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Allied Nationwide Finance falls into receivership

Fuseworks Media
Fuseworks Media

Wellington, Aug 20 NZPA - The receivers of Allied Nationwide Finance (ANF) will work with management at the finance company owned by Allied Farmers Ltd over the next few days to get a better insight into the company's workings.

Allied Farmers decided to stop supporting its subsidiary, saying it was unable to sustain the funding demanded by its trustee following a disputed breach of its trust deed.

The parent company believed its assets were best used for the benefit of shareholders, and most ANF investors would not be left too badly out of pocket as their principal and interest would be covered by the Crown retail deposit guarantee scheme.

In addition to the company collapse, Allied Farmers said tonight that its chairman John Loughlin had resigned.

ANF collapsed after missing payments on debenture maturities yesterday, affecting 4500 depositors with $130 million invested.

Receivers Kerryn Downey and Andrew Grenfell of McGrathNicol said they would work closely with Treasury and the Reserve Bank to determine valid investor claims as quickly as possible.

They would also work with ANF's senior management to understand the status of the company and assess initiatives undertaken by management to restructure the company's affairs.

The events unfolded during the day, but ultimately ANF advised that its directors decided this afternoon to request that its trustee appoint receivers.

McGrathNicol has been acting as independent advisers to New Zealand Guardian Trust (NZGT) and prepared a report on ANF, which resulted in the alleged breach of its trust deed ratio earlier this month. ANF's board then withdrew the company's prospectus.

"This alleged breach, which the Allied Nationwide Finance board and management continue to dispute, had a significant impact on the company's ability to manage liquidity and capital over the coming months," Allied Farmers managing director Rob Alloway said tonight.

"Allied Nationwide Finance continued to require funding from Allied Farmers on a scale that it could not justify in the interests of its shareholders."

ANF's receivership was the result of withdrawing the debenture prospectus, as the board was required to do, and not a result of the alleged breach, Mr Alloway said.

ANF said that up to yesterday, it had continued to meet all its financial obligations, including repayment of maturing debentures. It had been given 14 days, until 5pm today, to remedy the disputed breach of its trust deed with NZGT.

But as the capital and funding initiatives under consideration by the Allied group needed third party commitments and NZGT approvals, which had not been received by last night, it did not pay the debenture maturities due yesterday, ANF said. Allied Farmers shares last traded at just 2.6 cents each.

ANF said it expects an "acceptable outcome" from the receivership on the basis of its current net asset position and level of shareholder funds.

Mr Alloway said tonight that the company was in discussions with the underwriter involved in Allied Farmers' $19.3 million capital raising, put on hold when the ANF prospectus was withdrawn two weeks ago.

Credit rating agency Standard & Poor's has lowered its rating on ANF to D from CC, or to default from highly vulnerable, as a result of the company's collapse.

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