Allied Farmers may write down $23m loan; wants McKenna bankrupted
Allied Farmers may have to write down a $23 million loan secured by undeveloped land at Silverdale, north of Auckland.
Monday, March 28th 2011, 7:36AM
by Jenny Ruth
It is also opposing property developer Nigel McKenna's bid to avoid bankruptcy over the failed Kawaru Falls Station development in Queenstown. McKenna owes Allied at least $110 million but Allied has already completely written the loan off.
Allied told NZX on Friday lawyers for Hong Kong-based lender Asian Syndicate Finance has informed it Andrew Tauber and Paul Webb's company Honk 2 will default on a secured loan relating to the 59 hectare Silverdale property.
Allied holds a second mortgage over the property securing the $23 million loan Hanover Finance made to Honk 2 in March 2009 and says a preliminary updated valuation indicates a write-down may be necessary.
"It is not possible for us to fully understand the final impact on the carrying value of the loan until the completion of both the new valuation, and /or the sales process is completed," says Allied managing director Rob Alloway.
Allied bought Hanover's assets in late 2009, then valued at a gross $396.2 million, and has been writing their value down ever since. Its most recent write-down was $12.6 million which contributed to the $20.6 million net loss it reported for the six months ended December 2010.
Allied has been supporting Fletcher Construction's bankruptcy action against McKenna to whom Hanover and sister company United Finance provided finance from April 2005.
Allied says McKenna "surprisingly however omitted to include these significant (Allied) debts in a creditors' proposal put to the Court at the last minute" on March 21. McKenna is offering one cent in the dollar to creditors. Allied is now included in the proposal but says it won't support the proposed deal.
The bankruptcy hearing has been adjourned until April 18 to allow time for a creditors' meeting and vote and Allied expects McKenna to be bankrupted on April 19..
"We will not allow borrowers to avoid bankruptcy on the basis that over a long period of time we will receive a tiny proportion of what is owed from future earnings and unknown income sources," Alloway says.
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