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Allied Farmers puts Hendo's Five Mile development in receivership

Friday 5th March 2010

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Allied Farmers has moved quickly to begin clawing back debt from developer David Henderson, placing his Property Ventures in receivership to recover a $41.5 million loan to the Five Mile Development in Queenstown.

Henderson’s Property Ventures has been placed in the hands of receivers Grant Thornton as guarantor of the loan to Five Mile Holdings, also in receivership.  

Allied also announced the appointment of former Contact Energy chief legal counsel and one-time Kensington Swan partner Ross O’Neill as in-house legal counsel, vowing the move on Property Ventures is “the first of many such actions involving borrowers who have failed to meet their obligations.” 

Allied is smarting from having to write back to $175.5 million the value of assets acquired from Hanover Finance investors, from a gross realisation value of $396 million at the time the deal was announced last year. Shares of Allied fell 3.8% to 7 cents today. 

Allied managing director Rob Alloway said his company is already fully provisioned on the Five Mile debt and the only additional downside for recovery is the legal fees. Property Ventures has more than 30 subsidiaries, including the South of Lichfield precinct in Christchurch. 

“We’re at the top of the snake in many respects,” Alloway told BusinessWire.

“We’re not really concerned whether we get anything out of it or not. Henderson is going to be scrambling around – the parent has had bank accounts frozen this afternoon.” 

Announcing the reduction in the value of the Hanover and United Finance assets since the transaction settled, the company said while it was “confident a number of realisations can be achieved in the medium term, there is uncertainty attached to some positions.” 

The company allocated about 1.9 billion new shares to Hanover and United investors at 20.69 cents apiece, handing them control of the vastly enlarged company. 

The Hanover and United assets are now held in a subsidiary called Allied Farmers Investments, which has already begun litigation against a number of borrowers and called up guarantees. 

Allied Farmers announced further line-up changes today. Paul Macfie, formerly CEO, was named chief of Allied Farmers Rural, while Gary Wong, previous a Line 7/Canterbury of New Zealand executive, was appointed as interim chief financial officer.

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