Gapes to appeal Allied Farmers judgement, angering Alloway

April 1 (BusinessDesk) – Allied Farmers Ltd. says property developer Tony Gapes is to appeal a summary judgement over a $764,000 defaulted loan on a property in Newmarket, Auckland.

Earlier this month Allied’s Allied Farmers Investments unit won judgement against Fenton Projects as borrower and Gapes as guarantor over the loan made in 2007. It was secured by a second mortgage over a property in Carlton Gore Rd. Of the total, $600,000 is personally guaranteed by Gapes, according to Allied’s statement today.

“It is unbelievable that Mr Gapes continues to go to great lengths to frustrate and delay the payment of a debt which he clearly owes,” Allied managing director Rob Alloway said in the statement. “A Court has agreed with our view that the debt is valid and past due, and Mr Gapes’ appeal of the decision is nothing more than an attempt to delay the inevitable.”

The loan related to a joint venture with Hanover Property Group, owned by Eric Watson and Mark Hotchin, to develop the Lion Breweries site in Newmarket. As part of the deal, Hanover Property lent Fenton $1.16 million, which was later written down to $600,000 and switched to Hanover Finance.

Allied’s business with Gapes won’t be finished when the case is resolved. One of his companies, Queenstown Gateway Trustee, owes $3.3 million under a loan originally made by Hanover Finance to allow Gapes’ firm to acquire stage one of the Five Mile development in Queenstown.

Alloway said the transaction was one of the factors in Allied’s decision to withhold its final $5 million payment when it bought the loan books of Hanover and United Finance.

The loan isn’t due for repayment until November 2012 but Alloway says the security for the loan is “inadequate” and the same security had been provided to FAI Money, a firm owned by Hotchin and Watson.

Alloway said Gapes is understood to be developing the Queenstown site, including a supermarket for Progressive Enterprises.

Shares of Allied Farmers sank 10% to 0.9 cent, valuing the company at $20.4 million. The firm acquired the Hanover and United loan books for $396 million in a disastrous effort to expand as a finance company, only to have to slash back the value of the loans once they had been properly assessed.

(BusinessDesk)

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