Allied asks for more time after loan called in

Allied has requested an extension of time from lender to avoid default. Photo / Supplied

Allied Farmers faces default on a repayment after a lender called in a $500,000 loan just hours after the company lodged annual accounts with the NZX in which the auditor, PwC, refused to give any opinion on their validity.

The Hawera-based company said it had asked for more time to repay the loan, which was scheduled to be repaid from an asset sale in November.

At June 30, Allied Farmers had $2.1 million in cash and equivalents and carried bank debt of $1.8 million and borrowings from other financial institutions of $2.4 million.

These were attached to property assets it gained in its 2009 acquisition of the assets of the failed Hanover and United finance companies.

It also owes $17 million to its failed finance unit, Allied Nationwide Finance.

"Allied has requested an extension of time from the lender to coincide with the realisation of the underlying asset.

"This seems a sensible solution for both the lender and borrower," chairman Garry Bluett said.

"In the event an extension is not granted that would result in an enforceable event of default under ALF's secured loan facility."

The call comes on the same day Allied Farmers' auditor, PwC, gave a "disclaimer of opinion" on the company's annual report.

PwC said that there was insufficient evidence the group would generate enough cash from asset sales, reach agreement with some of its creditors, retainthe support of its secured lender,and find new funding.

The company narrowed its full-year loss to $14.1 million in the 12 months ended June 30, from $40.98 million a year earlier, as it wrote down the value of the Hanover and United loan books even further.

The Hanover and United deal was valued at $394 million when the assets were acquired in a debt-for-equity swap at the end of 2009.

In the latest accounts, the assets of Allied Farmers' Asset Management Services unit, where the former finance company assets are held, were valued at $22.4 million, down from about $37 million a year earlier.

The company's shares closed yesterday at 2.5c.

It has 90.8 million shares on issue following a massive share consolidation after stock on issue ballooned out to about $2 billion in the wake of the debt-for-equity deal.