ALF - Allied Farmers Limited

[Silverlight]

ALF Enters Agreement to Sell Prominent Queenstown Property

Allied Farmers Limited today announced that it has entered into a conditional agreement for the sale of the second stage of the well known “Five Mile” property in Queenstown.

The site comprises 23.4 hectares of bare land situated on the gateway into Queenstown. Adjacent to the airport and industrial park, it is thought to be suitable for future commercial and residential development.

Allied Farmers Managing Director, Rob Alloway said today “We have been working with a number of interested parties for some time and are pleased to have an agreement secured on terms and conditions which meet our expectations. We always knew this site had strong strategic value, and the sale price achieved, which is in excess of the value attributed to the property in the half year accounts, reflects that”.

“Whilst conditional, we are pleased with the timing of this sale, as it is near our financial year end and coincides with the negotiation of our banking arrangements for the next financial year” said Alloway.

The Five Mile property was once owned by Christchurch identity, David Henderson, who through the entity Five Mile Holdings Limited, unveiled plans to build a boutique town centre and residential development on the site. Five Mile Holdings Limited was placed into receivership by Hanover Finance in July 2008. The first stage of Five Mile, consisting of circa seven hectares, much of which has been excavated for an underground car park, was sold in November 2009 by Hanover Finance to Queenstown Gateway Trust Limited, led by well known Auckland developer, Anthony Gapes.

The sale is subject to various conditions and approvals which will be sought over the next month and Allied Farmers will keep the market informed once these conditions are met.

[Dr_Who]

Alot of people got dubbed into this company including the "experienced" players in the market.

Promoters promised so much and cannot deliver.

[Balance]

Must be about time to buy in.

Only absolute idiots bought into this stock to date.

[percy]

Must be about time to buy in.

Only absolute idiots bought into this stock to date.

I feel sure you will be quiet at home with them!! lol

[Balance]

I feel sure you will be quiet at home with them!! lol

http://www.sharetrader.co.nz/showthread.php?5408-Diligent-Boardbooks-IPO/page5

Thank you!

[Dr_Who]

Allied waits for funds as time runs out

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10654492

[winner69]

Allied waits for funds as time runs out

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10654492

As Balance would say the clock is ticking .... and the alarm about to go off

[minimoke]

T
PS: ALF now trading at 5c / share. There is quite a lot of support at 5c, but I wouldn't be too surprised if that chunk of 380,000 buys at that price disappears shortly.....
Ding! And today it looks like we'll hit 4c/ share.

[Alan3285]

Ding! And today it looks like we'll hit 4c/ share.

If you look at the depth figures, then it could well be lower than that.

Alan.

[Alan3285]

If you look at the depth figures, then it could well be lower than that.

Alan.

Just for the avoidance of doubt, I am not that good at picking prices (although I was right for once this time) - it was already below 4c before I posted, I was just too lazy to check again before hitting 'reply'.

Alan.

[minimoke]

If you look at the depth figures, then it could well be lower than that.

Alan.
Its looking like there might be a total collapse. Only 11 bids to buy 770k. These would be satisfied by teh 6 sellers at or below 4C. That could leave the remaining 19 sellers out in the cold.

[minimoke]

Just for the avoidance of doubt, I am not that good at picking prices (although I was right for once this time) - it was already below 4c before I posted, I was just too lazy to check again before hitting 'reply'.

Alan.No doubts or to worries on your postings on my part. I get the sense we can both sit back and watch the price go further south. Though what we have now is bidders for a penny dreadful in the true sense of the word - bidders now in at 1 cent!

[Lizard]

bidders now in at 1 cent!

.... surely even our Belg wouldn't???

[minimoke]

.... surely even our Belg wouldn't???
He could well be the mystery buyer lending support at that level or it could be one of his disciples. ALF buyers are exhibiting the classic lessons by following the tried and true Belgology technique of buying into a down trending stock and taking advantage of the dollar cost averaging that goes with it.

[evilroyrule]

im in for a penny.....

[Alan3285]

No doubts or to worries on your postings on my part. I get the sense we can both sit back and watch the price go further south. Though what we have now is bidders for a penny dreadful in the true sense of the word - bidders now in at 1 cent!

Indeed - I have to admit I am getting tempted though.....

However, I am already invested enough (elsewhere) so unless I liquidate something else I am not getting in just yet.

Alan.

[blockhead]

I think thats as low as you can go (bidders now in at 1 cent!) don't think you can put an order in for half a cent

[Alan3285]

I think thats as low as you can go (bidders now in at 1 cent!) don't think you can put an order in for half a cent

Isn't this one below 1c?

http://www.nzx.com/markets/NZSX/CER

Top bid = 0.009 (at time of post of course)


Alan.

[Alan3285]

I just tried putting on an order for 1m ALF at $0.001 ($1,000 worth at that price if my maths are right) but it was rejected by ASB's online system, possibly due to the limit price being too far off the current price (I have no idea why they reject for that reason, but they do).

Alan.

[minimoke]

im in for a penny.....
Which I guess also begs the question "what do you call a minus 10 bagger?" At 40c cents a year ago now down to less than 4 cents. I didn't come across a phrase for this in my Belgology text book - and FTX only managed to go from 50 cents to 10 cents in a year before the bottom fell out.

[Dr_Who]

Isn't this one below 1c?

http://www.nzx.com/markets/NZSX/CER

Top bid = 0.009 (at time of post of course)


Alan.

I remember CER well. Wasnt CER into weed chemicals at one stage with so many promises and BS?

Well, it doesnt go any lower then zero.


I just tried putting on an order for 1m ALF at $0.001 ($1,000 worth at that price if my maths are right) but it was rejected by ASB's online system, possibly due to the limit price being too far off the current price (I have no idea why they reject for that reason, but they do).

Alan.

If it gets to 1 cent you can kiss the company good bye.

[Alan3285]

I just tried putting on an order for 1m ALF at $0.001 ($1,000 worth at that price if my maths are right) but it was rejected by ASB's online system, possibly due to the limit price being too far off the current price (I have no idea why they reject for that reason, but they do).

Alan.

I also found this on ASB's site (probably won't fomat nicely):

All buy orders for NZX & ASX stocks must comply with the following price increments:

Exchange Instrument Price Range Price Steps
NZX Equities, Rights Issues, Warrants $0.01 - $0.199
$0.20 - $999.00 0.1 cent
1 cent
ASX Equities, Rights Issues, Warrants $0.01 - $0.099
$0.10 - $1.995
$2.00 - $999.00 0.1 cent
0.5 cent
1 cent


So that seems to imply they won't deal below 1c on NZSX listings, but the one I posted above seems to imply the exchange allows it.

Perhaps it is an ASB issue, but if I ask for the depth on CER from ASB it does show the two buy orders as:

62,616 @ 0.9

1,000,000 @ 0.3


I'd be interested to know if it is a limitation of using ASB, because that could be a good reason to move to Direct.


Alan.

[minimoke]

I'd be interested to know if it is a limitation of using ASB, because that could be a good reason to move to Direct.
Alan.
I put a bid in using Direct the other day on another company and it got rejected as being too far from market - even though the bid was, on my analysis, a reasonable reflection of value. Now I have to sit and wait for the SP to fall and go back in once the price gets closer to my offering. Oh and a word of caution - if your bid goes though chances are you'll end up being a majority shareholder with a seat on the Board. Do you really have the skills to maximise Director benefits while eroding shareholder value?

[Lizard]

I once had a bid rejected on a share (not ALF) I was trying to buy because the bid was too far from last trade, despite the fact that it was all that was on the offer... within a few hours, company directors bought the lot! I was pretty irritated about that - and astounded that I wasn't allowed to buy them (supposedly to prevent manipulation), but a director could!

(Turned out to be for the best, as it happened. Would have been a bad buy!)

[bull....]

Poor buggers in hanover have been shafted and all they have to show is the badly decomposed carcus of some rotten assets likely to depreciate more over time.

[777]

Except those that sold once getting the shares.

[Alan3285]

First news item:

Business Week - 20100629 - Allied Farmers says Hanover conduct breached obligations (http://www.businessweek.com/news/2010-06-29/allied-farmers-says-hanover-conduct-breached-obligations.html)

More detail here:

Stuff.co.nz - 20100630 - Allied accuses Hanover of breach (http://www.stuff.co.nz/business/3869146/Allied-accuses-Hanover-of-breach)


Every little helps I guess!

Alan.

[Walfootrot]

When you sup with the devil you need a long spoon- Alloway is finding this out to his cost and to original ALF shareholders.

[minimoke]

Every little helps I guess!
Alan.
I guess we will soon find if there is a difference between "won't pay today" and will pay in the future"
Punters now need to work out, again, who is cleverer. Is Alloway right and breaches have occurred - and those breaches have resulted in $5m in damage. Or have Hotchin and Watson stitched up a deal that enable them to act in the way they did (or allegedly did).

If Alloway is right then ALF will be $5m better off less the legal fees they are bound to incur. He must be assuming he is right because he is the one that did the due dilligence and got his solicitors to advise on the contractual terms. If Alloway is wrong then the $5m will need to be paid plus Hothicns legal costs plus any damages that have occurred from Allowyas action. Either way the real winners today will be the lawyers.

[minimoke]

So how does this happen? Trading is trending down in part cents. Opens the day on 3.5, spends most of the day around 3.6 and then bang on closing trades go through at 4c giving it a 11.1% rise on the last day of ALF financial year?

[percy]

When you sup with the devil you need a long spoon- Alloway is finding this out to his cost and to original ALF shareholders.

Wal,Never a truer statement.

[winner69]

Maybe tomorrow might be the day the ALF shareprice has a 2 in front of it ..... who said 2 cents would be a good entry point?

[Dr_Who]

Not long now

[Alan3285]

ALF010 looks like a much better investment to me - yielding 50% with all the 2 billion ordinary shareholders standing in line behind the bonds.

Alan.

[Balance]

ALF010 looks like a much better investment to me - yielding 50% with all the 2 billion ordinary shareholders standing in line behind the bonds.

Alan.

Read the terms of the issue carefully.

Most capital notes issued have the notes converting into shares at the company's option on maturity.

No free lunches.

Meanwhile, getting ready to have a play at ALF.

BRING ON THE 1.5c

[Alan3285]

Read the terms of the issue carefully.

Most capital notes issued have the notes converting into shares at the company's option on maturity.

No free lunches.

Meanwhile, getting ready to have a play at ALF.

BRING ON THE 1.5c

I don't recall having read that deed, so just guessing here, but if they did convert, it is usually via a VWAP formula, in which case you could get the shares, then immediately sell, and probably recoup most or all of the value anyway.

If so, then it doesn't matter to the bond holders, and the option gives the company a way to avoid paying out cash.

Is that correct?

Alan.

[minimoke]

I came across this quote which relates to Securitbank in 1977. Businessman Charles Belton wrote at the time: "It's criminal that someone can arrive from, say, Timbuktu, form a developing company, get some well-respected names to work for him, then get people to invest thousands of dollars. The developer pays himself a huge salary, buys a new car, and a flash house, then leaves many lamenting New Zealanders after the firm has gone broke. It is high time laws were introduced to make it more difficult for huge losses of investors hard-earned money."

[minimoke]

ALF Enters Agreement to Sell Prominent Queenstown Property

[I]Allied Farmers Limited today announced that it has entered into a conditional agreement for the sale of the second stage of the well known “Five Mile” property in Queenstown.

The site comprises 23.4 hectares of bare land situated on the gateway into Queenstown. Adjacent to the airport and industrial park, it is thought to be suitable for future commercial and residential development.

Allied Farmers Managing Director, Rob Alloway said today “We have been working with a number of interested parties for some time and are pleased to have an agreement secured on terms and conditions which meet our expectations. We always knew this site had strong strategic value, and the sale price achieved, which is in excess of the value attributed to the property in the half year accounts, reflects that”.

“Whilst conditional, we are pleased with the timing of this sale, as it is near our financial year end and coincides with the negotiation of our banking arrangements for the next financial year” said Alloway.
So the sale is now unconditional with settlement due in Mid November

[Stranger_Danger]

Hmm to quote Alloway

"They came late to this negotiation with a pretty compelling offer and we are
very pleased to be able to have concluded such a significant deal. When both
the buyer and seller are happy then the deal is usually about right" said Mr
Alloway.

In my experience, when both buyer and seller are a little UNHAPPY, then the deal is usually about right.

If both sides are happy, then generally both feel they have "done" the other side, and at least one (often both) end up wrong.

[Balance]

Read the terms of the issue carefully.

Most capital notes issued have the notes converting into shares at the company's option on maturity.

No free lunches.

Meanwhile, getting ready to have a play at ALF.

BRING ON THE 1.5c

Never got there.

In fact, our resident bell-ringer rang the bell a day ago and it is up 67% from when the bell rang.

Bugger!

[Alan3285]

Never got there.

In fact, our resident bell-ringer rang the bell a day ago and it is up 67% from when the bell rang.

Bugger!

Hi Balance,

Did you see my query above:


I don't recall having read that deed, so just guessing here, but if they did convert, it is usually via a VWAP formula, in which case you could get the shares, then immediately sell, and probably recoup most or all of the value anyway.

