The taxpayer will be called on to foot the bill for any shortfall after Allied Nationwide Finance was put into receivership late this afternoon.The company – a subsidiary of NZX-listed Allied Farmers, which took over the assets and loans of Eric Wat
The taxpayer will be called on to foot the bill for any shortfall after Allied Nationwide Finance was put into receivership late this afternoon.
The company – a subsidiary of NZX-listed Allied Farmers, which took over the assets and loans of Eric Watson and Mark Hotchin’s Hanover finance companies, was operating under the Crown retail deposit guarantee scheme.
The company has about $137 million worth of debentures on issue.
Kerryn Downey and Andrew Grenfell of McGrath Nicol were appointed receivers.
In a brief statement, Allied Nationwide said it "expects an acceptable outcome from the receivership on the basis of its current net asset position and level of shareholder funds."
Treasury deputy secretary financial operations Philip Combes said all eligible depositors will get the money they are entitled to under the scheme.
"The Crown stands fully behind its guarantee commitments, and we expect an orderly process of payment to eligible Allied Nationwide Finance depositors," said Mr Combes.
Allied Nationwide missed paying maturing debentures yesterday and said earlier today that it needed more time to remedy breaches of its trust deed ratio.
The breaches had been flagged by its trustee, NZ Guardian Trust (NZGT), which gave Allied Nationwide 14 days to rectify the situation. That deadline expired today.
Allied Nationwide and its parent Allied Farmers had been working hard to maintain sufficient short and medium term liquidity to meet trust deed and regulatory requirements but ultimately failed.
“The notice received from NZGT of the alleged Trust Deed ratio breach and the subsequent withdrawal of ANF’s prospectus had a significant and immediate impact on these initiatives, and the ability of ANF to continue to meet its obligations,” Allied Nationwide said in its statement.
Allied Nationwide directors include Garry Bluett, Philip Luscombe, Paul Macfie, Richard Spiers, Susannah Staley and Allied Farmers chairman John Loughlin - although he announced his resignation this evening from both companies.
Until yesterday, Allied Nationwide said it had continued to meet its obligations, including repayment of maturing debentures.
However, the company said it was unable to gain approvals from Guardian Trust for funding initiatives under consideration by the Allied group, which required third party commitments.
Allied Farmers recently put off a $19 million capital raising plan due to the issues raised by Guardian Trust.
The parent company then said it was considering moving some of the Hanover-acquired loans over to the finance company to try to solve its capital problem.
However, those assets – originally thought to be worth $396 million – are now valued at just $94 million.
It is unclear at this stage what impact the receivership will have on Allied Farmers, whose investors include 16,500 Hanover debenture holders issued more than 2 billion Allied Farmers shares last December at 20.7c each.
Allied Farmers managing director Rob Alloway wasn't available for comment when NBR called.
Meanwhile, Speirs Group Limited, via its wholly owned subsidiary Speirs Investments Limited, holds 2 million perpetual bonds issued by Allied Nationwide Finance Limited (ANFL).
The company has an option to ‘put’ those bonds to Allied Farmers Limited on or about September 30, 2013 at a price of $1 per bond, plus any accrued or unpaid interest.
“Given today’s receivership announcement by ANFL, the directors of Speirs Group Limited advise that, as part of the audit programme currently being completed for the year ended 30 June 2010, they will be considering any group impairment provisioning of the investment in ANFL bonds that may be necessary, " Speirs said.
