Allied Nationwide scrambles for funds after default

Allied Nationwide Finance has been placed in receivership. (See updated story here)

EARLIER STORY: The company says it missed paying maturing debentures yesterday and needs more time to remedy breaches of its trust deed.

The finance company said it expected to make good its investor payments today but needed an extension to a 14-day deadline set by Guardian Trust (NZGT) to comply with financial ratios. The deadline expired last night.

Listed securities of both Allied Nationwide and its parent, Allied Farmers, were placed in a trading halt late this afternoon pending further announcements.

Until yesterday, Allied Nationwide had continued to meet its obligations, including repayment of maturing debentures, the company said.

“However, as the capital and funding initiatives under consideration by the Allied group require third party commitments and NZGT approvals which had not been received by last night, it has transpired that ANF did not pay debenture maturities due for payment yesterday," the company said in a statement.

"Allied Nationwide expects to complete an initial transaction today that will result in payment of debenture maturities now due and has requested Guardian Trust both consent to this transaction and to provide a short extension to the deadline originally imposed.”

Allied Nationwide is a subsidiary of NZX-listed Allied Farmers Limited, which bought the assets of the Hanover group of finance companies in a debt-for-equity deal last December.

Allied Farmers recently put off a $19 million capital raising plan due to the issues raised by Guardian Trust.

The parent company 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.

Allied Farmers is forced to continue funding its finance company subsidiary but has its own problems, including repaying core debt of $19 million to Westpac.

Allied Nationwide has about $137 million worth of debentures on issue.

The investments are covered by the Crown retail deposit guarantee scheme until October 12.

Standard & Poor’s last week lowered Allied Nationwide’s credit rating from B/B to CC/C and said there was a "strong prospect" that Allied Nationwide could default on its obligations within six months.