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Allied Farmers capital notes

By Dan Stratful

Monday 14th November 2011

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Allied Farmers capital notes (ALF010) mature on 15 November 2011 and noteholders will receive shares in ALF as repayment of their principal, not the cash they would have hoped for.

For noteholders, this is the least preferred option, as cash back at maturity would have been preferred. This is the risk that any capital noteholder takes, however receiving shares in a company that is in better financial shape than ALF is not such a bad thing.

ALF itself is not in good financial shape and has reported a tough few years reporting a $41 million loss in the year ending 30 June 2011, a $78 million loss in the year to 30 June 2010 and a $35 million loss in the year ending 30 June 2009.

The losses are mounting up and are unsustainable unless new capital is raised, and ALF’s balance sheet is vulnerable. To make things a little more confusing for noteholders, ALF will undertake a share consolidation this week to reduce the number of shares it has, and its shares are on a trading halt as they will shortly be consolidated on a 100 for 1 basis.

Status: SELL

For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

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