Alloway vows he'll deliver

Rob Alloway reckons he and Allied Farmers have reason to feel confident they can recover Hanover's loans better than existing management. Photo / Dean Purcell

Allied Farmer's new managing director Rob Alloway - the man driving his firm's audacious $400 million debt-for-equity deal with Hanover and its debenture investors - accepts he's not a particularly well-known figure.

But that, he says, is not a bad thing.

"In the finance industry, most of the people who are familiar are infamous aren't they?"

With clamorous condemnation of the deal, even before the details are fully understood, there have been more calls for Hanover to be placed in receivership or even statutory management.

While some of that is driven by antipathy toward Hanover's owners Mark Hotchin and Eric Watson, Alloway himself appears to be cut from different, less flashy cloth.

He began his career as an electrician in the 1980s, going on to work in the Waikato dairy industry for the next decade or so.

He formed his own business distributing General Electric products in the 90s and by the turn of the century had offices in Hamilton, Sydney, Melbourne and Perth. He sold out in 2001 and after a year of farming, joined Fonterra, initially managing automation and process control functions, and than as the dairy giant's national capital projects manager.

In 2006 he became chief executive of engineering business NDA. The company was sold to private equity with Alloway leading a management group that acquired a 20 per cent stake in the same transaction.

Staying on as chief executive he led the company as it conducted a series of acquisitions in China, the US, Australia and New Zealand where it is now one of the largest local engineering groups. He left the company a year ago but remains a major shareholder.

Nowadays, he describes himself as a professional investor.

Having paid several million dollars for a 15 per cent stake in Allied Farmers this year, he became managing director a couple of months back, but is not drawing a salary. Instead he is working to ensure his investment in the company pays off.

Why buy into a wobbly company like Allied? Firstly, he says, it's because he loves the rural environment and community and therefore Allied's rural services business.

"It's been around for more than 100 years and is here to stay."

Allied's finance division is more of problem, but he clearly sees it as great opportunity too.

"The finance business has been though an absolute firestorm over the last couple of years. There's been some less than perfect business practices applied in that segment and the market's changed. A number of businesses have gone, a number things are effectively frozen like Hanover.

"I think it's a good place to be positioned - not with everything tied up in it - but it's nice to have at least a toe hold so that as it emerges, with better business practices and less competition, there's more of an opportunity to make reasonable lower-risk profit from it."

That's the story he hopes Hanover and United debenture investors will buy, and therefore give the required approval.

He admits the plan is not without risk and accepts there will likely to be strong downward pressure on the rejigged Allied Farmers share price immediately after the deal is completed.

"There may be some overhang there, but if investors are sensible and they understand the story that Allied Farmers have got and the plan the board and senior management have to turn Allied Farmers - which is a very old, well-established, diversified business - into an iconic company with a very, very strong balance sheet, then they will have more of an appetite to stay and share in some of the ongoing rewards."

Alloway is also mindful to quell suggestions that the deal is a sweet one for Hotchin and Watson and may leave them with significant cash.

"There's absolutely no consideration going to the shareholders in Hanover, they've done their equity in there, it's all negative."

However, he points out the transaction leaves about $10 million in cash with Hanover to cover transaction and wind up costs.

Alloway says Allied is leaving nothing to chance as far as Hanover's liabilities go. "We've left behind all the problems ... this is goodbye Hanover, Mark and Eric.

"We've got all the assets and anything that's worth anything and said goodbye to the rest, they can deal with the problems. Any litigation or exposure they have is theirs."

Furthermore, he reckons he and Allied Farmers have reason to feel confident they can recover Hanover's loans better than existing management.

"None of the people that have borrowed money or are associated with any of these assets are people that I know or are my friends. We will chase them until they pay."

To further underscore the difference between himself and Hanover's present owners, he points out: "I'm not a property developer.

"I live in an ordinary house in an ordinary street in Hamilton, not Paritai Drive."