Allied Nationwide crumbles into receivers' arms
[UPDATED] Allied Nationwide Finance has been put in receivership after being forced to halt new fund raising, becoming the seventh firm poised to make a call on the government retail deposit guarantee.
Friday, August 20th 2010, 5:00PM
The unit of Allied Farmers has asked trustee NZ Guardian Trust to appoint receivers after running out of time to remedy a breach in its Trust Deed ratio. It had until 5 pm today to save itself. It has about $130 million owed to about 4,500 depositors.
"The Crown stands fully behind its guarantee commitments and we expect an orderly process of payment to eligible Allied Nationwide Finance depositors," said Treasury deputy secretary, financial operations Philip Combes, in a statement. It may take 2-3 months to verify who is owed what, he said.
Guardian Trust has appointed Kerryn Downey and Andrew Grenfell of McGrathNicol as receivers. The advisory firm has been working for Guardian Trust and wrote the report that resulted in the trustee alleging the breach, Allied Nationwide said in its statement.
Allied Nationwide said it expects "an acceptable outcome" from the receivership because of the current net asset position and shareholder funds. It had tried to find ways to placate Guardian Trust but had been unsuccessful.
Shares of the parent company, Allied Farmers, were last down 3.7% to 2.6 cents and have shed more than 70% of their value this year. More than 95% of the stock is held by former investors in Hanover and United.
The parent's chairman John Loughlin and chief executive Rod Alloway didn't immediately return calls.
Speirs Group separately today said its Speirs Investments unit holds two million perpetual bonds issued by Allied Nationwide and has a put option through until September 30 2013 at $1 a bon plus interest.Speirs is weighing an impairment of the holding.
S&P lowers rating
Standard & Poor's Ratings Services today lowered its long-term local-currency issuer credit rating on New Zealand finance company Allied Nationwide Finance Ltd. (ANF) to 'D' from 'CC'.
"This rating action follows ANF's announcement that it has not met the debenture payments that were due on Aug. 19, 2010, and today's announcement that ANF's directors have requested that its trustee appoint receivers to the company," Standard & Poor's credit analyst Peter Sikora said. "We believe this was due to the capital and funding initiatives that the company was negotiating not being executed in sufficient time for ANF to meet its liquidity needs, including the remedy of its trust deed breach."
We understand that ANF expects to complete an initial transaction today that could result in the payment of debenture maturities now due. We also understand that ANF has requested that New Zealand Guardian Trust (ANF's trustee company) consent to this transaction and provide a short extension to the original deadline.
ANF's slower-than-anticipated success in asset sales and new capital injection-along with some loan repayment delays-has material weakened its liquidity and cash position. Additionally, on Aug. 6, 2010, the trustee believed ANF to be in breach of a covenant under its trust deed-which saw the prospectus withdrawn from the market-and forced the company to repay all debentures as they matured; this has added significantly to ANF's liquidity pressures.
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