Troubled finance company Allied Farmers has had HSBC tip Matarangi Beach Estates into receivership. And Allied managing director Rob Alloway isn't mincing any words about Hanover Finance - the company it inherited Matarangi from.On Tuesday HSBC called in
Troubled finance company Allied Farmers has had HSBC tip Matarangi Beach Estates into receivership. And Allied managing director Rob Alloway isn't mincing any words about Hanover Finance - the company it inherited Matarangi from.
On Tuesday HSBC called in a $19m loan to Matarangi. Today directors of Matarangi appointed Korda Mentha as receivers, according to an Allied statement filed with the NZX.
Matarangi's loan to HSBC has been in default since December, when Allied refused to take over a $23m guarantee as part of its merger with Hanover Finance.
Matarangi is a half-completed development that includes bare land, a golf course and some completed residential sections.
The most recent valuation of Matarangi's assets was a gross $26.1m,and once debt was subtracted, $7.9m in carrying value.
Mr Alloway said the value of Matarangi provided in the 30 June 2009 accounts, used by investors to inform the eventually successful vote to merge, was "unrealistic".
Mr Alloway didn't pull any punches in his statement, and said the state of Matarangi was symptomatic of many former Hanover assets:
“This is an unfortunate trend we have seen with most of the property and loan assets that were acquired, and further calls into question the real value of the shareholder support package contributed by Messrs Hotchin and Watson at the time of the Hanover moratorium. The investment community should have expected far better oversight of the moratorium from Hanovers directors, valuers, trustees and auditors,” Mr Alloway said.
Mr Alloway said “it is also disturbing to us that in the days leading up to the receipt of the repayment demand from HSBC, we were, with the knowledge of HSBC, approached by Mr Kerry Finnigan, representing an entity owned by Messrs Hotchin and Watson, proposing a purchase of the Matarangi assets for the loan value of circa $19 million.
“Investors can draw their own conclusions as to whether it was a coincidence that when we refused to sell the asset back to Hotchin and Watson, HSBC, who in Mr Finnigan’s own words have a “strong relationship” with Hotchin and Watson entities (HSBC banks both Bendon and Cullen Investments), immediately moved to demand repayment."
Mr Alloway hinted at ulterior motives for HSBC: "We would be disappointed if it turned out that HSBC’s demand for repayment was simply designed to enable the return of the asset to Hotchin and Watson interests at a vast discount to the value they transferred it to us in just November last year”.
