Tuesday 5th March 2013
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Allied Farmers has kept itself alive for now by selling a series of toxic loans for as much as $600,000, after facing a call on debt that had to be satisfied yesterday.
The Hawera-based firm sold various loan assets with zero book value to a confidential third party for an immediate payment of $100,000 and up to a further $500,000, it said in a statement. The top-ups depend on outcomes that are still unknown, and the net proceeds will be used to reduce debt.
Allied was in talks with various parties yesterday, including secured lender Crown Asset Management, to find an acceptable repayment of a $540,000 loan including interest, secured over a $3.75 million loan asset that it hasn't been able to realise.
If Allied couldn't come up with an acceptable deal, it faced liquidation.
The call on the loan was made last month, and was followed by the Inland Revenue Department making a statutory demand for $3.7 million in unpaid taxes.
Allied is trying to rebuild itself after its disastrous acquisition of financial assets from Hanover and United Finance for $394 million in 2009. It has ring-fenced what's left of the assets in its Allied Farmers Investments unit, which had assets of $25.7 million, according to its first-half accounts.
The shares plunged by 21 percent, or 0.4 of a cent, to 1.5 cents today, valuing the firm at just $1.4 million.
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