Alloway pays $2 to buy out Allied Farmers shareholders

Former Allied Farmers managing director Rob Alloway has paid the paltry sum of $2 to buy 19% of Allied Capital, once the largest shareholder of the rural services firm.

In a stock exchange disclosure notice, Mr Alloway confirmed NBR’s story yesterday that he’d bought the remaining shares in Allied Capital that he didn’t already own from William Giesbers and Paul Macfie, both former executives at Allied Farmers.

Allied Farmers shares traded up 0.2 cents today to 0.6c before slipping back to 0.5c.

The disclosure notice said Mr Alloway paid $2 for two parcels totaling 335,000 shares in Allied Capital.

Allied Capital was once Allied Farmers’ biggest shareholder with a 14.4% stake, before being diluted to just 0.279% following the debt for equity swap with about 14000 Hanover investors, who ended up with more than 90% of the company.

Allied Capital became a substantial shareholder when it acquired approximately 5.44 million Allied Farmers shares from Speirs group in May 2009.

Back then it paid $1.98 million for the shares (about 36c-a-share), comprising $1.48 million in cash and 500,000 convertible redeemable preference shares and options.

Not long after Mr Alloway was appointed managing director, just weeks before Allied reported a $33 million loss after a $20.5 million write down on the value of Allied Nationwide Finance (now in receivership).

Allied then took over the loans and assets of Hanover and United Finance, which it used to retire its own debt with Westpac.

Former Hanover investors were coaxed into accepting the debt for equity swap at roadshows led by Mr Alloway and Hanover co-founder Mark Hotchin.

They were told the merger offered the "only realistic means of Hanover investors getting back 100c in the dollar" from the more than $500 million they sunk into the finance company.

After they accepted they were issued 1.91 billion shares.

Those shares are currently trading at half a cent, having been issued at 21c.

Allied has been warned to release its audited annual accounts by this Friday or be suspended from NZX trading.

The accounts will include an audit determining the number of bonus shares to be issued to the original Allied Farmers shareholders, including Allied Capital.