Allied Nationwide Finance in breach of trust deed

Allied Nationwide Finance, the unit of NZX-listed Allied Farmers, is in breach of one of its trust deed financial ratios, says Guardian Trust.  

The trustee has given the finance company 14 days to remedy its position, Allied Farmers said in a statement. It has immediately suspended Allied Nationwide’s prospectus.

“Allied Nationwide continues to meet all its financial obligations, including repayment of maturing debentures,” it said. The board and management of Allied don’t agree there is a breach.

Allied Nationwide’s financial statements for the year ended June 30 are currently being audited but in the meantime it has presented financial information to the Trustee “which shows that the relevant trust deed ratio of total liabilities to total tangible assets was and is complied with,” it said.

Allied Nationwide remains covered by the Crown deposit guarantee scheme up until October 12. 

Allied Farmers announced this week that is plans to raise $19.3 million in a placement and rights issue at a 54% discount to repay debt and shore up its finances while continuing the slow process of selling property assets.

The capital raising, which has been underwritten by McDouall Stuart Group for $9 million, includes an institutional placement at 2.5 cents a share to raise $2.25 million and a rights issue to current shareholders on the basis of one new share at 2.5 cents apiece for every three shares held.

Shares of Allied rose 9.8% to 4.5 cents on the NZX. The initially tumbled 26% to 4 cents after the capital-raising statement earlier this week and have fallen more than 50% in the past six months after the firm was forced to slash the value of loans acquired from Hanover Finance and United Finance.

The group last month gained a six-month extension on its loan facility with Westpac, giving it more time to repay debt and restructure its business.

It had $21 million outstanding on the facility as at June 30 and had an overdraft facility of $2.5 million that was set to expire on July 1.

Businesswire.co.nz

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