If so, then it doesn't matter to the bond holders, and the option gives the company a way to avoid paying out cash.

Is that correct?

Alan.


Is that correct or am I missing something out of the equation?

Thanks,

Alan.

[Balance]

Hi Balance,

Did you see my query above:




Is that correct or am I missing something out of the equation?

Thanks,

Alan.

Apologies - I think you are right. What you have to watch out for is thatthe circumstances around the company converting into shares - unless you can short the stock, you could find yourself trying to get out along with many others through a narrow door?

[Alan3285]

Apologies - I think you are right. What you have to watch out for is thatthe circumstances around the company converting into shares - unless you can short the stock, you could find yourself trying to get out along with many others through a narrow door?

Yes, I agree that is a generic risk with these things.

However, if my sums are right, the number of shares now on issue (2b or so) would far swamp the number of additional shares that would be issued if the bonds were converted.

If that is the case, then I don't think the 'narrow door' analogy is too much of a concern in this specific situation?

On the other hand, maybe my maths isn't so good??

Thanks,

Alan.

[Beagle]

[QUOTE=Alan3285;312567]Yes, I agree that is a generic risk with these things.

However, if my sums are right, the number of shares now on issue (2b or so) would far swamp the number of additional shares that would be issued if the bonds were converted.

If that is the case, then I don't think the 'narrow door' analogy is too much of a concern in this specific situation?
Alan, A lot depends on what's happening with the share price at the time, if its rising you can do really well out of it. e.g. KIPGB just converted at the end of this June and KIP ordinary shares were issed on conversion at a 2% discount to VWAP in the previous 20 business days, (adjusted for the divvy paid during that timeframe on KIP shares), anyway I got KIP shares issued at 87.6 cents earlier this month, with the current price being 94 Bid 95 ask, not a bad conversion wouldn't you say ?

[Dr_Who]

Abit like PVO, it had a dead cat bounce before it past away. A long way from the 50-60 cents. Ooops ....a certain pipe piper continues to play its pipe to the river.

[Alan3285]

I guess I just view the potential for conversion to be a worst case scenario that isn't all that bad.

Obviously the very worst case is a total fallover, but that doesn't seem very likely at this point, especially given that Westpac seem to have given them a medium term vote of confidence.

I still think that, for the bondholders (only), the Hanover deal was all upside, no matter what those acquired assets turn out to be worth.

Alan.

[Silverlight]

Alan, you may also want to consider what the bonus securites converting to new shares will do to the price, and more importnatly if they get converted before or after the debt.

[Doyle]

An oppertunity was there for a 80% return over the last few weeks. For those with a very strong constitution. I got on board a little early myself at 4 cents, but its always nice to be back into the black. (This time with a stop loss firmly in place). Just goes to show when things get really negative there is an opertunity to make money. Where to from here? I think back down to around 4.5 cents. (What I see as about fair value given the uncertainty). But who knows another good realisation of some cash and it could hit 7 or 8 cents. Hardly exciting for those who were original hanover depositors, but exciting for those who are willing to trade this in the meantime. Prepare for a wild ride!!!!!!!!!

P.S. anyone else think that it would make sense to try and sell off the rural supplies and stock agents network. To me this is now just a distraction. ALF is not even a rural finance company anymore, in fact you could only describe it as a speculative one. Way I see it hock them off. Realise a little more cash and focus on the only way they have to add value for shareholders which is realising the best they can from the loan book.;)

[Alan3285]

Alan, you may also want to consider what the bonus securites converting to new shares will do to the price, and more importnatly if they get converted before or after the debt.

Hi Silverlight,

Did you see my post on that above? Have I made a mistake in the respective numbers?

Thanks,

Alan.

[Balance]

An oppertunity was there for a 80% return over the last few weeks. For those with a very strong constitution. I got on board a little early myself at 4 cents, but its always nice to be back into the black. (This time with a stop loss firmly in place). Just goes to show when things get really negative there is an opertunity to make money. Where to from here? I think back down to around 4.5 cents. (What I see as about fair value given the uncertainty). But who knows another good realisation of some cash and it could hit 7 or 8 cents. Hardly exciting for those who were original hanover depositors, but exciting for those who are willing to trade this in the meantime. Prepare for a wild ride!!!!!!!!!

P.S. anyone else think that it would make sense to try and sell off the rural supplies and stock agents network. To me this is now just a distraction. ALF is not even a rural finance company anymore, in fact you could only describe it as a speculative one. Way I see it hock them off. Realise a little more cash and focus on the only way they have to add value for shareholders which is realising the best they can from the loan book.;)

Well done!

I was waiting at 1.5c so has missed out.

[Dr_Who]

Follw the pipe piper and drown in the river esp when clients got in at 50-60 cents.

http://www.sharetrader.co.nz/showthread.php?3044-Allied-Farmers-Limited-ALF./page5

[Balance]

Follw the pipe piper and drown in the river esp when clients got in at 50-60 cents.

http://www.sharetrader.co.nz/showthread.php?3044-Allied-Farmers-Limited-ALF./page5


If any anyone is unfortunate or dumb enough to get into ALF at those levels, they should get a sympathetic pat on the shoulders - from those who lost less investing in ELD at $1.80?

[Alan3285]

Follw the pipe piper and drown in the river esp when clients got in at 50-60 cents.

http://www.sharetrader.co.nz/showthread.php?3044-Allied-Farmers-Limited-ALF./page5

I missing something here - who specifically got in at 50 - 60c?


Confused Alan.

[Balance]

I missing something here - who specifically got in at 50 - 60c?


Confused Alan.

If anyone did, they need their head read!!!

[Alan3285]

If anyone did, they need their head read!!!

Possibly, but Dr_Who was making a reference to someone in particular buying in that specific price range and posting about it in the fifth page of this thread - I couldn't work out who he is referring to.

Alan.

[Balance]

Possibly, but Dr_Who was making a reference to someone in particular buying in that specific price range and posting about it in the fifth page of this thread - I couldn't work out who he is referring to.

Alan.

He has confused ALF with ELD?

[Alan3285]

He has confused ALF with ELD?

That could explain it.

Or at the very least, he has confused me!

Alan.

[Balance]

That could explain it.

Or at the very least, he has confused me!

Alan.

BTW - I just tripped to squash the freaking insect moving around under your name!

Good one!

[Alan3285]

BTW - I just tripped to squash the freaking insect moving around under your name!

Good one!

:-)

Alan.

[minimoke]

BTW - I just tripped to squash the freaking insect moving around under your name!

Good one!
What? Damn!. Just sent my screen to the repair shop to get rid of the bug.

[Alan3285]

What? Damn!. Just sent my screen to the repair shop to get rid of the bug.

(:-O)

Alan.

[minimoke]

BTW - I just tripped to squash the freaking insect moving around under your name!

Good one!
I'm told those that see the dancer going anti clockwise make the best investment decisions

[trackers]

damn... used to be able to see that chick spin both ways but can only see counterwise today... My share picking skills have also taken a turn for the worse lately, so perhaps you're right Minimoke lol!!

[Alan3285]

I'm told those that see the dancer going anti clockwise make the best investment decisions

What does it mean if she seems to be totally static for me??


Alan.

[minimoke]

What does it mean if she seems to be totally static for me??


Alan.
There's a bug in your system? (alternatively brain function has ceased)

[Alan3285]

There's a bug in your system? (alternatively brain function has ceased)

Damn bug!

I'm itchy all over now!

Alan.

[Doyle]

The comments from Rob Alloway, I find very curious. To me their original disclosure notice was perfectly adequate and made it clear that an "extension" had been made through to march next year. If some media have reported it incorrectly that is hardly ALFs problem. I.e. if the media are being over negative print a clarification, if the media are being over positive thats their problem not ALF's.
It seems to me alloway is very worried there is still a lot more to play out on their banking arangements, why else come out with a negative press release. I sold my ALF on friday on the tone of the announcement. Plus at 6.9 cents, they really are starting to get well above the NPV of their loan book.

Keep an eye on this one though i'm thinking there will be plenty more oppertunities to trade this one.

[Alan3285]

The comments from Rob Alloway, I find very curious. To me their original disclosure notice was perfectly adequate and made it clear that an "extension" had been made through to march next year. If some media have reported it incorrectly that is hardly ALFs problem. I.e. if the media are being over negative print a clarification, if the media are being over positive thats their problem not ALF's.
It seems to me alloway is very worried there is still a lot more to play out on their banking arangements, why else come out with a negative press release. I sold my ALF on friday on the tone of the announcement. Plus at 6.9 cents, they really are starting to get well above the NPV of their loan book.

Keep an eye on this one though i'm thinking there will be plenty more oppertunities to trade this one.

Hi Doyle,

What is the NPV of their loan book?

Where are you getting a figure from, or how are you working it out?

I realise it will only be an estimate, but I am interested in what you are getting, and the methodology you are applying.

Thanks,

Alan.

[Doyle]

Hi Doyle,

What is the NPV of their loan book?

Where are you getting a figure from, or how are you working it out?

I realise it will only be an estimate, but I am interested in what you are getting, and the methodology you are applying.

Thanks,

Alan.

Hi Alan, can only provide two estimates I am afraid. And they are not particularly insightful.

The first is the disclosed fair value, most of you will discredit these as nonsense, however I would remind everyone of the impact of the IFRS on calculating these assets, meaning they are infact discounted using appropriate ( In this case high) discount rates. After impairments are calculated.

The Value of assets received from hanover are currently valued at 86.5 Million.
I estimated you can add around another 17 mil to that from the amount that has not been reviewed yet. (Thats a simple pro rata calculation nothing scientific.)

So the figure is 103.5 Million.

Plus you can add to that any net assets from the ALF previous to hanover takeover. The rural supplies bussiness still has a value, the finance company was virtually insolvent before hanover came along. Un-fortunately we don't know alot about these as they are no longer really central to ALF operations. Now I view the rural bussiness as having a value however, have a concern that the old finance was walking a tightrope. So Im going to hope that the net balance of the old assets are zero.

103.5 mil / 1952290000 = 5.30 cents per share.

This is really a generous estimate, however there is some potential upside to this due impairments not necesarily being realised.

The next estimate is one i probably like a little more although it is probably more generous, grant thortons report gave 56 cents as the bottom of the range for its report. They already payed out 6 cents, so minus that off and ascribe a value of 78cents in the dollar which is what the original transaction was based on.

396.2 mil/ 0.78 *0.5 = 253.974

Then discount these, (This is bascilly a junk bond and in all seriousness you would expect about an 18 percent return to take on these kind of crap asstes)
253.974/ 1.18 ^3 = 154.8621 /1952290000 = 7.9323 cps.


So NTA in my view is somewhere between 5.3-7.9 cps.

There are risks to this:

Too the downside:
-we don't know what has been happening in ALF's other bussiness's. There could be more writedowns in it's old non-hanover loans.
- The developent market could continue downwards.
-high legal and administrative costs.
Too the upside:
Impairments may not be realised, particularly overtime.
Interest collected on some loans may exceed expectations. (penalty interest)

Sorry Allan I dont have any insightful information really, only some guesses. To me the bigger uncertainty lies not in the hanover loan book but the old ALF loan book which was subjected to far less scrutiny.

Personally I see it as a buy in the low fours and a sell at anything above 6. We will know more when we see the annual report.

What I really want to see is the rural supplies business sold, it's only a distraction now.

Many will ridicule my estimates and insist there is no value here at all. It will be interesting to see how this one plays out, but to be honest I see movement to the upside possible over the longtime.

I agree the assets are not worth alot however, I don't accept and never have that they are worth nothing. If you have nerves of cast Iron then there will be many trading oppertunities on this one in the days to come.

[Alan3285]

Hi Alan, can only provide two estimates I am afraid. And they are not particularly insightful.

The first is the disclosed fair value, most of you will discredit these as nonsense, however I would remind everyone of the impact of the IFRS on calculating these assets, meaning they are infact discounted using appropriate ( In this case high) discount rates. After impairments are calculated.

The Value of assets received from hanover are currently valued at 86.5 Million.
I estimated you can add around another 17 mil to that from the amount that has not been reviewed yet. (Thats a simple pro rata calculation nothing scientific.)

So the figure is 103.5 Million.

Plus you can add to that any net assets from the ALF previous to hanover takeover. The rural supplies bussiness still has a value, the finance company was virtually insolvent before hanover came along. Un-fortunately we don't know alot about these as they are no longer really central to ALF operations. Now I view the rural bussiness as having a value however, have a concern that the old finance was walking a tightrope. So Im going to hope that the net balance of the old assets are zero.

103.5 mil / 1952290000 = 5.30 cents per share.

This is really a generous estimate, however there is some potential upside to this due impairments not necesarily being realised.

The next estimate is one i probably like a little more although it is probably more generous, grant thortons report gave 56 cents as the bottom of the range for its report. They already payed out 6 cents, so minus that off and ascribe a value of 78cents in the dollar which is what the original transaction was based on.

