At the time of the earnings announcement in August, Loughlin said the company believed it was “nearing or at the bottom of the cycle in both the rural and finance company sectors.”

This month, Allied Farmers said it had gained commitment from an investor to subscribe for $7 million of equity in the group. The funding would provide the company with “headroom” to look at deals that would aid consolidation and restructuring in its main business sectors. It expects to announce details of the equity raising shortly.

The company has been in talks with “a number of entities” in recent months with a view to consolidation using Allied’s status as a listed company.Loughlin said while Fonterra’s announcement of higher milk-fat payments was welcome new, “it is likely to take some time to flow down into the wider rural economy.”

Businesswire.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Allied Farmers may lift loan book value by $276K as IRD lurks with liquidator's axe
Allied Farmers sells Taranaki real estate unit worth 26 percent of group's value
Fire sale of toxic loans keeps Allied Farmers ticking for now
Allied Farmers tries to cobble together loan repayment as liquidation hovers
Lender runs out of patience, seeks $500k loan repayment from Allied Farmers
Crown Asset Management keeps Allied Farmers on life support
Allied Farmers' auditor refuses to give opinion on accounts
Allied Farmers granted waiver for $1.2M loan for bobby calf business
Allied Farmers wears more post-Hanover cost and delay
Allied Farmers lifts provision for loan guarantee to $1.4M