HSBC has pulled the plug on troubled finance comany Allied Farmers and demanded repayment of a $19m loan to Hanover-inherited subsidiary Matarangi Beach Estates.Matarangi Beach Estates was acquired by Allied Farmers as part of the Hanover transaction and
HSBC has pulled the plug on troubled finance comany Allied Farmers and demanded repayment of a $19m loan to Hanover-inherited subsidiary Matarangi Beach Estates.
Matarangi Beach Estates was acquired by Allied Farmers as part of the Hanover transaction and was one of the property development assets contributed by Mark Hotchin and Eric Watson to the debt moratorium at a net value of $26m.
"While this action on the part of HSBC is disappointing, this has always been one of the difficult assets in the portfolio. We haven't achieved the property sales we have needed with this asset and a recent campaign to sell the entire development was not successful," Allied Farmers' managing director Rob Alloway said.
"Among the issues we have faced with it is that HSBC's consent to the change of ownership of Matarangi Beach Estates Limited was still outstanding because it was seeking replacement shareholder guarantees while we were not prepared to put the group's wider assets at risk."
Allied Farmers will now start a process to sell the asset and will be seeking to maximise the outcome.
The carrying value of the property at 30 June 2010 was $7m (net of its debt). It is not known at this time what the impact of HSBC's action will be on this value, but a further reduction in value is likely. Further announcements will be made as matters progress, the company said.
