Government-guaranteed Allied Nationwide in receivership
The taxpayer will be called on to foot the bill for any shortfall after Allied Nationwide Finance was put into receivership late this afternoon.
The company – a subsidiary of NZX-listed Allied Farmers, which took over the assets and loans of Eric Watson and Mark Hotchin’s Hanover finance companies, was operating under the Crown retail deposit guarantee scheme.
The company has about $137 million worth of debentures on issue.
Kerryn Downey and Andrew Grenfell of McGrath Nicol were appointed receivers.
In a brief statement, Allied Nationwide said it "expects an acceptable outcome from the receivership on the basis of its current net asset position and level of shareholder funds."
Treasury deputy secretary financial operations Philip Combes said all eligible depositors will get the money they are entitled to under the scheme.
"The Crown stands fully behind its guarantee commitments, and we expect an orderly process of payment to eligible Allied Nationwide Finance depositors," said Mr Combes.
Allied Nationwide missed paying maturing debentures yesterday and said earlier today that it needed more time to remedy breaches of its trust deed ratio.
The breaches had been flagged by its trustee, NZ Guardian Trust (NZGT), which gave Allied Nationwide 14 days to rectify the situation. That deadline expired today.
Allied Nationwide and its parent Allied Farmers had been working hard to maintain sufficient short and medium term liquidity to meet trust deed and regulatory requirements but ultimately failed.
“The notice received from NZGT of the alleged Trust Deed ratio breach and the subsequent withdrawal of ANF’s prospectus had a significant and immediate impact on these initiatives, and the ability of ANF to continue to meet its obligations,” Allied Nationwide said in its statement.
Allied Nationwide directors include Garry Bluett, Philip Luscombe, Paul Macfie, Richard Spiers, Susannah Staley and Allied Farmers chairman John Loughlin - although he announced his resignation this evening from both companies.
Until yesterday, Allied Nationwide said it had continued to meet its obligations, including repayment of maturing debentures.
However, the company said it was unable to gain approvals from Guardian Trust for funding initiatives under consideration by the Allied group, which required third party commitments.
Allied Farmers recently put off a $19 million capital raising plan due to the issues raised by Guardian Trust.
The parent company then said it was considering moving some of the Hanover-acquired loans over to the finance company to try to solve its capital problem.
However, those assets – originally thought to be worth $396 million – are now valued at just $94 million.
It is unclear at this stage what impact the receivership will have on Allied Farmers, whose investors include 16,500 Hanover debenture holders issued more than 2 billion Allied Farmers shares last December at 20.7c each.
Allied Farmers managing director Rob Alloway wasn't available for comment when NBR called.
Meanwhile, Speirs Group Limited, via its wholly owned subsidiary Speirs Investments Limited, holds 2 million perpetual bonds issued by Allied Nationwide Finance Limited (ANFL).
The company has an option to ‘put’ those bonds to Allied Farmers Limited on or about September 30, 2013 at a price of $1 per bond, plus any accrued or unpaid interest.
“Given today’s receivership announcement by ANFL, the directors of Speirs Group Limited advise that, as part of the audit programme currently being completed for the year ended 30 June 2010, they will be considering any group impairment provisioning of the investment in ANFL bonds that may be necessary, " Speirs said.
Signup to free NBR email alerts here
Back to home
Back to top
Print
Email
Share
Delicious
Digg
StumbleUpon
Reddit
Google
Yahoo
Technorati
Scoopit
NBR SERVICES
SUBSCRIPTIONS
Sign up for NBR subscriber content or email alerts
Latest
Comments and questions28
I imagine there are cross default clauses in the Westpac Allied Farmers documentation. It will be interesting to see whether Allied Farmers follows its subsidiary this afternoon.
Perhaps now taxpayers will ask why we needed 'investor confidence' in unsound institutions while the sound ones never lost it. Perhaps now taxpayers will ask if indiscriminate investor confidence in financial institutions is a worthy policy goal.
I want investors to be cautious and prudent, not confident. Investors should be monitoring financial institutions, and not just expecting the government to regulate and backstop financial institutions. I want a financial system that weeds out the unsound institutions promptly, not years later. I want a financial system that can keep on working even when individual institutions fail. What I want doesn't really need a policy to deliver it, it just needs relief from the 'help' of the government and taxpayers.