396.2 mil/ 0.78 *0.5 = 253.974

Then discount these, (This is bascilly a junk bond and in all seriousness you would expect about an 18 percent return to take on these kind of crap asstes)
253.974/ 1.18 ^3 = 154.8621 /1952290000 = 7.9323 cps.


So NTA in my view is somewhere between 5.3-7.9 cps.

There are risks to this:

Too the downside:
-we don't know what has been happening in ALF's other bussiness's. There could be more writedowns in it's old non-hanover loans.
- The developent market could continue downwards.
-high legal and administrative costs.
Too the upside:
Impairments may not be realised, particularly overtime.
Interest collected on some loans may exceed expectations. (penalty interest)

Sorry Allan I dont have any insightful information really, only some guesses. To me the bigger uncertainty lies not in the hanover loan book but the old ALF loan book which was subjected to far less scrutiny.

Personally I see it as a buy in the low fours and a sell at anything above 6. We will know more when we see the annual report.

What I really want to see is the rural supplies business sold, it's only a distraction now.

Many will ridicule my estimates and insist there is no value here at all. It will be interesting to see how this one plays out, but to be honest I see movement to the upside possible over the longtime.

I agree the assets are not worth alot however, I don't accept and never have that they are worth nothing. If you have nerves of cast Iron then there will be many trading oppertunities on this one in the days to come.

Thanks Doyle - That's great stuff.

Alan.

[Silverlight]

Doyle I think your analysis is fine at the start of the acquisition, but Grant Thornton valuing at 56 cents in the dollar makes 400m loan book worth 224m.

ALF's announcement from 28 May showed they now only value the book at $124m. So GT's estinmate is way high, unless you still thinks this estimate is good? ie the assets will be revalued upwards by 100m?

On 9 June (page 16 of this thread) I estimated 3.725 cents per share, based on the current financials and the future weighting of the 500m shares still to be issued under the bonus securities.

[Alan3285]

Doyle I think your analysis is fine at the start of the acquisition, but Grant Thornton valuing at 56 cents in the dollar makes 400m loan book worth 224m.

ALF's announcement from 28 May showed they now only value the book at $124m. So GT's estinmate is way high, unless you still thinks this estimate is good? ie the assets will be revalued upwards by 100m?

On 9 June (page 16 of this thread) I estimated 3.725 cents per share, based on the current financials and the future weighting of the 500m shares still to be issued under the bonus securities.

Hi Silverlight,

The possible 500m shares from converted bonds - this will depend on the VWAP at any date of conversion?

Am I correct in assuming that, if the shareprice is 3.725 and this converts the bonds to 500m shares, then a (hypothetical!) share price of 7.450 (twice as much) converts the bonds to 250m shares?

Thanks,

Alan.

[Silverlight]

Not the bonds, the bonus securities that convert to shares that were issued to all ALF shareholders before the Hanover holders came onboard. They convert to shares at a rate determined by the loanbook impairment.


At the current $270m shorfall on the asset impairment I calculate that holders of ALF on 16 Dec 2009 will get issued 564m new shares, because of the current shortfall, on 30 June 2011.

Page 10 -11 Notice of Meeting 24 Nov 2009 (https://www.i-search.nzx.com/blobs/NZSE0000/2009/323365/NZSE0000-110211.pdf)

[Alan3285]

Not the bonds, the bonus securities that convert to shares that were issued to all ALF shareholders before the Hanover holders came onboard. They convert to shares at a rate determined by the loanbook impairment.

Ah-ha!

Sorry, I should have read your post more carefully!

Thanks,

Alan.

[Doyle]

Hi guys, I did forget about the bonus securities (rookie error). In response to your question in short yes i see some revaluation in the loan book, which is why I still put some credence in Grant Thortons valuation. The impact of IFRS in the current market is huge, which is why I am slightly wary of the updated valuations. I guess the issue of the bonus shares comes down to when they are issued? from my own memory that was not to be until most of the loan book was realised. So in short some way off yet.

P.s. Don;t forget 6 cents was already distributed after the grant thorton report was made. The grant thornton report was based on 56 cents in original capital not 56 cents in the dollar of assets.

Hence why my figure was 253.974 million.

[Lizard]

It would be good to have someone else recheck the amount of the bonus securities under the formula. I seem to remember a journo (Chalkie?) published something that mentioned the bonus issue a few days after Silverlight did, but got only 50m (just going off memory here, so might be wrong). I started trying to calculate for myself, but must have got distracted... has anyone else checked it?

Just tried the calc and got 82.6m shares to be issued June 2011 at $272m shortfall. Any others?

[Silverlight]

Lizard you are right! :)

I can't offer any excuse for my shameful first calculation, I just got 82,689,546 shares.

I used a notepad first time, this time excel :p

[Lizard]

I can't offer any excuse for my shameful first calculation

I can... the formula was not particularly straightforward or obvious (and there was a key bracket missing)! Actually, I just found the Chalkie article and he/she calculated that each bonus share would convert to 14.6 ordinary shares (his calculation was published 3 June), so that is different again - I just figured at the time that one of you was out by a factor of 10. From what we've both now got, it would be 21.9 shares per bonus share (or a 220% increase in each original ALF holders (pre-Hanover) shareholding.)

Worth noting that from here, any increase in the shortfall would accelerate the quantity issued though. While the IFRS amortisation effect would decrease the shortfall (as would more sales at above current value), there is also the possibility of further decreases in property values and the question of likely impairments on the remaining $37.5m loan book still to be examined. But would need about a $370m shortfall (i.e. Hanover asset value of just $26m) to be issuing over 500m shares.

[Doyle]

0.044, Glad I had a stop loss trailing this one. Made 50% in 20 days and 5 days later we are just about bak to where I started.

[Stranger_Danger]

Umm, so now they're asking 80 year old ex Hanover debenture holders to put money in?

Is it April Fools day?

[winner69]

Umm, so now they're asking 80 year old ex Hanover debenture holders to put money in?

Is it April Fools day?

What happens when you are desperate for survival eh

[Stranger_Danger]

Pretty much.

This is the key line - The recent extension to our
banking arrangements with Westpac, albeit with restructuring and capital
raising milestones that are required to be met, signalled confidence in our
plans, which we too are confident provide a solid foundation for our future
growth.

Capital raising failure = bye bye company.

[Dr_Who]

I have been voicing loud and clear for those that did want to listen.

[Alan3285]

Pretty much.

This is the key line - The recent extension to our
banking arrangements with Westpac, albeit with restructuring and capital
raising milestones that are required to be met, signalled confidence in our
plans, which we too are confident provide a solid foundation for our future
growth.

Capital raising failure = bye bye company.

Can it fail if it is underwritten?

Alan.

[winner69]

Bet you that most of Hangover holders who are now Allied shareholders don't even know what a rights issue is .... heck many didn't knoe about shares or have a CRN number and such things

Maybe they might be tempted if Allied say heck guys the last lot you got were 20 cents odd and these are 2.5 cents ....... what a bargain eh .... cheap as

[darksentinel]

heck guys the last lot you got were 20 cents odd and these are 2.5 cents ....... what a bargain eh .... cheap as
And just ignore the fact that the last lot are now worth 1/5 of what you got 'em for.

Similar to the UK pensioners with BP stock. Poor, innocent victims.

[bull....]

wow cant get much closer to my 2 c valuation than this , unless they go bust of course which must be a possibilty now if they have to go to the drastic action of a rights issue at this price.

[winner69]

April last year a rights issue at 40 cents .... good one

And whatever happened to the $7m Resimac from Aust 'committed' last October ..... that propped up the balance sheet big time and sucked Westpac in for a while ..... and now the chicken has come home to roost ..... and desperate measures now needed ..... wasn't it Shoeshine in one recent column talking about such things used the word deception

[minimoke]

Pretty much.

This is the key line -...
Capital raising failure = bye bye company.
I quite like this line as well" "I am also encouraging our current shareholders to take up their rights, not only to support the business and its future plans, but also to avoid any dilution effect from the capital raising"

Encouragement = "you are over a barrel. We've taken our pleasure with you via Hanover but we want to be around a bit longer so we can take advantage of our salaries and director fees. We need your support because there is no money in Hanover and other parts of the business don't look that flash. We've comprehensively managed to dilute your original investment and we encourage you to give us more NOW because its near on impossible to dilute value when its at Zero.

[Dr_Who]

I quite like this line as well" "I am also encouraging our current shareholders to take up their rights, not only to support the business and its future plans, but also to avoid any dilution effect from the capital raising"

Encouragement = "you are over a barrel. We've taken our pleasure with you via Hanover but we want to be around a bit longer so we can take advantage of our salaries and director fees. We need your support because there is no money in Hanover and other parts of the business don't look that flash. We've comprehensively managed to dilute your original investment and we encourage you to give us more NOW because its near on impossible to dilute value when its at Zero.

You are onto it Minimoke.

[winner69]

this will take total shares to over 2.5 billion

A 100 for 1 consolidation after the rights will make the Hangover people feel rich ... and the 2.5 cents will then be a real bargain ..... see its all about perception .... not deception

[Doyle]

Haha you really have to laugh at this carry on. The fact that it is 50% underwritten gives it some hope of success. Still getting even 50% subscriptions will be a mission. How much capital do they need to survive? because I have to say this is the most destined to fail capital raising I have ever seen.

[lewinsky]

Mark and Eric must be choking on their beer as they line up the deck chairs around the poolside in Hawaii

[percy]

You will all enjoy Chalkie's article in this morning's Press.I could not find it on stuff website,but no doubt it will appear.

[Dr_Who]

You will all enjoy Chalkie's article in this morning's Press.I could not find it on stuff website,but no doubt it will appear.

Would be interested in reading the article. Pls provide link when available. Cheers.

[Jaa]

Here ya go:

Time for Hanover investors to get angry
http://www.stuff.co.nz/business/opinion/3989279/Time-for-Hanover-investors-to-get-angry

[percy]

Would be interested in reading the article. Pls provide link when available. Cheers.

I will try to give you the link,if it does not work go to www.stuff.co.nz then enter Chaklie in search.
Here goes with link www.stuff.co.nz/business/.../Time-for-Hanover-investors-to-get-angry
Sorry just tried the link, did not work,but Chalkie in search did.

[Alan3285]

I will try to give you the link,if it does not work go to www.stuff.co.nz then enter Chaklie in search.
Here goes with link www.stuff.co.nz/business/.../Time-for-Hanover-investors-to-get-angry
Sorry just tried the link, did not work,but Chalkie in search did.

The direct link works for me - thanks!

Alan.

[winner69]

My view only but ANP needs a heck more capital than $10m .... esp later this year

The big question is will ALF be in a position to provide this?

Lot more to be come out yet I fear

Seems that this bit of 'conjecture' last April was the case

Still would like to know if Resimac ever intended to put the 'committed' $7m into ALF .... or just a big con

[minimoke]

So the Trustees of Allied Nationwide reckon they are in breach of one of their covenants with one of their financial rations out of kilter. The company has withdrawn its Prospectus at this vital cash raising time and has 14 days to satisfy the Trustees. Not a great look when ALF has gone to market looking for more cash. The end of August is going to be interesting in so many ways.

[minimoke]

Capital raising failure = bye bye company.
Well, the capital raising has been put on hold for a while until the Allied Nationwide trustee issues are sorted out. An understandable delay but a delay they can ill afford. In the meantime SP down to $0.035

[Stranger_Danger]

Bye bye company.

[Doyle]

In the mean time the SP will probably drift below the rights price, meaning it will have to be discounted further. This is real trouble here, I bet the institutions who took the placement are spewing and looking for an out.

[winner69]

Talk about shifting the deck chairs on the Titanic .. "It is possible that the solution to the Trustee's concerns will involve Allied Farmers providing additional capital to Allied Nationwide ....... one option may include the transfer to Allied Nationwide of some of the assets acquired from Hanover Finance and United Finance

Jeez those Hangover assets must be really worth something .... they sure have been valuable to ALF .... saved them from going under last year .... enough to make ALF a NZX50 company for a few days (or almost) ..... and now we can use them to provide more (paper) capital to keep a finance company afloat. Surely the Trustee won't fall for that trick .... but 100% guaranteed they will.

Whatever happened to real money I ask

All this carry on with ALF and SCF is quite laughable really

[Dr_Who]

As I said before... wont be long now guys.

[minimoke]

Whatever happened to real money I ask

winner, you're clearly at odds with Chris Lee. He says "We applaud the company's fighting spirit"

[winner69]

So the trustee reckons that total liabilities is greatrer than 90% of tangible assets ....... Allied disagrees .... they obviously think that liabilities are less than 90% of assets

As liabilities are usually a real number quite apparent that the trustee and Allied have different views of the assets figures ................ and the trustee doesn't think they are worth as much as Allied does ... what a surprise

Some admire Allied for their 'fighting spirit' (in keeping the thing afloat apparently) but it is when you are fighting to survive that judgement sometimes gets a bit blurred

Any bets on where ANF and ALF might be in 3 weeks time



of total liabilities to total tangible assets. Under the Deed, the company must not let its total liabilities exceed 90% of the value of its total tangible assets.

