Allied Farmers' finance company receives notice of breach
Allied Farmers Ltd's finance company has suspended its prospectus and is in talks with its trustee about a disputed breach of its trust deed finance ratios.
Allied Nationwide Finance Ltd today received notice from Guardian Trust that it was in breach of one of the financial ratios and has 14 days to remedy the situation. The finance company is covered by the Crown deposit guarantee scheme until October 12.
The board and management of the company do not agree with the trustee's view.
Allied Nationwide's financial statements for the year ended June 30 are being audited, which should be completed by the end of August.
Allied Nationwide said it has presented financial information as at June 30 to the trustee which shows that the relevant ratio of total liabilities to total tangible assets was, and is, complied with.
Allied Nationwide continued to meet all its financial obligations, including repayment of maturing debentures.
Pending resolution, the company decided to immediately suspend its prospectus.
Allied Farmers said it would update the situation on Monday.
Allied Nationwide has been providing finance and investment products to New Zealanders for more than 30 years.
It reported a disappointing net group loss of $6.4 million for the year ended June 30, 2009. Total group assets then were $360m, including $48m of cash and $292m of loan assets.
Allied Farmers announced a partially underwritten $19.30m capital raising on August 3. The capital raising is partially underwritten by McDouall Stuart Group Ltd.
Allied Farmers earlier negotiated a further extension on its banking arrangements with Westpac Bank as it continued to negotiate and develop several restructuring initiatives.