Allied Nationwide reaches out to parent as provisions mount
Embattled NZX-listed company Allied Farmers has provided extra capital to cover further losses on impaired loans at its subsidiary Allied Nationwide Finance.
In a market update released to the market this afternoon, Allied Farmers said it had provided an immediate increase in an existing credit support facility from $5 million to $10 million for ANF.
The increase follows a review of ANF’s loan provisioning prior to the release of its June 30 financial statements.
The review, subject to auditing, found ANF was likely to recognise total loan provisions of approximately $10.7 million for the second half.
ANF recently got a BB- rating from Standard & Poor’s and is therefore not eligible for the extended government retail deposit guarantee.
The company contributed an unaudited net loss after tax of $1.21 million for the six months to December.
ANF was expected to house some of the better performing loans and assets that Allied Farmers took over from the failed Hanover group of finance companies.
The worst were transferred to Allied Farmers Investments, a new company formed after the reverse takeover deal last December.
Last week Allied Farmers said the value of the Hanover acquired assets was now worth $124 million, compared to the $396 million value put on the assets when shareholders voted.
According to ANF’s most recent prospectus the finance company is experiencing 53% reinvestment rates, however that percentage is likely to fall once the existing deposit guarantee runs out in October.
The terms of the increase in the facility provided by Allied Farmers to ANF are subject to final approvals, which are in the process of being obtained, the company said in a statement.
[EDIT] NBR understands ANF has full recourse against Allied Farmers Rural under ongoing factoring arrangements as part of the sale of the rural business on June 30, 2009.
As at December 2009, the value of the debtors factored was $20.9 million.