Allied waits for funds as time runs out

John Loughlin. Photo / Hawke's Bay Today

Troubled finance and rural business Allied Farmers is still waiting on money it needs by next week.

Allied chairman John Loughlin said yesterday the business was still negotiating for funds, which it needs to renew debt facilities for the new financial year starting on July 1.

Westpac is its principal bank and has loaned the company $16.5 million with a $2.5 million overdraft.

Allied said negotiation of its banking facilities with Westpac and one other lender, proposing to offer funding under a shared security arrangement, was continuing.

"The Allied Farmers business has a number of moving pieces at the moment with asset sales, settlements, banking and financing arrangements," Loughlin said.

"The board and management have been working hard to finalise a number of issues and are conscious the date for completion of financing negotiations is not far away. In that context we feel it's important the market be informed of the position," Loughlin said.

About 13,000 Hanover investors owed more than $500 million agreed at the end of last year to swap their four forms of securities for shares in Allied, whose shares traded yesterday at 4.3c.

Allied owes Hanover bosses Mark Hotchin and Eric Watson $5 million by the end of June.

That is due to be paid as final settlement of the December deal and chief executive Rob Alloway said Allied was contractually obliged to pay the money.

Since the deal, Allied has also been hit by a succession of property write-downs.

The value of what was once Hanover Group's loan book has shrunk by close to 70 per cent, and last month there were warnings of more write-downs.

Last year, investors were told the loan book of Hanover Finance and sister company United Finance was worth $396.2 million but in May it was revealed they were worth just $124 million

Allied got good news earlier this month - the conditional sale of part of the Queenstown Five Mile project.

But this coincided with revelations investors who bought sections in a Fijian property project where Allied Farmers has an outstanding $20 million-plus loan have been repaid their deposits, putting the future of the project in doubt.

Its finance arm was also hit with a credit downgrade. Allied Nationwide Finance (ANF) said Standard & Poor's had lowered its rating to B from BB-.

Standard & Poor's said the action reflected a material deterioration in ANF's liquidity position beyond what had been expected.