[winner69]

Maybe Alloway should practice what is emblazoned across the Allied Finance home page

Know where you stand, Know where you are going

The know part seems to be missing

[winner69]

Chalkie doesn't bring up we didn't already know this morning but reckons the board should be sacked and Allied Finance put into liguidation

So if Chalkie says that should happen must be the way to go .... but many admire Allieds fighting spirit

Still would like to know if Resimac was/is really serious about putting in the $7m or whether it was just a ploy to give Westpac some confidence .... prob why Westpac are so pissed off now .... yes Resimac still have that option, yeah right .... didn't Shoeshine use the word deception in one of his articles.

[Lizard]

Hanover assets now valued at $94.3m. Takes the shortfall to $301.7m and, by my calc, the no. of ordinary shares to be issued to ALF Bonus Share holders at 31 Jun 2011 now at 120m (presuming of course that there is still an ALF to issue them). That's a conversion rate of about 32 ords to 1 bonus.

[winner69]

Is a CC credit rating on negative watch good?

When I went to school a C was still a pass .... maybe not in this case

[Jaa]

Is a CC credit rating on negative watch good?

When I went to school a C was still a pass .... maybe not in this case

C's got degrees too!

[minimoke]

I

When I went to school a C was still a pass .... maybe not in this case
When I went to school math was never a strong point but doesn't $24.5m in Property Assets plus $57.8m in loan assets equal $82.3m? So where does the $94.3m come from?

[winner69]

Hanover assets now valued at $94.3m. Takes the shortfall to $301.7m and, by my calc, the no. of ordinary shares to be issued to ALF Bonus Share holders at 31 Jun 2011 now at 120m (presuming of course that there is still an ALF to issue them). That's a conversion rate of about 32 ords to 1 bonus.

So we go from $400m to $175m to $124m and then six weeks later to $94m ,,, what a joke

And they want to use some of this $94m to prop up ANF ... if I was the trustee i would be wanting twice what is needed to sort of cover myself, just maybe

I understand they are still capitalising interest on many of these loans ..... could just report an operating profit .... nice one

Hangover investors have been shafted more by ALF than what Hotchin et al did to them ... at least they knew what they were letting themselves in for with Hotch et al

What a joke .... as Chalkie says put everybody out of their misery

[Lizard]

When I went to school math was never a strong point but doesn't $24.5m in Property Assets plus $57.8m in loan assets equal $82.3m? So where does the $94.3m come from?
Those figures are the impairment provisions/fair value adjustments from 31 Dec, not the current valuations. Nearly halved in value in 6 months (was $175.5m).

[Beagle]

When I went to school math was never a strong point but doesn't $24.5m in Property Assets plus $57.8m in loan assets equal $82.3m? So where does the $94.3m come from?

Common guys, Giddee-up...do your homework and google Standard and Poors and learn about their ratings. I'm not going to post a link as IMO people need to learn to do their own reasearch.

CC on negative credit watch is an appalling rating and its nothing to do with the grades you got at school.

[minimoke]

Those figures are the impairment provisions/fair value adjustments from 31 Dec, not the current valuations. Nearly halved in value in 6 months (was $175.5m).

Of course - thanks. No point even trying to do basic math when head is full of cold but my math is as good as Bernard hickey whos site says
The acquired Hanover property assets were valued at NZ$24.5 million at June 30, Allied Farmers said, and loan assets at NZ$57.8 million.. - time to find that medication.Then I might be able to find the other $1.1m

[Doyle]

The market is so wrapped up in falling stocks it has forgotten about ALF, If we were paying attention it would be below 3 cents already. Running out of positive things to say about this one, might jump on board for one last trade at some stage, but it would seem that the end is nigh.

[lewinsky]

The guys that did due diligence on this must be a tad red faced at the moment.

The colour of their faces must match Mark Hotchins sun tan in Hawaii?

Did they get independent advice like the directors of Feltex?

Disaster zone.

[winner69]

Common guys, Giddee-up...do your homework and google Standard and Poors and learn about their ratings. I'm not going to post a link as IMO people need to learn to do their own reasearch.

CC on negative credit watch is an appalling rating and its nothing to do with the grades you got at school.

Roger ..... you should know us better than that

We are nice guys here and just didn't want to use the word junk .... or crap or whatever

You can get a D from S&P so CC not that bad

Always hard to remember that 3 c's are better than 2 c's which is better than 1 C .... so a few more steps down yet for ANF

Bit like nudge nudge wink wink all this stuff .... and retrospective as well

[minimoke]

The guys that did due diligence on this must be a tad red faced at the moment.

The colour of their faces must match Mark Hotchins sun tan in Hawaii?

Did they get independent advice like the directors of Feltex?

Disaster zone.

Lewinsky - if we look back to the time teh Allied / Hanover deal was done some key points in teh booklet that went out to investors at teh time included"
- The Independent directors, Henry and Hammond, "unanimously recommend that investors vote in favour" of the proposals.

- The independent report from Grant Samuel also recommends investors should vote for the proposal as it is "superior to the status quo (and the prospect of potential receivership)".

- Guardian Trust, the trustee for Hanover debenture holders, warns that if the proposal is accepted and investors decide to sell their Allied Farmers shares straightaway they are likely to get less than 72c each (the value ascribed to the shares in the deal).

- It also warns that if the deal is approved, Hanover investors will "cease to have any claim against the company, its residual assets or rights, or any shareholder support regardless of whether you voted in favour of the resolution or not".

- Guardian Trust general manager corporate trusts, Bryan Conner, also makes it clear that if investors vote in favour of the proposal they are swapping illiquid debt securities, which are secured against the assets of Hanover for shares in Allied Farmers which are liquid, but rank behind Allied Farmers' other liabilities.

- Also the report says there is little likelihood another offer will eventuate, and that if Hanover stays in its moratorium there is "every likelihood" the company will end up in receivership.
Grant Samuel says that investors are likely to receive less from a receivership than from the moratorium.

[bull....]

Watson and Hotchin must be laughing about how they dumped their crap on alf and escaped liability if it went bust. Probably sunning it up somewhere drinking a Pina Colada

[winner69]

Hope ANF trustee accepts the Hangover assets as new capital so ANF can survive past early October .... minimoke, Liz and myself (and roger) don't want to and can't afford to repay depositers

[minimoke]

Watson and Hotchin must be laughing about how they dumped their crap on alf and escaped liability if it went bust. Probably sunning it up somewhere drinking a Pina Colada
I doubt they are. If you go back to when ALF took over Hanover the stupid (and I'll take the heat for calling them stupid - as well as greedy) Hanover investors thought ALf was a better option. The grass was greener and they would get more money from the deal. But they didn't read that it was clearly flagged that ALF back office were way less competent than hotchin and Watson and that the values were questionable. Hotchin and Watson breathed their sighs of relief a long time ago - complete with $10 - $20m extra cash in hand. I suspect they would have moved on a long time ago - which is why ALF holders are in the poo.

[minimoke]

Hope ANF trustee accepts the Hangover assets as new capital so ANF can survive past early October .... minimoke, Liz and myself (and roger) don't want to and can't afford to repay depositers
Jeez, I'm sitting here wondering just how much we are going to be asked to stump up with - is if around $200m. I'll take heart from Chris Lee's wise words just less than a month ago: "Allied Nationwide Finance, in our view, is a well managed business and the shareholders are beginning to display a willingness to add more capital as they convert the Hanover assets into useful cash."

But then I'm dragged back to reality and reminded ALF / Hanover investors knew ages ago that at least 73% of Hanovers loan book was impaired and 90% of Uniteds was either unsecured or second mortgage loans (now where does this sound familiar - Oh I know SCF and Aorangi). And we are being asked to support the Deposit Guarantee because of turmoil in world financial markets and maintaining public confidence in our Finance Sector. Give me a break - they (the investors and Companies) are incompetent so why should we support them!

[winner69]

Jeez, I'm sitting here wondering just how much we are going to be asked to stump up with - is if around $200m. I'll take heart from Chris Lee's wise words just less than a month ago: "Allied Nationwide Finance, in our view, is a well managed business and the shareholders are beginning to display a willingness to add more capital as they convert the Hanover assets into useful cash."

But then I'm dragged back to reality and reminded ALF / Hanover investors knew ages ago that at least 73% of Hanovers loan book was impaired and 90% of Uniteds was either unsecured or second mortgage loans (now where does this sound familiar - Oh I know SCF and Aorangi). And we are being asked to support the Deposit Guarantee because of turmoil in world financial markets and maintaining public confidence in our Finance Sector. Give me a break - they (the investors and Companies) are incompetent so why should we support them!

Painful eh but thats what capitalism is all about

[bull....]

Jeez, I'm sitting here wondering just how much we are going to be asked to stump up with - is if around $200m. I'll take heart from Chris Lee's wise words just less than a month ago: "Allied Nationwide Finance, in our view, is a well managed business and the shareholders are beginning to display a willingness to add more capital as they convert the Hanover assets into useful cash."

But then I'm dragged back to reality and reminded ALF / Hanover investors knew ages ago that at least 73% of Hanovers loan book was impaired and 90% of Uniteds was either unsecured or second mortgage loans (now where does this sound familiar - Oh I know SCF and Aorangi). And we are being asked to support the Deposit Guarantee because of turmoil in world financial markets and maintaining public confidence in our Finance Sector. Give me a break - they (the investors and Companies) are incompetent so why should we support them!

Gee is this comment about chris for real , I dont read or know him that well but hes obviously a clever fellow lol.

[minimoke]

Painful eh but thats what capitalism is all about
I don't accept that this is capitalism. Without wanting to start a whole debate on what capitalism is or isn't we know that broadly speaking its about a free economy where risk takers get rewarded for taking risk (without government intervention) and bear the loss when the risk goes bad.

I just fail to understand why the tax payer is standing behind useless investors who continue to blindly put money into crappy investment companies (Allied with its CC rating and SCf with its short term C and negative credit watch to name but two) and even now people are prepared to pay $0.034 for ALF. And the tax payer has to stand behind them when things go bad - and the worst of it is that investor money isn't going into the productive sector - its just going to pay earlier depositors off.

How is it that capitalism has evolved so that the Finance Companies get "Special Industry" status. They get free Kiwi saver money; they get tax payer cash; they mange to steer clear of the toothless regulators - yet your ma and pa owned SME down the road gets nada in the way of support.

I don't know what to call it but it sure ain't capitalism.

[minimoke]

Gee is this comment about chris for real , I dont read or know him that well but hes obviously a clever fellow lol.
Apologies - I should have provided a citation. If you follow this link and scroll down to 22 July you can bask in the deeps pools of his wisdom. http://www.chrislee.co.nz/index.php?page=newsletter-display&list=2&month=July&year=2010

[Dr_Who]

Jeez, I'm sitting here wondering just how much we are going to be asked to stump up with - is if around $200m. I'll take heart from Chris Lee's wise words just less than a month ago: "Allied Nationwide Finance, in our view, is a well managed business and the shareholders are beginning to display a willingness to add more capital as they convert the Hanover assets into useful cash."

But then I'm dragged back to reality and reminded ALF / Hanover investors knew ages ago that at least 73% of Hanovers loan book was impaired and 90% of Uniteds was either unsecured or second mortgage loans (now where does this sound familiar - Oh I know SCF and Aorangi). And we are being asked to support the Deposit Guarantee because of turmoil in world financial markets and maintaining public confidence in our Finance Sector. Give me a break - they (the investors and Companies) are incompetent so why should we support them!

Didnt he say the same thing about a number of finance companies before they went belly up?

[J R Ewing]

Painful eh but thats what capitalism is all about

This whole GFC has helped reveal what a sick version of so called capitalism we are currently operating (in some instances). The GAINS are privatised but the LOSSES are socialised, at least where the entity in question is deemed "too big to allow to fail". Small wonder we get poor corporate accountability as a result. They simply desert the sinking ship and move on to the next feeding frenzy.

[minimoke]

Didnt he say the same thing about a number of finance companies before they went belly up?
A little off topic but here is his latest view on SCF

"Footnote. If SCF did collapse, the Crown should ultimately recover virtually all of the money it would pay out.

SCF’s assets have been subjected to such scrutiny that there should be no horrific surprises around the corner."

[Balance]

A little off topic but here is his latest view on SCF

"Footnote. If SCF did collapse, the Crown should ultimately recover virtually all of the money it would pay out.

SCF’s assets have been subjected to such scrutiny that there should be no horrific surprises around the corner."

Best description of Chris Lee - "Chris 'consistently wrong when it comes to finance companies' Lee"

[winner69]

This whole GFC has helped reveal what a sick version of so called capitalism we are currently operating (in some instances). The GAINS are privatised but the LOSSES are socialised, at least where the entity in question is deemed "too big to allow to fail". Small wonder we get poor corporate accountability as a result. They simply desert the sinking ship and move on to the next feeding frenzy.

This is the wersion of capitalism I was loosely referring to above ... agree minimoke probably not the true meaning of capitalsim but this is how it is evolving

[minimoke]

Ding! And today it looks like we'll hit 4c/ share.
That was 29 June
Ding - just hit $0.03

They say a week is a long time in politics - it sure is in the world of finance companies. This si what ALF said just over a week ago "The new shares will be offered at 2.5 cents per share, which represents a discount to Allied Farmers' current share price of approximately 5.5 cents per share."

