Deal's done - now Hanover investors must wait

Hanover co-owner Mark Hotchin came under further criticism from investors in Auckland yesterday. Photo / Richard Robinson

New Allied Farmers shareholders hope to find out today the value of their vote when a trading halt on the company is lifted.

Yesterday, Hanover investors voted by a narrow margin to pin their hopes on Allied Farmers doing better than the company co-owned by Eric Watson and Mark Hotchin with their investments.

The lifestyles and assets of the two multimillionaires again came under fire at yesterday's investor meeting in Auckland which approved the share-rescue deal.

Hotchin's $30 million Paritai Drive mansion and Mr Watson's bloodstock investments and his failure to appear at any meetings in the past few weeks were criticised.

Victims of the pair voted in favour of a debt-restructuring proposal from NZX-listed Allied Farmers which will change their investments into shares.

Allied will take over all Hanover's assets, and 75 per cent of investors had to agree for the deal to go ahead.

The final vote was 75.45 per cent in favour of the proposal.

But the price the slumping shares will trade at and the dividend they will pay are unknown.

Investors questioned Allied's low share price (19c-20c yesterday), big share sales (353,000 of Allied's 38 million shares traded last Thursday), loss of $33.3 million in the year to June 30, and its future.

After investors approved the deal, Hotchin said he was pleased.

"Allied Farmers has a good future," he said. "It now has a considerable asset base and the time and resources available to achieve much greater value from the assets."

Many of the about 1000 mainly elderly Hanover and United investors criticised Allied before the vote.

Some said it was a poor business with which they did not want to become involved.

One of them, Eric Cotter, said Allied was rich in liabilities and poor in assets. He said $396 million worth of assets were being swapped for $10 million in shares.

Investors urged Hotchin to pay the $20 million originally promised through the debt-repayment plan.

That should go to investors immediately, regardless of the Allied deal, they said.

But Hotchin said there were no plans to pay.

"The $20 million is not due and falls away under receivership," he said.

"If, during that process, it gets called on, we will certainly have to stand behind it, but it's certainly not on the table at the moment."

Investor Brian Earnshaw said he considered himself a reasonably intelligent person.

"But when it comes to investing money, I am dumber than dumb, as my $70,000 investment in Hanover Finance so-called secured debentures clearly shows.

"We investors have been cunningly manoeuvred into a position where we are virtually forced to vote for the proposal, which allows a small, relatively unknown company with only $10 million in equity and a share price close to its lowest ever to swallow Hanover's $400 million debt with highly probable subsequent indigestion," Earnshaw said.

"One should beware that if Allied goes into receivership, we as shareholders would be last in the queue behind all the other creditors."