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Crown guarantee triggered as Allied Nationwide Finance fails

Fuseworks Media
Fuseworks Media

Wellington, Aug 20 NZPA - Allied Nationwide Finance (ANF), the finance company owned by Allied Farmers Ltd, has collapsed after missing payments on debenture maturities yesterday.

ANF is covered by the Crown retail deposit guarantee scheme. Treasury said 4500 depositors with $130 million of deposits are affected.

"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 Philip Combes.

The events unfolded during the day but ultimately ANF advised that its directors decided this afternoon to request that its trustee, New Zealand Guardian Trust (NZGT), appoint receivers.

NZGT appointed Kerryn Downey and Andrew Grenfell of McGrathNicol.

McGrathNicol has been acting as independent advisers to NZGT and prepared a report on ANF, which resulted in the alleged breach of its trust deed ratio earlier this month.

"The board and management of ANF will cooperate fully with the receiver in the interests of all stakeholders of the company, including deposit and bond investors, staff, customers and Allied Farmers as shareholder," the company said in a statement to NZX.

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.

Allied Farmers said earlier today that ANF missed a payment of debenture maturities due yesterday.

ANF said it expected to complete an initial transaction today that would result in the payment of debenture maturities now due.

Allied Farmers has suspended a planned capital raising and ANF has suspended its prospectus while it sorts out a disputed breach of its trust deed with NZGT, which gave ANF 14 days, until 5pm today, to remedy the position.

The board and management of ANF did not agree with NZGT's view and believed that ANF was in compliance with the relevant ratio.

ANF said that up to yesterday, it had continued to meet all its financial obligations, including repayment of maturing debentures.

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.

Eligible depositors with Allied Nationwide Finance will be contacted by the Treasury and provided with information about how to claim under the terms of the Crown retail deposit guarantee.

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.

"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," Standard & Poor's credit analyst Peter Sikora said.

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