[minimoke]

That was 29 June
Ding - just hit $0.03

They say a week is a long time in politics - it sure is in the world of finance companies. This si what ALF said just over a week ago "The new shares will be offered at 2.5 cents per share, which represents a discount to Allied Farmers' current share price of approximately 5.5 cents per share."
Ding. I don't think its too unreasonable to assume that the capital raising plans are now dead in the water. Whats the point now the SP has hit $0.025 - theres no substantial discount on offer now!.

So where does this leave ALF. Allied National in breach of its trust deed. ALF with reduced assets. ALF probably without the ability to quickly place capital into Allied national, a CC credit rating on negative watch. Alloways hand (or that of the trustees) must now be on the pug - surely its not long before it is pulled.

And as for idiot investors why on earth would you buy at the start of the day (when the news was already available) at $0.036 to end the day on $0.025. And I'm expected to be happy we have a Deposit Guarantee protecting these people. Give me strength!

[Alan3285]

Ding. I don't think its too unreasonable to assume that the capital raising plans are now dead in the water. Whats the point now the SP has hit $0.025 - theres no substantial discount on offer now!.

Entirely rational question, but I would note that back in, or around, 2001 (ish!) Fletcher Challenge Forests had a rights issue (I think it was) and the theoretical minimum prices for the rights was breached which meant you could 100% guarantee no loss through arbitrage - you might have made good money, but your worst outcome was zero (less any commissions you paid of course).

Perhaps my memory fails me, but I'm sure I remember watching it happen.

The market, and perhaps more specifically, some of the market participants, are not always 100% rational.

Alan.

[J R Ewing]

The market, and perhaps more specifically, some of the market participants, are not always 100% rational.

Alan.

Now that's an understatement! I would say NONE of the market participants are 100% rational and some close to 0%

[Alan3285]

Now that's an understatement! I would say NONE of the market participants are 100% rational and some close to 0%

Excepting me of course!

Alan.

[Balance]

Entirely rational question, but I would note that back in, or around, 2001 (ish!) Fletcher Challenge Forests had a rights issue (I think it was) and the theoretical minimum prices for the rights was breached which meant you could 100% guarantee no loss through arbitrage - you might have made good money, but your worst outcome was zero (less any commissions you paid of course).

Perhaps my memory fails me, but I'm sure I remember watching it happen.

The market, and perhaps more specifically, some of the market participants, are not always 100% rational.

Alan.

Underwriters to the FFS issue ended up with 40%+ of the rights issue or about 22% of the company.

Went on to make a fortune as they got the stock at 25 cents and sold them at over 35 cents.

The rich gets richer while the great unwashed out there gets out at the bottom.

[J R Ewing]

Underwriters to the FFS issue ended up with 40%+ of the rights issue or about 22% of the company.

Went on to make a fortune as they got the stock at 25 cents and sold them at over 35 cents.

The rich gets richer while the great unwashed out there gets out at the bottom.

I doubt the Hanover Investors are getting out today. If you have followed it down this far you might as well hope for a reversal rather than take peanuts in the hand. Traders would have a different view and no doubt would have lost only a fraction of the amount of the long term investors.

[Balance]

I doubt the Hanover Investors are getting out today. If you have followed it down this far you might as well hope for a reversal rather than take peanuts in the hand. Traders would have a different view and no doubt would have lost only a fraction of the amount of the long term investors.

There will be a revised capital raising and 'Hanover' shareholders will simply forfeit their rights and the underwriters will pick them up. That is what is going to happen.

Sadly.

[J R Ewing]

There will be a revised capital raising and 'Hanover' shareholders will simply forfeit their rights and the underwriters will pick them up. That is what is going to happen.

Sadly.

Oh I see what you mean - death by dilution!

[Balance]

Oh I see what you mean - death by dilution!

Start with the 120m to be issued to ALF original shareholders. Then, more shares to be issued - probably re-priced at 1.5c or 2c.

Sad.

[Beagle]

Roger ..... you should know us better than that

We are nice guys here and just didn't want to use the word junk .... or crap or whatever

You can get a D from S&P so CC not that bad

Always hard to remember that 3 c's are better than 2 c's which is better than 1 C .... so a few more steps down yet for ANF

Bit like nudge nudge wink wink all this stuff .... and retrospective as well

Fair enough, I was just having a bad day and feeling a bit knackered, is anyone else sick of the winter and wants to holiday in Hawai, maybe a certain scam artist could put all us poor souls up for a few weeks in his five star resort.

Seriously...I havn't lost any money on this or in what must be one of the biggest scam's ever, but it just beggars belief that ALF could have done proper due diligence and the assets are now worth less than a quarter of what they were about nine months ago.

Surely this truly appalling fisaco deserves a thorough independent investigation ? How truly ironic that the vote only just scraped through by the barest of margins, wasn't it 75.4 % or something really close to that ? I feel sad for all the old people that have been scammed.

[Logen Ninefingers]

Bernard Hickey was blogging from that voting meeting and he advised people to vote for the ALF deal. I think he'd met with Alloway and he'd told him his plans and what not....probably buttered him up with a nice lunch on ALF or some other nice pressie. I was pretty disgusted with it....1/ Receiver would have got something back money wise for these long-suffering investors 2/ Receiver would have exposed any irregularities is the Hannover loan book to the harsh light of day, taking down Watson & Hotchin. Now the Hannover investors have shares worth diddly squat.
Allied Farmers were a minnow trying to swallow what they convinced everyone was a whale, but which they privately thought was a dolphin, and it turned out in actuality to be a sprat.
Now they are a dead goldfish about to be flushed down the dunny.

[minimoke]

Fair enough, I was just having a bad day and feeling a bit knackered, is anyone else sick of the winter and wants to holiday in Hawai, maybe a certain scam artist could put all us poor souls up for a few weeks in his five star resort.

Seriously...I havn't lost any money on this or in what must be one of the biggest scam's ever, but it just beggars belief that ALF could have done proper due diligence and the assets are now worth less than a quarter of what they were about nine months ago.

Surely this truly appalling fisaco deserves a thorough independent investigation ? How truly ironic that the vote only just scraped through by the barest of margins, wasn't it 75.4 % or something really close to that ? I feel sad for all the old people that have been scammed.
I for sure am sick of winter but I'm more sick of these frickin finance companies and their slow sinking ship which inevitably tries to suck in more punters in the whirl pool as it goes down. I'm already supporting a couple of Hanover punters (and a few more in SCF who will need a hand when that tips) and it just pisses the pants off me these ongoing shenanigans - which only goes to show its been a tiring winter and the tolerance levels aren't as high as usual. Pull the plug and get the whole thing over and done with so people can move on.

But back on topic. PWC had a go at valuing Hanover (and the ****wit punters believed them), it was rumoured GPG had a look but didn't turn up with a deal and Grant Samuel had a look as well. There was even some speculation that SCF might have come to the party but Lachie probably had his hands full buying peas. It was plain that Hanover was ****ed, Hotchin and Watson had exploited their own personal piggy bank (now where have we heard that before) and it was beyond redemption. But throw the punters a line of hope and like a coke addict they snort it up. The sooner the govt gets rid of the Deposit Guarantee and force the punters to go cold turkey the better.

Oh well thats my rant for the day - nearly time for something medicinal!

[Balance]

Bal me ol' mate, be nice to Vultures and White Knights - they site on bundles of cash for for long periods scratching around for opportunities like this. Its a werrying business. And when the Vultures do act, not all mums and dads have sold out, and they get it back eventually.

Question then arises - where do the underwriters of FFS for eg end up with 40% plus of te issue at the heavily discounted price of 25 cents? A cynic would even say that they purposefully drove the sp below 25c to spook the small investors into not picking up their rights.

Am watching ALF with interest.

I do not hear the bell ringing just yet.

[bung5]

Question then arises - where do the underwriters of FFS for eg end up with 40% plus of te issue at the heavily discounted price of 25 cents? A cynic would even say that they purposefully drove the sp below 25c to spook the small investors into not picking up their rights.

Am watching ALF with interest.

I do not hear the bell ringing just yet.

There will be a government bailout. Soon.

[winner69]

There will be a government bailout. Soon.

Doesn't it piss you off that the likes of you, minimoke, Balance and me have to front up and give punters (an apt description) their money back because of their own greed and management ineptitude

[Alan3285]

Doesn't it piss you off that the likes of you, minimoke, Balance and me have to front up and give punters (an apt description) their money back because of their own greed and management ineptitude

You should be protesting in the street at the selfishness of Phil Goff and his goons for getting into that in the first place.

Can but hope that the Nats continue their 'phased withdrawal' at the current pace, and fully extricate the taxpayer in 2012. Might be worth writing to your local Nat MP too on that score!

Alan.

[bung5]

Doesn't it piss you off that the likes of you, minimoke, Balance and me have to front up and give punters (an apt description) their money back because of their own greed and management ineptitude

Well expect resignations in the coming days as well

[Beagle]

I for sure am sick of winter but I'm more sick of these frickin finance companies and their slow sinking ship which inevitably tries to suck in more punters in the whirl pool as it goes down. I'm already supporting a couple of Hanover punters (and a few more in SCF who will need a hand when that tips) and it just pisses the pants off me these ongoing shenanigans - which only goes to show its been a tiring winter and the tolerance levels aren't as high as usual. Pull the plug and get the whole thing over and done with so people can move on.

But back on topic. PWC had a go at valuing Hanover (and the ****wit punters believed them), it was rumoured GPG had a look but didn't turn up with a deal and Grant Samuel had a look as well. There was even some speculation that SCF might have come to the party but Lachie probably had his hands full buying peas. It was plain that Hanover was ****ed, Hotchin and Watson had exploited their own personal piggy bank (now where have we heard that before) and it was beyond redemption. But throw the punters a line of hope and like a coke addict they snort it up. The sooner the govt gets rid of the Deposit Guarantee and force the punters to go cold turkey the better.

Oh well thats my rant for the day - nearly time for something medicinal!

You and me both buddy......late last week I noticed a man who held up a bank with a BB gun was sentenced to 3 3/4 years prison, i think it was from memory, he stole about $900...of course its quite okay for all these scam artists to steal and pillage tens of millions of dollars of old people's money, and cause permanent serious harm to thousands of people, mamy of whom have no chance to restore their finances and will suffer for the rest of their lives, and what do these finance company directors receive as punishment, maybe 12 months home detention in their multi-million dollar homes, owned by their family trust's of course, and that's only if Dipsh#t and Co can actually make a prosecution stick.

[peat]

You should be protesting in the street at the selfishness of Phil Goff and his goons for getting into that in the first place.

Can but hope that the Nats continue their 'phased withdrawal' at the current pace, and fully extricate the taxpayer in 2012. Might be worth writing to your local Nat MP too on that score!

Alan.

You do understand that NZ didnt really have any option once Australia went forward with deposit insurance.
Hey I'm not a fan either but I dont really see there was any alternative at the time. NZ (Australian owned) banks with no GG and parent companies with an Aus GG. That would've created bad things here in NZ.

[Balance]

You do understand that NZ didnt really have any option once Australia went forward with deposit insurance.
Hey I'm not a fan either but I dont really see there was any alternative at the time. NZ (Australian owned) banks with no GG and parent companies with an Aus GG. That would've created bad things here in NZ.

Australia did not extend the guarantee to finance companies.

And I bet you that if they did, they would not allow the kind of blatant related party transactions which exploded when companies like SCF laid their grubby hands on government guaranteed deposits.

[minimoke]

You do understand that NZ didnt really have any option once Australia went forward with deposit insurance.

I can understand and appreciate the need for the Deposit Guarantee during the worst of the GFC. But the govt should not have bought in the extended scheme (or at least brought in tighter criteria. It is ludicrous to require the tax payer to under write depositors in firms like SCF when that money is only being used to pay off existing depositors. The original and extended scheme should not have been used to enable punters to have their dumb decision making underwritten by the tax payer. At some point the Hanover investors need to front up and accept responsibility that their investments are their decisions and they stand by their decisions. If they get it wrong - tough. Why is it that dumb people get protection when no other business person gets such protection in their risk taking decision making.

[Beagle]

How cunning were those weasel's to use Richard Long a man many oldies had come
to trust after about 30 years of seeing him in their living room's every night, what a
cunning move to use him to promote the Hand-over scam.
Personally I hope the said former news presenter sleeps very poorly at night knowing
he had a major part to play in inflicting damage on thousands of gullible investors.

Now I'll move into the realms of speculation, may I be so bold to suggest a certain
Timaru businessman has shown equal amounts of extreme cunning with his VW
Beetle marketing programme.

[peat]

yup fair points.
that was reckless I agree. even more reckless than any guarantee.
so I think we're all generally in agreement that it was never a good idea but that NZ took it to far....

[Alan3285]

yup fair points.
that was reckless I agree. even more reckless than any guarantee.
so I think we're all generally in agreement that it was never a good idea but that NZ took it to far....

