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More strife for Allied Farmers as HSBC pulls Matarangi Beach credit line

Friday 12th November 2010 2 Comments

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Allied Farmers, which took on the Hanover and United loan books in a failed bid to become a major lender, faces losing another $7 million after HSBC pulled the credit line on one of the firm's subsidiaries.  

The Hong Kong-based lender called its $19 million loan facility to Matarangi Beach Estates after Allied refused to put up the same guarantee as the previous owners, Eric Watson and Mark Hotchin, who had poured the vehicle into Hanover to try to keep it afloat.

HSBC will probably try to sell the asset, which was valued at $26 million when Watson and Hotchin poured it into Hanover, and Allied's statement said the firm isn't sure how much it will have to write down.

"We haven't achieved the property sales we have needed with this asset and a recent campaign to sell the entire development was not successful," managing director Rob Alloway said in a statement. "Among the issues we have faced with it is that HSBC's consent to the change of ownership of Matarangi Beach Estates was still outstanding because it was seeking replacement shareholder guarantees while we were not prepared to put the group's wider assets at risk."

Allied struggled to clear $17 million of debt from Westpac through much of this year, and only managed to repay the bank in September after it sold land in Queenstown.

The firm wrote down the value of the Hanover loan book by more than three-quarters from the $396 million initially estimated in the ambitious debt-for-equity swap last year.

It booked a loss of $77.6 million in the year ended June 30 after taking a $40 million hit on the failure of its finance unit.

The shares were unchanged at 2.3 cents.

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Comments from our readers

On 12 November 2010 at 11:20 pm Wayne said:
Hotchin & Watson conned us Hanover Investors once again & so got off the hook. How dumb was that? Now Allied are picking what remains to pay off their own bad debts. So really does any of this make a jot of difference either way for us dumb Hanover Investors?
On 13 November 2010 at 4:02 pm mark said:
Wayne Your comments sum it up! Allied are paying their depts with your funds! Where are the commerce commision in all this! they are supposed to protect us! this has not Just been Bad Busines Practice! this has been a case Robbing peter to Pay Paul!
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