Allied Farmers [NZX: ALF], which is rebuilding from a disastrous takeover of the Hanover and United Finance loan books, plans to repay $2 million to Crown Asset Management Ltd by selling down its stake in a subsidiary company and issuing bonds, satisfying its debt to the government entity.
The Hawera-based company will sell a tenth of its stake in NZ Farmers Livestock Ltd for $1 million, and issue $1 million of three-year non-listed bonds in its rural subsidiary by Oct. 3, to repay debt owed to the Crown entity set up to handle assets from failed finance companies backed by the government's deposit guarantee. Allied owed $2.65 million to Crown Asset Management as at Dec. 31, according to its first-half report.
NZFL shareholders Stockmans and Agent Company Ltd are buying the shares, exercising pre-emptive rights after Allied Farmers negotiated a sale with a potential buyer.
Holders of Allied Farmers bonds issued last year also agreed to extend their Aug. 29, 2014, maturity for another year.
Allied Farmers avoided liquidation last year, raising $600,000 in a bond issue, almost half of which was bought by interests associated with chairman Garry Bluett, and as series of asset sales helped reduce its debt with Crown Asset Management.
The share sale and extension of the existing bonds were granted waivers from an NZX listing rule which would require shareholder approval.
Allied Farmers is trying to rebuild after the disastrous acquisition of financial assets from Hanover and United Finance for $394 million in 2009. Its asset management unit, which houses the ex-Hanover and United Finance loans, held assets worth $183,000 and liabilities of $1.09 million as at Dec 31.
Shares of Allied Farmers were unchanged at 4.5 cents, valuing the company at $4.75 million.
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