I've never understood why any of these types of things are done with an 'all or nothing' approach. It creates big issues at the end of the scheme too - witness the finance companies facing walls of redemptions in Oct 2010.

How difficult would it have been to say that you got (say):

- 100% cover on up to $1m until 31 Mar 2009
- 80% cover on up to $800k until 30 Sep 2009
- 60% cover on up to $600k until 30 Mar 2010
- 40% cover on up to $400k until 30 Sep 2010
- 20% cover on up to $200k until 31 Mar 2011

then no cover.

Pick your own amounts, cover, and periods.

At least that way, it would have had a built in 'weaning off' mechanism.


Alan.

[Dr_Who]

Anyone buying ALF at these levels?

[Beagle]

Anyone buying ALF at these levels?]

No, they're absolutly worthless...wait I just heard a rumour they're issuing 500 Trillion shares at 0.001 cents per share, what a bargain I must be in boots and all, LOL.

[Alan3285]

Anyone buying ALF at these levels?

No - I reckon the ALF010 represent better value, so I would buy those instead.

The ord shareholders have to lose (literally I think) everything, before the ALF010's lose anything.

Clearly, that is quite possible, but at current yields they are a better option I think. Biggest risk might be a suspension of interest payments. Anyone know what happens then?

Alan.

[Doyle]

No - I reckon the ALF010 represent better value, so I would buy those instead.

The ord shareholders have to lose (literally I think) everything, before the ALF010's lose anything.

Clearly, that is quite possible, but at current yields they are a better option I think. Biggest risk might be a suspension of interest payments. Anyone know what happens then?

Alan.

Hi alan do you know anyone who provides online trading for NZDX, im with asb securities and as far as I know, you have to place NZDX Trades over the phone.

[Doyle]

Anyone buying ALF at these levels?

I've Lost my stomach for it to be honest. Their seems to be some very irrational Buyers of those ALF shares, When the SP hit nearly 7 cents three weeks back you really had to wonder why. Personally I think their will be a buying oppertunity, but I think thet will likely be during or just after the capital raising. The way I see it the rights issue will likely have to be priced 1.5 cents due to this ANF trust deed debacle. And thats if they can sort it out. And due to the volume of rights the issue price will end up as the heads price by default.

One possibility is that ALF let ANF go into receivership, but the parent company continues trading. If that happens I think their could be a buying oppertunity in the ensuing Panic at say 1 cent.

A long way to play out here, so don't see any need to buy. Although in the past due to irrational buying, the SP has spiked after even mediocre announcements. Which could be the case again, they could sort out the trust deed and bam SP hits 5 cents again.

Personally I've lost my nerve but, am looking for a buying oppertunity if it presents itself, Just right now I don't see it.

[bung5]

is going into receivership by the end of the week.

[Alan3285]

Hi alan do you know anyone who provides online trading for NZDX, im with asb securities and as far as I know, you have to place NZDX Trades over the phone.

I use ASB Securities too, but I would switch if I found someone who does NZDX online.

Perhaps someone here using Direct Broking can enlighten us as to whether they are fully online for NZDX or is it just NZX only too?

Thanks,

Alan.

[QOH]

I use ASB Securities too, but I would switch if I found someone who does NZDX online.

Perhaps someone here using Direct Broking can enlighten us as to whether they are fully online for NZDX or is it just NZX only too?

Thanks,

Alan.

You can trade NZDX online with Direct Broking.

[Alan3285]

You can trade NZDX online with Direct Broking.

Thanks QOH.

[Newman]

No - I reckon the ALF010 represent better value, so I would buy those instead.

The ord shareholders have to lose (literally I think) everything, before the ALF010's lose anything.

Clearly, that is quite possible, but at current yields they are a better option I think. Biggest risk might be a suspension of interest payments. Anyone know what happens then?

Alan.


Allied Farmers has to pay back Westpac and inject equity to its Nationalwide Finance (due August 22) before you get anything as ALF010 notes holders. Further, your notes can be converted to shares that could be worthless at the time of conversion. You could get 1 million shares for $100 notes. But the most important, Allied farmers is still losing money from its operational activities.

There are better investments than ALF010, such as NZF010 or even Blue Star Group notes. In the later case if you put 20 cents for every BLU020 bonds, the balance sheet of the company would be positive.

[Alan3285]

Allied Farmers has to pay back Westpac and inject equity to its Nationalwide Finance (due August 22) before you get anything as ALF010 notes holders.

I'm fiarly sure they have paid interest recently - are you saying that has stopped now?



Further, your notes can be converted to shares that could be worthless at the time of conversion. You could get 1 million shares for $100 notes.

What is the formula? Could you give a numerical example?


But the most important, Allied farmers is still losing money from its operational activities.

Yes - that is the big issue, I agree.


There are better investments than ALF010, such as NZF010 or even Blue Star Group notes. In the later case if you put 20 cents for every BLU020 bonds, the balance sheet of the company would be positive.

My opinion is that the ALF010 possibly represent better value than ALF.

BLU020 look better still - I agree.

Alan.

[Silverlight]

My opinion is that the ALF010 possibly represent better value than ALF.

Alan, I think both represent terrible Value. Don't mix yourself up with comparing value to risk/reward.

ALF010 have less risk, but if the risk scale was 0 -10, the risk of ALF is a 9.5 and the risk to ALF010 is a 9. Buying either of these assets has a lot of risk for the potential gain.

Current buyers in ALF010 are paying 41 cents to get a $1 return, as ALF is higher risk, buying today at 2.6 cents you are expecting at least 150% of the ALF010 holders are expecting, so a share price of at least 6.5 cents.

You could get the same return betting on both the Sydney FC (20.5 cents) and the Victory (20.5 cents) to win the A league...

[bung5]

Allied Farmers has to pay back Westpac and inject equity to its Nationalwide Finance (due August 22) before you get anything as ALF010 notes holders. Further, your notes can be converted to shares that could be worthless at the time of conversion. You could get 1 million shares for $100 notes. But the most important, Allied farmers is still losing money from its operational activities.

There are better investments than ALF010, such as NZF010 or even Blue Star Group notes. In the later case if you put 20 cents for every BLU020 bonds, the balance sheet of the company would be positive.

I tell you it will be in receivership before then

[Alan3285]

Alan, I think both represent terrible Value. Don't mix yourself up with comparing value to risk/reward.

ALF010 have less risk, but if the risk scale was 0 -10, the risk of ALF is a 9.5 and the risk to ALF010 is a 9. Buying either of these assets has a lot of risk for the potential gain.

Current buyers in ALF010 are paying 41 cents to get a $1 return, as ALF is higher risk, buying today at 2.6 cents you are expecting at least 150% of the ALF010 holders are expecting, so a share price of at least 6.5 cents.

You could get the same return betting on both the Sydney FC (20.5 cents) and the Victory (20.5 cents) to win the A league...

So,... are you saying that ALF represent better value than ALF010?

Alan.

[Lizard]

What happens if they run out of cash? I presume they are then required to allow investors the benefit of the government guarantee on deposits... does this mean VA, receivers, liquidators? Does it only apply to ANF or would the guarantee require them to put ALF itself into receivership? Are the ALF010's covered by the guarantee?

At the moment, (from equity levels) it looks like a reasonable receivership might still eventually return value to ALF010 holders, but wouldn't like to take a bet on it.

[Alan3285]

What happens if they run out of cash? I presume they are then required to allow investors the benefit of the government guarantee on deposits... does this mean VA, receivers, liquidators? Does it only apply to ANF or would the guarantee require them to put ALF itself into receivership?

I would hazard a guess that the effect of the GGS would be to replace the amounts owed to investors, with amounts owed to Treasury.

I'll guess that this would have been triggered by one of the events you named and that the directors are no longer controlling ANF.

It would only put ALF itself into receivership if it, in turn, could not meet its payments at they fall due and someone (or some group) put it into receivership. Not inevitable, but reasonably likely I think.


Are the ALF010's covered by the guarantee?

I would doubt it - does anyone have a reference that says they are covered? They would just be a creditor of ALF (rather than ANF).


At the moment, (from equity levels) it looks like a reasonable receivership might still eventually return value to ALF010 holders, but wouldn't like to take a bet on it.

Yes - I agree. A lot of uncertainty, but likely there would be some (or at a stretch - a complete) payout to the ALF010 holders.


Alan.

[Silverlight]

So,... are you saying that ALF represent better value than ALF010?Alan.

No, I was pointing to the fact that they are both a huge risk.

After some thought on your question of "value", my analysis is that they have close to zero value, however...if we work on the basis, that an ALF share is close to zero as the company is walking a tightrope, then ALF010 have this value + 5 quaterly payments at 9.6% p.a.

So to place an actual return on this, if you bought ALF010 today at 50 cents per note, you are actually buying ALF (current price 2.6 cents) at 1.3 cents per share with the bonus of receiveing 5 quarterly payments of 9.6% of the face value (2.6 cents) or 0.31cents.

Conclusion

Buying ALF010 at 50 cents in the dollar, is like buying ALF at 0.99 cent per share today, if ALF is trading at 2.6 cents, if they survive until December 2011.

Another way to read that is, if you own ALF, and plan on holding until December 2011, sell your holding and buy ALF010, same risk, less than half the price.


EDIT: This is all based on the assumption that the notes will be converted to shares, which is a pretty good assumption in my view

[bung5]

Conclusion

Buying ALF010 at 50 cents in the dollar, is like buying ALF at 0.99 cent per share today, if ALF is trading at 2.6 cents, if they survive until December 2011.

Another way to read that is, if you own ALF, and plan on holding until December 2011, sell your holding and buy ALF010, same risk, less than half the price.
[/I]

What is the outcome of the finance company if it is in recievership before the end of the week?

[Alan3285]

What is the outcome of the finance company if it is in recievership before the end of the week?


sell your holding and buy ALF010, same risk, less than half the price.


I haven't gone through Silverlight's numbers, and I'm certainly not warranting they are correct, but I think the conclusion is right.

Alan.

[Lizard]

I haven't gone through Silverlight's numbers, and I'm certainly not warranting they are correct, but I think the conclusion is right.

Alan.

But Silverlight's numbers assume that the ALF010's convert, i.e. ALF not in receivership... and can ALF remain out of receivership if ANF were to go? And how can ANF stay out if they hit a cash glitch given that it seems they won't be getting many reinvestments at the moment? Just curious if others have taken it apart that far or not - I haven't and limited time to do so at present.

[Alan3285]

But Silverlight's numbers assume that the ALF010's convert, i.e. ALF not in receivership... and can ALF remain out of receivership if ANF were to go? And how can ANF stay out if they hit a cash glitch given that it seems they won't be getting many reinvestments at the moment? Just curious if others have taken it apart that far or not - I haven't and limited time to do so at present.

Well, it appears that ANF going into receivership would only tip over ALF it it created cash outflows (calls on loans say) from ALF, or if ALF is reliant on cash inflows from ANF to pay its way?

I don't know if either is true.

Alan.

[Silverlight]

Well full year financials are out in the next two weeks, so will wait and see how much they have changed from the half year.

For interest, half year financials attached.

[Lizard]

Well we already know how much equity they have lost due to impairments/provisions on Hanover assets ($81.2m) and ANF ($10.7m) - so maybe $80m equity left? Hard to ascertain the extent of any other gains/losses.

Cashflow likely to be tight. I'm going to guess $10-$15m cash remaining at end of June and probably falling fast since. Though I'm not sure how large the impact of 5-mile sale was. Also not sure about how much cash they can get through securitisation via Speirs group.

[COLIN]

Alan (& any others tempted): I wouldn't go anywhere near this one, myself.
If you are desperate for a high-stakes gamble, with much better odds, what about STL030, now that they have this Bluestone Group behind them?

[Alan3285]

Alan (& any others tempted): I wouldn't go anywhere near this one, myself.
If you are desperate for a high-stakes gamble, with much better odds, what about STL030, now that they have this Bluestone Group behind them?

Maybe - I don't know anything about STL030 so I couldn't say.

As I said above, I think ALF010 is a better bet than ALF, but that BLU020 is better still.

Alan.

[bung5]

Internal investor will save allied finance. but ALF won't be so lucky

[Lizard]

... and can ALF remain out of receivership if ANF were to go? And how can ANF stay out if they hit a cash glitch given that it seems they won't be getting many reinvestments at the moment?

So now confirmed that ANF have pretty much run out of cash - at least for yesterdays debenture repayments. So I guess will get my questions answered later today?

[minimoke]

Internal investor will save allied finance. but ALF won't be so lucky

Looks like we'll find out today. ALF say an announcement from ANF will come out later in the day.

[Alan3285]

Further announcement by ANF (not ALF - the subsidairy):

http://www.sharetrader.co.nz/showthread.php?7517-Allied-Farmers-Limited-Capital-Notes-(ALF010)&p=316136&viewfull=1#post316136


Not sure if they ran out of cash from what they said. Looks to me like they are putting the acid on the trustee to make a call. Seems to imply they *could* have paid, but the trustee wouldn't let them, or have I read that wrong?

Alan.