No doubt about cross gtees. Imagine how different the company looked before the prime finance, nationwide finance, speirs and hanover transactions. Gee the Chairman and MD must be really proud!! I feel for the staff of Allied Farmers and the people who worked for years to save and rebuild this company only to see it crash after poor decision making.
This massive rort of poor gullible Hanover investors will reach its inevitable conclusion when Allied Farmers is also put into receivership in due course. All the professionals involved in that due dilligence of Hanover's "so called" assets should be extremly embarrassed by their incompetent and inept inability to fairly value those assets.
I am sure Eric Watson and Mark Hotchin are laughing into their Pina Colada's somewhere in a sunny five star resort.
Deep shame also on Richard Long for promoting Hanover and giving these con-artists the ability to deceive so many trusting investors. I hope he sleeps poorly at night..
Hanover was dead in the water over two years ago. Why did Allied buy it? There are some very clueless people in the financial sector in NZ, if not in most Western countries. When will people do their home work? I will write slowly, the global credit boom is over, deflation will come and take out everybody who are exposed. It is that simple. Such it up.
You have a long list of wants David, howoever what are you doing about achieving these wants other than writing blogs?
Stuff reports that Rob Alloway 'cannot be contacted for comment". Wonder if he is busy towing his new Porsche race car off into the sunset with his new Audi Q7. Wonder how the staff of Allied and the Shareholders feel about that?
first the hanover investors were given the rope then they went and asked for more rope and now they have hung them selves. whilst the directors of hanover just handed out the rope. why when all the history of failed companies is looked at did hanover investors ever think they would get a better outcome and let off scott free the directors.... surely there must be an investigation into the way the case was put to them by hanover and allied didnt breach code
ANF was a DOG always has been, imcompetant management, sloppy governance
Alllaway is in there working very hard to turn this around. His interests are in line with all other shareholders - he has more to lose (or gain) than most in this whole sorry saga
As a shareholder I'm hanging in there. This might get interesting now that the cancer has been cut out of the company
Good to see Loughlin gone, time now Hanover interestors put their own Director forward to look after their interests?
Those were the days where all involved cared.
What will Sir Ron Trotter's father be saying?
Did you ever read Speirs Finance's financials.I did and always regarded it as an E ranked finance company.
You would have to have rocks in your head to take over Hanover.
There were lots of bad rumours coming from Queenstown about Hanover a considerable time before it folded.
Why would you want an association with a friend with a bad reputation.
Did Loughlin Jump or was he pushed.
Credit rating dosn't mean a thing?
It appears from some of the ratings recently that a credit rating represents the time it is likely to take before a default occurs, being an assessment that is primarily driven by liquidity measures.
Lets cut the crap. It's time Hotchin and Watson fronted up and accepted their responsibilities. Dig deep into your pockets you two guys and put your money where it belongs..back into the pockets of the investors who provided it in the first place.
Unfortunately that's not how it works.
Hotchin & Watson are not going to walk around wearing sackcoth and pleading for forgiveness.
It's only the blue collar guys who do the time.
At least Fay & Richwhite handed over some coin.
As for the financial planners who put the poor unfortunates in there.
It's business as usual for them.
No accountability.
.
John Mallon, CEO of Allied Nationwide Finance - where are you? Stop hiding behind Rob Alloway and front up pal !!! Rumour on the street is Hotchin and Watson found a way to pay a large sum of money to someone at Allied. I can't believe that is true.
But for how long will your man Rob be running the main company watch this space........................ and if you really knew what you were talking about and had done your research which clearly you haven't and have no idea what you are talking about "mellon is spelt mallon" I suggest you get back to your cowshed and focus on that. Your just a farmer!!!!!
But for how long will your man Rob be running the main company watch this space........................ and if you really knew what you were talking about and had done your research which clearly you haven't and have no idea what you are talking about "mellon is spelt mallon" I suggest you get back to your cowshed and focus on that. Your just a farmer!!!!!
Can't you at least think up a pen-name behind which to post your jealous comments..
Nothing wrong with farmers.
