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Allied Farmers discloses further Hanover asset losses

Allied Farmers has again downgraded the value of assets acquired from Hanover Finance and United Finance last year and is still counting.Allied Farmers described the purchase of $396.2 million worth of assets last year as bold and a way of propelling the

NZPA
Fri, 28 May 2010

Allied Farmers has again downgraded the value of assets acquired from Hanover Finance and United Finance last year and is still counting.

Allied Farmers described the purchase of $396.2 million worth of assets last year as bold and a way of propelling the company forward. It said today that the assets are now worth $124 million.

By March 1, the value of the assets had dropped to $175.5 million and by May 7 to $106.6 million.

Allied Farmers said today that as part of the process for the preparation of the annual result to June 30 it has assessed $69.1 million, or 65%, of the $106.6 million of loans and a further impairment of $33.6 million is required on the $69.1 million of loans assessed to date.

"Assessment work is under way on the remaining $37.5 million balance of the acquired loan assets not yet assessed.

"However, we are unable at this stage to determine the extent of the impairment on these loans until we have received further information, such as updated independent valuations on underlying property securities."

The company cited a range of factors for the devaluation, including a tightening of funding for developments, lengthening of realisation periods due to longer rezoning processes and delays, lower valuations of Auckland apartments and the bankruptcy or liquidation of borrowers.

The result of assessment work to date suggested a further impairment provision of $51.5 million would be required.

"These impairment provisions are subject to further adjustments arising from completion of the work on the remaining $37.5 million balance of the acquired loan assets, and audit verification."

Allied Farmers shares fell 0.5c to 5.9c today.

NZPA
Fri, 28 May 2010
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Allied Farmers discloses further Hanover asset losses
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