[Stranger_Danger]

This is like watching a car crash in slow motion.

[minimoke]

Still willing buyers at 2.7 cents. I reckon they're game

[Stranger_Danger]

Who is buying this share today? Are they mental?

[Alan3285]

Who is buying this share today? Are they mental?

Conspiracy?

What do they know....

Alan.

[Stranger_Danger]

Ummm......nothing. Which they're attempting to prove.

[Alan3285]

Ummm......nothing. Which they're attempting to prove.

LOL

Alan.

[Beagle]

This is like watching a car crash in slow motion.

That's hit the nail squarely on the head, them and SCF, who can resist staring at two really big car crashes happenning at the same time ?

[winner69]

That's hit the nail squarely on the head, them and SCF, who can resist staring at two really big car crashes happenning at the same time ?

.... maybe on the same road heading towards each other ........

[evilroyrule]

i remember a similar thing happening when dfg was sinking. someone propped shares up at 1 or 2c until receivership announced. looks to be same thing here.

[winner69]

Most a re just punters .... no different from guys who might put $10,000 on Wellington to beat Waikato tomorrow and get $14,000 back ... or lose the lo

[Silverlight]

20 August, 2010
NZX Market Supervision Announcement
Allied Nationwide Finance Limited (ANF)
Allied Farmers Limited (ALF)

Trading Halt of Securities

NZX Market Supervision advises that ALF and ANF have requested a trading halt pending a further announcement in relation to the position of ANF. The announcement may not be made until after the close of trading today.

ENDS

Is this the end?

[Stranger_Danger]

REL: 1524 HRS Allied Farmers Limited

GENERAL: ALF: Allied Nationwide update

We apologise for the trouble we have had today securing the services of a fat lady.

Having diligently searched local donut shops, such services have now been secured.

After market close, singing is likely to commence.

[J R Ewing]

Who is buying this share today? Are they mental?

I can understand why people are prepared to take a punt at these prices. If ALF does manage to re-capitalise there could be a nice profit to be made. Better buying now at 2-3 cents than it was a while back at 10c or so surely? Of course now that there is a trading halt and an expected announcement AFTER COB today, we can assume that the news ain't going to be good...

[Stranger_Danger]

I have a lollipop that I purchased for $1000.

Would you like to buy it off me for $100?

[minimoke]

ALF
20/08/2010
GENERAL

REL: 1631 HRS Allied Farmers Limited

GENERAL: ALF: Receiver to be appointed to Allied Nationwide

20 August 2010

Receiver to be appointed to Allied Nationwide (NZX Code: ANF)

Please find attached an announcement made this afternoon by Allied Farmers'
subsidiary, Allied Nationwide Finance Ltd (ANF). Allied Farmers (NZX Code:
ALF) advises that it will be making a further announcement later today
addressing this development.
End CA:00198638 For:ALF Type:GENERAL Time:2010-08-20:16:31:14

[J R Ewing]

I have a lollipop that I purchased for $1000.

Would you like to buy it off me for $100?

Thanks for the offer but no. Yes, I'm sure there's an element of that as well. But they ARE cheap and if they DO get the recapitalisation there is the prospect of a good profit, provided you can participate in the recap and avoid dilution. I didn't buy myself, I'm just saying there is a case (at least until 5 p.m.).

[J R Ewing]

Of course they might be even cheaper on Monday...

[Dr_Who]

Abit like PVO, it had a dead cat bounce before it past away.

Vary sad for the shareholders of both company, but the writing was on the wall.

[Beagle]

REL: 1524 HRS Allied Farmers Limited

GENERAL: ALF: Allied Nationwide update

We apologise for the trouble we have had today securing the services of a fat lady.

Having diligently searched local donut shops, such services have now been secured.

After market close, singing is likely to commence.

LOL - Said fat lady was compelled to finish donuts early and sing for us all just so we are all aware where our hard earned taxpayer money will be wasted. What a great way to finish the week, (NOT).

I reckon the real value all said and done of the assets rorted into ALF by the Handover crooks is less than the guarantee the Handover theives had ($20m) and ALF will be next. Which one to go next ALF or SCF, ladies and gentlemen, lay down your bets, (sorry bookie is no longer accepting quinella bets that they will both collapse, due to the absolute certainty of this outcome).

[minimoke]

LOL - Said fat lady was compelled to finish donuts early and sing for us all just so we are all aware where our hard earned taxpayer money will be wasted. What a great way to finish the week, (NOT).
Insider in Air NZ tells me she was seen on a flight to Timaru but it got diverted to New Plymouth this afternoon.

[Beagle]

Insider in Air NZ tells me she was seen on a flight to Timaru but it got diverted to New Plymouth this afternoon.

LOL.....I just heard from the pilot, she has a very sore throat after that song, but he assures me that she'll be absolutly kosher with some care and rest over the weekend and he'll have her down to Timaru first thing next week.

[bull....]

Not surprising news at all , I see SCF just had some bad credit rated news released by s&p

[RazorX]

Well someone bought over 1 million shares @ 2.6c at 16:59 according to Direct Broking. There seems to be quite large volumes of shares being traded. Anyone think that they will go ahead with the 2.5c per share capital raising?

[Alan3285]

Well someone bought over 1 million shares @ 2.6c at 16:59 according to Direct Broking. There seems to be quite large volumes of shares being traded. Anyone think that they will go ahead with the 2.5c per share capital raising?

I thought they were on a trading halt since mid-afternoon?

Was it lifted?

Alan.

[minimoke]

I thought they were on a trading halt since mid-afternoon?

Was it lifted?

Alan.

At 4.42pm with trades going through at 4.59pm at 2.6 cents

[Alan3285]

At 4.42pm with trades going through at 4.59pm at 2.6 cents

Okay - Thanks.

Alan.

[Doyle]

Don't see why this has to be the end myself, I guess it depends on alf ability to raerise capital so we will see. Either way monday will be interesting, I may even buy a few if they get cheap enough.

[Alan3285]

Don't see why this has to be the end myself, I guess it depends on alf ability to raerise capital so we will see. Either way monday will be interesting, I may even buy a few if they get cheap enough.

Yes - I agree.

I won't be buying any shares, but I might buy more of the bonds. Would mean liquidating something else though, and there's nothing else I want to get out of at this point.

Alan.

[Beagle]

Yes - I agree.

I won't be buying any shares, but I might buy more of the bonds. Would mean liquidating something else though, and there's nothing else I want to get out of at this point.

Alan.

I dunno about that Alan. I suspect many of the buy orders that were filled late this afternoon were actually orders that had been sitting there for some time by speculators. Maybe they were out for a boozy long lunch with their office girls or on the golf course and missed all the news alltogether and got an unexpected fill on their speculative order ? I suspect you'll be able to buy ALF shares at a lot less than 2.6 cents come Monday, if you're brave enough ? 1 cent anyone ? 300% yield on the ALF010's perhaps ?

[Lizard]

So we get the weekend to work out the value of an ANF-less ALF?

[Alan3285]

Yes - ALF might (rightly?) say that it was the trustees (faulty) actions that caused ANF to go under, and that it wasn't in ALFs shareholder's interest to continue to support ANF when the trustee was making it impossible.

We'll see.

Alan.

[Lizard]

Radio New Zealand (http://radionewzealand.co.nz/news/business/54788/allied-nationwide-finance-placed-in-receivership) are reporting that John Loughlin has resigned as Chairman of both ANF and ALF tonight.

Looks like ALF released this late in the day:
http://www.voxy.co.nz/business/allied-farmers-decision-made-protect-shareholder-value/5/59645


Allied Farmers confirmed today that the Trustee's requirement for significant additional liquidity for its subsidiary Allied Nationwide Finance had resulted in its decision to not provide it with additional support. This decision was regrettable, as it is one of the key factors behind the Trustee's decision to place Allied Nationwide Finance into receivership.

The fact that Allied Nationwide Finance is going into receivership should not provide any credence to the alleged breach, but is the direct result of withdrawing the debenture prospectus, as the board of Allied Nationwide Finance was required to do.

Allied Farmers Managing Director, Mr Rob Alloway said Allied Nationwide Finance had been significantly affected by the withdrawal of its prospectus following the allegation of a breach of its Trust Deed received by the company on 6 August 2010. 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 Nationwide Finance continued to require funding from Allied Farmers on a scale that it could not justify in the interests of its shareholders.

"As a result of the Trustee's actions Allied Farmers has been asked to support its finance subsidiary with levels of funding that we cannot sustain. " he said.

"We believe the assets of Allied Farmers, including those acquired in the Hanover transaction, are best utilised for the benefit of our shareholders, most investors in Allied Nationwide Finance would have their principal and interest covered by the existing Crown Retail Deposit Guarantee Scheme."

"That process may take several weeks to work through but in the meantime it is business as usual for Allied Farmers as we continue to work on creating value for our shareholders."

Mr Alloway said the company was in constructive discussions with the underwriter involved in Allied Farmers $19.3 million capital raising which was put on hold when the Allied Nationwide Finance prospectus was withdrawn 14 days ago and will make an announcement when it has further information available.

Finally, it is with regret that the Board announces the resignation of Mr John Loughlin as Chairman of Allied Farmers. John joined the board in 2004 and also chaired the board of Allied Nationwide Finance. He has worked extremely hard throughout what has been a very difficult period for the company. The company expects to announce a replacement Chairman shortly

[winner69]

Would appear the trustee couldn't agree what ANF assets were worth to meet some ratio. Nobody can really argue over what one owes but what happens if i reckon my house is worth $1m but the bank says its worth only $800k .... I say I am solvent but the bank says i am insolvent

One day we might know who was right but I would conjecture that in this case both the trustee and ANF were wrong ... prob both made their reasonable assessment of what ANF assets were worth when in reality prob less than both estimates.

At least ALF lives for another day while the taxpayer picks up the mess for ANF

[winner69]

What a loser Loughlin is ..... Chris Lee (or was it his off sider) will be gutted ..... Allied may have that 'fighting spirit' Chriss admired but when they need really need a fighter Loughlin packs a sad an run aways

I thought Loughlin had more mettle than this and he has gone down more than 1 notch in my estimation .... but he'll say he is taking the blame and doing the honourable thing

Admission of failure I reckon and says he wasn't too convinced about with his case in calling the trustee a wally and bring his company down.

[Lizard]

Looking through the ALF accounts and based on recent announcements, I am thinking maybe around $34m in equity left in stand-alone ALF? That would be enough to meet the bank equity covenant of $20m from end of Sept. The minimum EBITDA ratio probably more of a problem, but has been waived before. The tough ones are the leverage and interest cover ratios that are suspended until end of Sept... not sure what the specifics are there.

... so I'm speculating need a significant capital injection to pay down ALF bank debt by 30 Sept. Seems to me that any money to be made here on a recovery will be made by a new investor or perhaps not made at all.

Interesting though that probably things weren't as "down to the wire" as made to look in the news when considering some comments one poster made on 17th August.

[winner69]

Good old Arthur Lim has it all summed re ANF demise "For Allied Farmers it means a chunk of their shareholders' funds have just disappeared off the face of the earth."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10667728

Al least Alan will be happy ... ALF didn't give a fair chunk of the Hanover assets away to prop up ANF .... bondholders big sigh of relief

[Lizard]

Can someone tell me where the Westpac and other party loans (total about $46m) secured over the Hanover estimates came from? Presumably (according to the ALF HY breakdown of acquisition) they were acquired as part of the Hanover assets? There are no cash inflows from borrowings to suggest they were new loans at HY10.

However, I can't find any reference in the ALF notice of meeting to acquiring any liabilities. Nor can I find any similar loans in the Hanover Charging Group accounts of Jun 2009. So I am curious as to at what point these loans were taken out, where the cash went and where they were accounted for in the process of transferring Hanover assets to Allied.

[winner69]

ALF has had $20m-$30m Westpac loan for some years now .... I think that they felt they had had enough and got a bit nervous about it and just wanted out

I'm pretty sure that nothing related to Westpac came through from Hangover

[Alan3285]

Good old Arthur Lim has it all summed re ANF demise "For Allied Farmers it means a chunk of their shareholders' funds have just disappeared off the face of the earth."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10667728

Al least Alan will be happy ... ALF didn't give a fair chunk of the Hanover assets away to prop up ANF .... bondholders big sigh of relief

Absolutely!

In theory at least, it should make the capital raising easier, but unfortunately most 'investors' aren't switched on enough to see the reality of the situation - they'll just read the bad news in the paper (that ALF's finance company went into receivership) and think that its all bad for ALF, so likely it will make it harder.

Ah well. Still enjoying the ride!

Alan.

[Lizard]

ALF has had $20m-$30m Westpac loan for some years now .... I think that they felt they had had enough and got a bit nervous about it and just wanted out

I'm pretty sure that nothing related to Westpac came through from Hangover

But according to the HY accounts, there is $31m from Westpac and $15m from other parties (note 4) secured over Hanover Assets and included in the reconciliation of acquired value (note 10). These are on top of the other Westpac loans to ALF. So there still reads to me to be $79m+ of ALF debt of which $46m is secured over Hanover assets. The $46m is is borrowings by the Asset Management Services group (i.e. the bit set up to manage Hanover assets). Terms for this debt were still under discussion at HY reporting and therefore classified as "current".