I deal with them every day.
At least they don't talk around corners like city slickers.
And you need to educate yourself on the difference between your and you're.
Then you can talk with authority on Mellon versus Mallon.
Try milking cows for a few years.
Like working at the freezing works outside.
i don't understand all of this.
It does seem from the outside that allied farmers are freinds of the handover group and just come in to help them. At the same time the allied farmer leaders are now leaders of one of the biggest NZ traded companies(for a few weeks anyway). I do know that the company that went into receivership here discussed is not allied farmers but it all smells bad to me. If this is business in NZ then it is embarassing. It makes some of the others who I have seen up close leading business in parts of the economy seem ok(not impressed at all but they seem ok compared with these finance company's).
Its all about getting around rules.
Hotchin wants to escape investigation by an official assignee who is capabale of reporting wrongdoings to SFO and Securities comission. The only way he could do this was to avoid a Hanover receivership. Come ANF who would buy his liabilities and prevent an SFO investigation.
Of course he must now not return to New Zealand because of his obvious intent to rip of the public of New Zealand. Never mnd he still has his little brother, Joh Hotchin running around New Zealand doing hs dirty work for him.
Come ANF, starved of assets and struggling to meet banking covenants. Cash is King, however it is paid for. 400 million or 100 million, does it really matter? Cash will do, any cash, so regardless of the misonformed Hanover Investor, Alloway buys his failing business a life-line with the severely impaired Hanover balance sheet.
Next, why not bolster Allied Nationwide with the former Hanover assets? Why would you. Debenture funing will probably be dead after October, particularly given the recent news about SCF.
Finally the Trustee. Of course the Trustee found a default, and would contune to find them. There is no chance of a class action by investors while they are protected by the govt gaurantee. After October if Allied fell, God only knows the trouble the guns shy trustee could get into.
Its just my opinion, but can there really be any nobility in New Zealand business?
Excellent work Red Dog....especially the "Your" versus "You're" comment! I can't believe that someone actually tried to defend the Allied Nationwide CEO, John Mallon. That anonymous punter's ad hominem comments directed at the farmers just shows the mentaility we're dealing with. maybe it was "Mellon" himself? He's been invisible in the press to date so hiding behind anonymity would make sense? And I can't think who, other than himself, Hotchin or his Mum, would defend him?
Get real, contributors.
The Hanover deal was done by ALF Allied Farmers the parent and not Alied Nationwide Finance the finance company company. I seriously doubt whether John Mallon was responsible for the Hanover takeover.
Thos who followed the purchase of Hanover debentures for ALF scrip would have to be deaf and blind not to have observed the role PriceWaterhouse Coopers played in the advocacy for the deal.
I recall John Waller being a key player in getting the moratorium in the first place and David Bridgman for the takeover by ALF.
Grant Samuel wrote an independent expert's piece on whether the takeover deal was fair to Hanover investors - as I recall they said it was.
Without PwC and Grant Samuel's input, I doubt whether the takeover would have got 75% support - after all with it, they only just beat 75% by less than 1/2 of a per cent.
Do these organisations have any liability to Hanover and United debenture holders?
ALF may actually improve a bit now that ANF has been cut free. If Alloway et al can collect enough of the Hanover loans to repay Westpac (I would expect Andrew McDouall to be running for the hills haven't invoked an out clause to get out of his or his companys 9m underwrite) then they will finally have a debt free company worth 50-70 million, albeit with over 2 billion shares (NAV say 3 cents - will need a 100 to 1 consolidation to get themselves out of penny dreadful territory!).
Even given the bonus shares for original shares, Rob Alloway will have effectively done his dough.
John Waller, knew phucking well, he was selling a lemon to the Hanover investors, at the moratorium. He was paid-off by the two cowboys.
Forget the Allied stuff ,its dead !
There needs to be a public out cry about the two Hanover dealings.And then Hotchin and Watson need to be brought back to face the music.They have stolen money from the company while it was trading insolvant .
I think the point is ANF is bust. Mallon is CEO of that.
Well he isn't at the track like he used to. What a shame it seems his sport had to go on back burner when he got his job in Allied. damn shame
Post new comment or question
To share this article, click on a service below