Allied Farmers posts $43M loss on more Hanover write-downs
By Paul McBeth
Aug. 29 (BusinessDesk) – Allied Farmers Ltd. posted a full-year loss as it wrote off another $29.7 million from the value of its toxic Hanover and United Finance loans.
The Hawera-based company made a loss of $43 million, or 0.1 cent per share, in the 12 months ended June 30, compared to a loss of $77.6 million, or 1.8 cents, a year earlier. The bulk of the latest loss came from an impairment charge on the former Hanover and United assets that the company took on in a debt-for-equity swap in December 2009.
The value of the remaining Hanover assets and cash realised was $93.6 million, Allied said in a statement. The remaining assets were valued at $33.8 million, with liabilities of $12.2 million.
Adding to Allied’s woes is a dwindling cash flow with just $137,000 as at June 30, with a net annual outflow of $9.9 million as the company kept up with interest repayments.
That comes ahead of Allied’s listed capital notes maturing on Nov. 15, where investors are owed $12.6 million. The bonds, which pay a coupon of 9.6%, last traded on July 6 at 57.84 cents in the dollar.
The directors are figuring out to deal with the repayment, and will have to pay a premium for a 22 day period in July when it breached the terms of its debt-to-equity ratio covenant.
The results are unaudited, and once that process has been complete Allied will issue additional shares to pre-Hanover merger investors who were protected by a provision in case the loan book’s value deteriorated.
The shares are worth just 0.8 of a cent, valuing the company at $16.3 million.
Allied issued almost 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% of the company, which had just 37.7 million shares on offer before the merger.
The collapsed value of the loans sparked a war of words between Allied and former Hanover owners Mark Hotchin and Eric Watson, ultimately ending up up in court, after Allied refused to pay out the final $5 million cash instalment of the deal.
The failure of Allied to transform itself into a major lender also took the scalps of former chairman John Loughlin, who stepped down in August last year, and managing director Rob Alloway.