Thursday 6th October 2011 2 Comments
|Text too small?|
Penny-dreadful Allied Farmers has retracted its accusations against Hanover Finance in order to settle a $5million dispute and is preparing to issue 977.3 million new shares to its pre-Hanover merger shareholders.
The rural services company, which failed to transform itself into a major lender, has retracted accusations that Hanover behaved inappropriately when Allied took over the Hanover loan portfolio, which proved to be worth far less than investors had been led to believe.
Allied will also pay legal costs for the Hanover, the former finance company headed by Mark Hotchin. Allied Farmers reported a loss of $41 million in the 12 months ended June, slightly less than the $43 million flagged in August, when it published unaudited results.
As a result of the dwindling value of the Hanover and United Finance loan books, Allied Farmers will issue shares to pre-Hanover merger investors who were protected by a provision in case the loan book’s value deteriorated.
The company will issue 390.6 million shares, which falls within existing listing rules, and ask shareholders at next month’s annual meeting to approve the issue of a further 586.8 million.
On top of that issue, Allied Famers will have to convert $12.6 million of listed bonds into equity after failing to reach agreement with its trustee to consider ways around paying out the debt when it matures in November.
The bonds, which pay a coupon of 9.6%, traded at 47.6 cents in the dollar on the NZDX today.
Auditor PricewaterhouseCoopers, now known as PwC, tagged the report, saying there were inherent uncertainties the company will be able to meet its obligations to pay $20.7 million owed to failed subsidiary Allied Nationwide Finance Ltd.
The shares rose a tenth of a cent to 0.5 cents in trading today, valuing the company at just $10.2 million.
In December 2009, Allied Farmers issued almost 1 billion shares at 20.69 cents apiece in a debt-for-equity swap with Hanover for its loan books, which pitched a best-case scenario of returning 70 cents in the dollar to Hanover investors.
That meant they controlled about 97% of the company, which had just 37.7 million shares on offer before the merger.
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