Allied Farmers narrows loss; Hanover millstone remains

Allied Farmers narrows loss; Hanover assets millstone remains

By Paul McBeth

Feb. 29 (BusinessDesk) – Allied Farmers, which unsuccessfully tried to transform itself into a major lender, narrowed its first-half loss as it continues to eke out value from the remains of the Hanover and United Finance assets it bought in 2009.

The Hawera-based company made a loss of $9 million in the six months ended Dec. 31, less than half the loss of $20.6 million a year earlier, it said in a statement. Revenue plunged to $9.5 million from $28.6 million a year earlier, and the company took another impairment on the ex-Hanover assets of $3.6 million.

The unit holding the Hanover assets “continued to make losses as several assets were sold by the first mortgagee resulting in further significant write-downs,” the company said. “The larger part of the asset base is now the property assets, including 81 sections at Jacks Point in Queenstown for which there is steady enquiry.”

The Hanover loan book and property assets has been a millstone around Allied’s neck since it bought them in an audacious debt-for-equity swap at the end of 2009 only to write off the majority of the $394 million transaction value and shut down its own finance unit, Allied Nationwide Finance.

Allied issued more than 1 billion shares at 20.69 cents apiece to enact the deal, which pitched a best-case scenario of returning 70 cents in the dollar to Hanover investors. That meant they controlled about 97 percent of the company, which had just 37.7 million shares on issue before the merger.

Since then, the company issued more shares to pre-deal investors and swapped listed capital notes for equity, before launching a 1-for-100 consolidation.

The shares fell 4.9 percent to 3.9 cents in trading today, valuing the company at just $3.5 million.

As at Dec. 31, Allied had net loans and advances of $10.1 million, after taking a provision for $38.5 million on their face value.

Group borrowings fell to $19 million as it continued to repay debt, and converted $6.1 million of listed capital notes to equity last November.

Allied is more upbeat about its rural division, saying the coming six months is promising, and its livestock business is on track for a good second half.

(BusinessDesk)

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