Allied Farmers puts capital raising on hold amid trustee concerns
Allied Farmers has put its $19.3 million capital raising on hold amid concerns from the trustee that the financier breached its trust deed and has pulled its prospectus from the market.
Monday, August 9th 2010, 6:08PM
by Paul McBeth
The firm has been behind the eight-ball since taking on the Hanover loan book last year in a debt-for-equity swap, and planned to raise new funds at a deep discount to pay back its facility with Westpac.
Its finance unit, Allied Nationwide, was forced to pull its prospectus amid after the parent disclosed a dispute with Guardian Trust over whether the finance company breached one of its trust deed ratios.
"Our preference is for the prospectus to disclose the very latest information, and with our trustee having some questions over our finance subsidiary, we fell it is prudent to delay the prospectus," chairman John Loughlin said.
"It is possible that the solution to the trustee's concerns will involve Allied Farmers providing additional capital to Allied Nationwide, and while the form of this capital is still being considered, one option may include the transfer to Allied Nationwide of some of the assets acquired from Hanover Finance and United Finance."
The finance unit has been doing it tough in recent months, with reinvestment rate of 48.2% in the six months through April, and just 29.3% in the month of May. That comes as the company prepares to meet $55 million worth of maturities in six months ending in December this year, according to the firm's first-half report.
Loughlin said the issue facing the finance unit was its liquidity and how it will source funding after the government's deposit guarantee expires in October.
"We continue to pay debenture holders on time, and that remains our focus," he said.
Compounding the firm's funding worries is the BNZ's indication that it does not want to keep providing $120 million funding standby facility for the securitisation programme acquired from Speirs Securities.
Paul is a staff writer for Good Returns based in Wellington.
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