Allied Farmers to buy Hanover, United assets
Allied Farmers agrees to buy Hanover, United assets for $400 mln in stock
Nov. 18 (BusinessWire) - Allied Farmers agreed to buy the financial assets of Hanover Finance and United Finance in an all-stock a deal worth about $400 million. Allied’s shares jumped 6.1% to 35 cents when they resumed trading after being halted for the announcement.
The statement comes after Hanover disclosed a $102 million annual loss and confirmed it is unlikely to be able to repay all the money owed to investors who agreed to a moratorium on payments last year. The alternative to the Allied deal may have been receivership.
Under the proposal, the performing assets of Hanover and its United unit will be transferred to Allied Nationwide Finance, bolstering the size of its balance sheet and improving capital adequacy, Allied said in a statement. A new subsidiary of Allied Farmers will be created to hold and manage “difficult assets,” it said.
Initially the new unit will be lead by Rob Alloway, Allied Farmers’ managing director.
“Given the uncertain nature of these assets, Allied Farmers has been careful to ensure the fairness of the transaction to both our new and existing shareholders,” Allied said. “For existing shareholders, the transaction includes an adjustment mechanism which will realign relative shareholding as at June 2011 if the expected recoveries from the acquired assets do not meet expectations.”
It said asset realisations after the transaction have the potential to flow significant cash into Allied Farmers, strengthening the company’s position medium term.
The deal needs approval from Allied’s shareholders and from investors in Hanover and United.
Allied plans to hold a special meeting to vote on the proposal in early December.