UPDATED: Net tangible assets has been recorded at negative 0.35c compared to 2.20c in the previous corresponding period, indicating a large number of new shares to be issued to placement shareholders.
Allied Farmers has reported an unaudited operating loss after tax of $43 million for the year to June 30 with further impairment losses from the Hanover assets.
The result includes further impairment losses of $29.7 million on the assets acquired in December 2099 from Hanover Finance and United Finance.
Those assets, which had an ascribed value of $396 million at the time of the transaction in December 2009, are now worth just $93.6 million, although it is still not clear whether that includes assets already sold.
Net tangible assets (NTA) has been recorded at negative 0.35c compared to 2.20c in the previous corresponding period.
This, combined with the shortfall in asset value, will have a profound effect on the number of bonus shares issued to the original Allied farmers shareholders under a re-set mechanism to "protect" them from downside from the merger.
More significantly it will also mean a large number of new shares to be issued to institutional and private investors who participated in a placement of 90,000 shares at 2.5c last August. These shareholders have their own "price adjustment ratio" which kicks in after the bonus share scheme is calculated.
The number of shares to be issued will depend on the audited valuation of the Hanover and United assets, which Allied says should be finalised by September 30.
In a statement, the company said it had been a challenging year, including:
- the impact of the receivership of Allied Nationwide Finance Limited on 20 August 2010 had a severe impact on the Rural Division as it lost the primary source of funding for its rural customers, and resulted in the abandonment of the proposed underwritten capital raising announced on 3 August 2010;
- the failure to collect a significant rural debtor within contracted terms, which is subject to pending Allied Farmers initiated legal action, had the impact of reducing cash flow for the Rural Division with consequences for its working capital, which constrained supplies and detrimentally impacted the result;
- the continued impact of writedowns relating to the assets acquired from Hanover Finance and United Finance for the year, as Allied Farmers continued to meet the market where necessary and work to maximise the value of the portfolio in very trying and difficult property markets.
The directors said they acknowledged it was an unsatisfactory result.
Meanwhile, the board will shortly determine a proposed course of action in relation to $12.5 million of capital notes due to mature in November 2011.
“The receipt in the last few days of asset valuations used for the calculation of the asset write-downs as at 30 June 2011 has identified that a short term breach of the capital note debt to equity ratio covenant occurred from that date. This was remedied by a reduction of debt on July 22. The only consequence is an additional 2% interest rate payable for this 22-day period,” the company said in its statement.
Allied Farmers has engaged McGrathNicol to help manage the Hanover and United assets. McGrathNicol is the receiver of Allied Nationwide Finance, which is still owed $19 million from its parent company.
