Hanover is dead; Long live the House of Farmers

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Wednesday, December 16th 2009, 10:37PM

by Philip Macalister

My predictions that Allied Farmers would get its deal on Hanover through the vote today turned out to be correct. However it was a close, very close, call. After hours counting the votes the key group voted in favour of the deal by just 0.4%. To succeed 75% of Hanover investors had to vote in favour of the deal. The biggest group, Hanover debenture holders said yes with75.4% voted in favour. The meeting was far more sedate than the moratorium decision meeting a year ago, with fewer investors turning up. It seems there was a bias in the audience. The anti brigade fronted. The acceptors didn’t. I suspect part of the reason is that those who wanted to taste the shareholders’ blood are the ones who turned up. They probably left dissatisfied as shareholder Mark Hotchin wasn’t involved in the meeting too much, and when he was he fronted strongly. Fellow shareholder Eric Watson did a no show leading to accusations he was a “shyster” and “chicken livered”. What struck me about the meeting (except for how young I felt amongst all these investors) is that emotion over-rode intelligence. Instead of baying for blood investors should try and be objective and look at the merits of the deal. Allied, Grant Samuel and others have been straight up and said if investors take shares there is a strong likelihood (I’d say 100%) that the share price will tank in the short to medium term. Also Allied Farmers MD Rob Alloway, while talking positively, acknowledged the Hanover book was a mess. The outcome of the meeting swung on the knife edge judging by the performance of some players. Here we rank how the key players performed – a little like how All Blacks get rated after a test match.

• Meeting chairman; Charles Darlow ; 6 – A solid performance like when he chaired the moratorium meeting. No nonsense, in control and organised. Let himself down by allowing “statements” at the end. Here a group of investors, most with scripted speeches, gave rousing performances extolling investors to vote against the proposal. These statements took the meeting to the knife edge. He shouldn’t have allowed them.
• Hanover chairman, David Henry, 2 – As he acknowledged he isn’t “an elegant speaker”. Ran the risk of putting all the old dears to sleep. His closing comments could have been stronger and more persuasive. Poor performance.
• Allied Farmers managing director, Rob Alloway, 7: Mr Nice Guy. Addressed most people by first name. Wore his heart on his sleeve. If anything too nice.
• Hanover shareholder Mark Hotchin; 8; Couldn’t believe he wasn’t involved in the meeting much until well into the second half when adviser Ton Watson challenged him to put in $20 million cash. Hotchin gave a passionate response, giving a frank assessment of how they first viewed the deal and why it was good for investors. Hotchin doesn’t like public speaking at the best of times, however necessity has seen him develop into a good speaker.

Reserves

• Hanover independent director Des Hammond – Didn’t have too much to do during the meeting, but kept the media at bay when they quizzed Hotchin in the stand up press conference while votes were counted.

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