Allied Farmers says it will probably default on a loan to subsidiary Allied Nationwide (ANF), whose receivers are trying to recover funds owed to the taxpayer under the retail deposit guarantee scheme.
Allied Farmers says it will probably default on a loan to subsidiary Allied Nationwide (ANF), whose receivers are trying to recover funds owed to the taxpayer under the retail deposit guarantee scheme.
Last October Allied converted inter party debts with ANF into a loan secured over assets acquired from the former Hanover and United Finance assets.
All up these amounted to $24 million, although as of this week the outstanding balance was $19.2 million.
The first loan of $8.9 million was due for repayment on or before July 1 this year while the second, now totaling $11.7 million, was due before July 2012.
ANF went into receivership in August, triggering a $130 million payout to investors under the retail deposit guarantee scheme.
The above loans were secured over ex Hanover assets including Matarangi Beach Estates (in receivership) but ranked behind bank lenders including HSBC.
In a statement this morning, Allied Farmers said when the loan arrangements were agreed with ANF’s receivers it thought it could recover sufficient funds from asset realisations to repay the first loan before July.
“The board has now reviewed those forecasts, and these indicate it will be difficult to conclude sufficient realizations by June 30, 2011 in order to fully repay the balance of the first loan by the due date.”
“The decline in forecast realisations in the period to 30 June 2011 is the result of challenging conditions driven by market saturation of finance company assets,” Allied Farmers said.
Allied is also allegedly in default on funding arrangements previously disclosed including a disputed guarantee for $7 million to the purchaser of an ex Hanover loan and a also in relation to the receivership of Matarangi.
Receivers for ANF have reserved their position in relation to those defaults and are considering their options, Allied said.
Allied also owes Hanover $5 million as part of the debt for equity swap, which it is refusing to pay. This is headed for the courts next month.
Receivers for ANF have reserved their position in relation to those defaults and are considering their options, Allied said.
Managing director Rob Alloway said the company was working with the receivers of ANF to try and resolve outstanding issues and future arrangements.
“Although the forecast realisations required to fully repay ANF have not been achieved, we have had better success in relation to the sale of properties we own at Jacks’ Point and Clearwater. We have been able to retire debt to lenders (ranking ahead of ANF) on these properties from $13.3 million at 31 December 2010 to $10.4 million today.
“In addition, we have sales contracts that we expect to settle prior to 30 June 2011 that will result in further debt retirement of circa $4.7 million”.
Allied Farmers took over the assets and loans of Eric Watson and Mark Hotchin’s Hanover finance companies in a debt for equity swap in December 2009.
The company has since written down the value of the loan books from $396.2 million to about $85 million.
In 2008, the Hanover and United assets were valued at $516.6 million.
Allied’s unaudited half year report showed total liabilities of $58.69 million.
At the full year, the company's auditor PricewaterhouseCoopers was unable to verify the company’s financial statements and could not form an opinion on its going concern status.
