Allied posts $43m loss on Hanover writedowns

Hawera-based company Allied Farmers has posted a $43 million loss in the year to June 30. Photo / Sarah Ivey

Allied Farmers posted a full-year loss as it wrote off another $29.7 million from the value of its toxic Hanover and United Finance loans.

The Hawera-based company made a loss of $43 million, or 0.1 cent per share, in the 12 months ended June 30, compared to a loss of $77.6 million, or 1.8 cents, a year earlier.

The bulk of the latest loss came from an impairment charge on the former Hanover and United assets that the company took on in a debt-for-equity swap in December 2009.

The value of the remaining Hanover assets and cash realised was $93.6 million, Allied said in a statement. The remaining assets were valued at $33.8 million, with liabilities of $12.2 million.

Adding to Allied's woes is a dwindling cash flow with just $137,000 as at June 30, with a net annual outflow of $9.9 million as the company kept up with interest repayments.
That comes ahead of Allied's listed capital notes maturing on November 15, where investors are owed $12.6 million.

The bonds, which pay a coupon of 9.6 per ccent, last traded on July 6 at 57.84 cents in the dollar.

The directors are figuring out to deal with the repayment, and will have to pay a premium for a 22 day period in July when it breached the terms of its debt-to-equity ratio covenant.

The results are unaudited, and once that process has been complete Allied will issue additional shares to pre-Hanover merger investors who were protected by a provision in case the loan book's value deteriorated.

The shares are worth just 0.8 of a cent, valuing the company at $16.3 million.

Allied issued almost 1 billion shares at 20.69 cents apiece to enact the deal, which pitched a best-case scenario of returning 70 cents in the dollar to Hanover investors.

That meant they controlled about 97 per cent of the company, which had just 37.7 million shares on offer before the merger.

The collapsed value of the loans sparked a war of words between Allied and former Hanover owners Mark Hotchin and Eric Watson, ultimately ending up up in court, after Allied refused to pay out the final $5 million cash instalment of the deal.

The failure of Allied to transform itself into a major lender also took the scalps of former chairman John Loughlin, who stepped down in August last year, and managing director Rob Alloway.