BUSINESSDESK: Allied Farmers faces default on a repayment after a lender called in a $500,000 loan just hours after the company lodged annual accounts with the NZX in which the auditor, PwC, refused to give any opinion on their validity.
The Hawera-based company says it has asked for more time to repay the loan, which was scheduled to be repaid from an asset sale in November.
As at June 30, Allied Farmers had some $2.1 million in cash and equivalents and carried bank debt of $1.8 million and borrowings from other financial institutions of $2.4 million.
These were attached to property assets it acquired in its disastrous 2009 acquisition of the assets of the failed Hanover and United finance companies. It also owes $17 million to its failed finance unit, Allied Nationwide Finance.
"Allied has requested an extension of time from the lender to coincide with the realisation of the underlying asset. This seems a sensible solution for both the lender and borrower," chairman Garry Bluett says.
"In the event an extension is not granted that would result in an enforceable event of default under ALF's secured loan facility."
The call comes the same day Allied Farmers' auditor PwC gave a "disclaimer of opinion" on the company's annual report, saying there was insufficient evidence the group will generate enough cash from asset sales, reach agreement with some of its creditors, retain the support of its secured lender and find new funding.
The company narrowed its full-year loss to $14.1 million in the 12 months ended June 30 from $40.98 million a year earlier, as it wrote down the value of the Hanover and United loan books even further.
The Hanover and United deal was valued at $394 million when the assets were acquired in a debt-for-equity swap at the end of 2009.
In the latest accounts, the assets of Allied Farmers' Asset Management Services unit, where the former finance company assets are held, were valued at $22.4 million, down from about $37 million a year earlier.
The shares were unchanged at 2.9 cents apiece in trading today, valuing the firm at just $2.6 million. It has 90.8 million shares on issue following a massive share consolidation after stock on issue billowed to some 2 billion in the wake of the debt-for-equity deal.