I would think it might be of some significance to ALF holders and Hanover investors as to how this debt came about so as to know whether there was any transfer of value or rights of which investors were unaware.

[winner69]

Doesn't Note 10 say they 'acquired' $40.910m of borrowings from Hanover

The infamous $175m written down value of the hanover assets were $220m assets less the borrowings.

So no new 'real' borrowings ... just seems that the Hangover guys managed to get rid of some debt as well in the deal

Murkier and murkier all this seems to get

Do you have any idea what the arrangements are between ANF and Spiers and ALF ... all that seems to have been structured to confise people

And I still wonder what happened to the that $7.5m that Aust outfit 'committed' so Westpac would give them a bit more time ... all smoke and mirrors

Some call this outfir AL LIED now

Hope bond holders are safe though

[Lizard]

Doesn't Note 10 say they 'acquired' $40.910m of borrowings from Hanover


Yes - except that there wasn't that amount of debt in the Hanover Group Charging group accounts at June 2009 that were released prior to the transfer - not bank debt. May have been in the overall Hanover Finance Ltd accounts, at least in part (they are on the companies office - the charging accounts aren't, but I retrieved a cached copy from the Hanover site the day after the deal). So if the debt went with the assets to Allied, then I am wondering if it was actually individual loans against individual projects such as Matarangi, that were then re-financed across all of the Allied assets... which must surely have transferred risk from the banks to the Hanover investors?

Maybe there is more detail in the Grant Samuel report which I never got to get a copy of... but none of the docs I can find say anything about transferring liabilities with those assets, eh?

[Balance]

Yes - except that there wasn't that amount of debt in the Hanover Group Charging group accounts at June 2009 that were released prior to the transfer - not bank debt. May have been in the overall Hanover Finance Ltd accounts, at least in part (they are on the companies office - the charging accounts aren't, but I retrieved a cached copy from the Hanover site the day after the deal). So if the debt went with the assets to Allied, then I am wondering if it was actually individual loans against individual projects such as Matarangi, that were then re-financed across all of the Allied assets... which must surely have transferred risk from the banks to the Hanover investors?

Maybe there is more detail in the Grant Samuel report which I never got to get a copy of... but none of the docs I can find say anything about transferring liabilities with those assets, eh?

I recall reading somewhere that Eric & Hotchin transferred some heavily mortgaged properties across to Hanover (being their increased equity contribution) as part of the moratorium agreement. Very very smart boys, those two.

One has no choice but to wonder in amazement really. I remember being at the Hanover moratorium meeting where Bruce Sheppard tried to fight for the investors but was pretty much told to shut up by the majority of them. Then there's the comment that it was great that Hotchin turned up but where is that gutless Watson - a great double act playing good guy, bad guy and they lapped it all up.

[Lizard]

I recall reading somewhere that Eric & Hotchin transferred some heavily mortgaged properties across to Hanover (being their increased equity contribution) as part of the moratorium agreement.

Yes, have found the Hanover notes (http://www.scribd.com/doc/23349060/Hanover-EM-Book-Final) now, and you are right. These assets were part of the Axis Group which was contributed to Hanover Finance as part of the Shareholder Support package at the time of the debt restructure. So the debts came as part of the combined $34m in support package assets acquired in the ALF-Hanover deal.


various property owning subsidiaries (the Axis Companies) held by HFP Investments Limited (HFP), a company owned by HFL (87.77%) and United (12.23%).At the time of the Debt Restructure HFL and United both had several loans to the Axis Companies.It was intended that where possible the Axis Companies would provide guarantees and security to support the Debt Restructure.The Axis Companies were acquired by HFP for $40 million, funded by way of a subordinated, interest-free loan, which could only be repaid once all amounts under the Debt Restructure had been paid;

[Lizard]

Hey Winner, you might be interested in this comment from page 32 of the Grant Samuel report:


Grant Samuel understands that the performing loans in the HFL and United portfolios will be transferred from Allied Farmers to its subsidiary Allied Nationwide.These loans will serve to increase the robustness of the underperforming Allied Nationwide portfolio and assist it in obtaining a satisfactory credit rating.Approximately 20% of the overall HFL and United loan portfolio is considered to be performing.The remaining non-performing or impaired loans will remain with Allied Farmers to collect and administer.The effect of this transfer is to separate the good loans from the bad loans;

If so, then all the good "performing" assets effectively now taken off Hanover investors and presumably now end up being used to pay back Treasury for providing repayment to ANF debenture holders? Your (taxpayer) win; Hanover investors loss...

[Lizard]

Yes, have found the Hanover notes (http://www.scribd.com/doc/23349060/Hanover-EM-Book-Final) now, and you are right. These assets were part of the Axis Group which was contributed to Hanover Finance as part of the Shareholder Support package at the time of the debt restructure. So the debts came as part of the combined $34m in support package assets acquired in the ALF-Hanover deal.

Interestingly, going back to the ALF prospectus at the time of the offer, their pro-forma balance sheet on page 11 does not show any debt coming with these assets either... the only place I can find it is in the HFL consolidated accounts to June 2009 where there is some detail of debts held within various of the Axis Group companies (ref pg 43). However, these accounts were not publicly available until filed at the Companies Office on 5 January 2010 - i.e. a few days after the deal had been completed.

[Lizard]

Interestingly, going back to the ALF prospectus at the time of the offer, their pro-forma balance sheet on page 11 does not show any debt coming with these assets either... the only place I can find it is in the HFL consolidated accounts to June 2009 where there is some detail of debts held within various of the Axis Group companies (ref pg 43). However, these accounts were not publicly available until filed at the Companies Office on 5 January 2010 - i.e. a few days after the deal had been completed.

So further to this, it seems to me that the assessment of the value of the Axis Group assets provided from the Shareholder Support package was rather brushed over in the Hanover-ALF restructure. Probably the best assessment comes in the Nov 2008 Hanover Prospectus (http://www.societies.govt.nz/scanned-images/87/BC10056892687.pdf), on pages 59 & 60 of the PWC Advisors report which was produced for the earlier debt restructure.


http://img.villagephotos.com/p/2006-8/1204598/Picture%204.png.jpg

Anyway, I may be a little confused here, but getting back to the value of the assets remaining in ALF, the bank debts against the Hanover assets may still be quarantined to individual assets acquired as part of the Axis group, which may have therefore now have negative equity?

(Could ALF perhaps put the Axis group companies into receivership and stop them being a drain on equity? If so, what does that do to their relationship with Westpac, who, if I read it correctly, is the bank lender both as primary mortgage holder within the Axis Group assets and lender to ALF themselves?)

[Lizard]

Hey Winner, you might be interested in this comment from page 32 of the Grant Samuel report:


Grant Samuel understands that the performing loans in the HFL and United portfolios will be transferred from Allied Farmers to its subsidiary Allied Nationwide.These loans will serve to increase the robustness of the underperforming Allied Nationwide portfolio and assist it in obtaining a satisfactory credit rating.Approximately 20% of the overall HFL and United loan portfolio is considered to be performing.The remaining non-performing or impaired loans will remain with Allied Farmers to collect and administer.The effect of this transfer is to separate the good loans from the bad loans;

If so, then all the good "performing" assets effectively now taken off Hanover investors and presumably now end up being used to pay back Treasury for providing repayment to ANF debenture holders? Your (taxpayer) win; Hanover investors loss...

Not sure if this is correct to analyse in this way, but comparing ALF HY10 and ANF HY10, the ANF report shows Net Loans and Advances of $163,845k,000 , whereas the ALF report shows Net Loans and Advances allocated to the Financial Services business (ie ANF) of $139,285,000. So am wondering if the difference ($24.5m) is Hanover performing loans transferred to ANF? Could be a different explanation though.

[Stranger_Danger]

It's all too complicated.

Far better to buy something with low or no debt on a single figure P/E.

The market offers up many of these opportunities.

i spend zero time analysing the ALF's of this world in any serious way these days - I see them as relics of history (the credit boom), there pretty much to laugh at.

[minimoke]

It's all too complicated.

i totally agree. I recall doing an analysis at the time and seeing way too many red flags to make the hanover into ALF deal a goer. Watson and hotchin had so many deals going that there was no way there was going to be anything of benefit to the Hanover investors I knew at the time. Unfortunately they believed that it was a good deal and thought the idea of getting 70 cents in the dollar via ALF a much better proposition than putting hanover into receivership. Thats why I'm now supporting several of these investors. Theres little to be gained from any analysis now. Its a gone burger for all concerned and the potential gains by bottom picking ALF (and a risk the bottom hasn't yet been reached) just don't make the effort worthwhile.

But thanks Lizard - always useful to recap on some of the deals elements so future punters can learn to look for the yellow and red flags of warning that fly when these sort of deals get done.

[Alan3285]

Not sure if this is correct to analyse in this way, but comparing ALF HY10 and ANF HY10, the ANF report shows Net Loans and Advances of $163,845k,000 , whereas the ALF report shows Net Loans and Advances allocated to the Financial Services business (ie ANF) of $139,285,000. So am wondering if the difference ($24.5m) is Hanover performing loans transferred to ANF? Could be a different explanation though.

Excellent work Lizard - I tip my hat to you for doing some proper analysis.

It is so easy to sit on the sidelines sniping, but it takes real nous to uncover what is actually there.

Good on ya mate!

Alan.

[Lizard]

I agree that this is too hard to value and probably too risky to buy. ANF receivership might also have some impact on getting out the ALF FY accounts on time? If so, could just see a suspension on 1 September?

On some real stab-in-the-dark figures, I think even a punt would have to be at below 1.2 cps to give a chance of decent return - and then probably only works after recapitalisation, since any low share price before then would just transfer more value to a "white-knight" investor.

So overall, valuation is a bit pointless for now. But I am still a bit fascinated to see how the Hanover-ALF deal worked out in hindsight. In the end, Tony Gibbs was probably right with his plate of custard remarks. If value has been transferred, it seems most likely to have been from Hanover Investors to banks (as first lenders on some Axis group assets and lenders to ALF) and possibly Treasury?

[Lizard]

i spend zero time analysing the ALF's of this world in any serious way these days.

Since my weekend has been entirely taken up with a house full of super-charged 14 year olds, analysing ALF in the gaps seemed as good as anything. Something about trying to find order in chaos! :p

With the last one about to depart, I can now retreat to the garden...

[Alan3285]

I agree that this is too hard to value and probably too risky to buy. ANF receivership might also have some impact on getting out the ALF FY accounts on time? If so, could just see a suspension on 1 September?

On some real stab-in-the-dark figures, I think even a punt would have to be at below 1.2 cps to give a chance of decent return - and then probably only works after recapitalisation, since any low share price before then would just transfer more value to a "white-knight" investor.

So overall, valuation is a bit pointless for now. But I am still a bit fascinated to see how the Hanover-ALF deal worked out in hindsight. In the end, Tony Gibbs was probably right with his plate of custard remarks. If value has been transferred, it seems most likely to have been from Hanover Investors to banks (as first lenders on some Axis group assets and lenders to ALF) and possibly Treasury?

Yes - I think from what you've posted you're probably right.

The interesting part is still whether those loans are ring fenced in any way, or if they come right through to the shareholders in ALF.

Alan.

[winner69]

Liz - wonder what a ALF balance sheet will look like without the ANF part in it .... still sick as I say

Still wondering where Resimac's commitment went to

And the Allied / Spiers arrangements are a real mess as well methinks

[Lizard]

Liz - wonder what a ALF balance sheet will look like without the ANF part in it .... still sick as I say

I'm guessing $40m equity tops. Debt down to $70m ish? Maybe still a bit higher than that. Trouble is, other than sales of Hanover assets, there's not much coming in to pay the interest with. And the covenants/deadlines are just going to keep coming. Hence still in discussions with potential investors.

It's all guesswork though as I'm no expert and can't figure where to allocate the inter-company bits.


Still wondering where Resimac's commitment went to.

Yes, that seems to have been a bit of distract-and-delay tactic.


And the Allied / Spiers arrangements are a real mess as well methinks

I haven't gone through them in great detail, but presume that just once again the whole strategy is to stay alive at any costs by sacrificing some of the security (in the form of the best assets) in exchange for cash/liquidity. Not sure if the losers here will be Speirs, the BNZ or the Treasury, but debenture holders were already secured by the govt guarantee, so the reduced quality of debenture assets they had doesn't appear to have hurt them too much. Maybe. As I say, didn't go through very closely, so might have missed something.

[bung5]

Well expect resignations in the coming days as well


"John Loughlin has resigned as chairman of Allied Farmers after its finance unit was placed in receivership. "

There we go

[minimoke]

"John Loughlin has resigned as chairman of Allied Farmers after its finance unit was placed in receivership. "

There we go
Unlike captains of Korean fishing vessels he quickly leapt at the first sign the ship was going down

[Dr_Who]

ALF was game over way before the hangover backdoor listing.

[minimoke]

ALF was game over way before the hangover backdoor listing.
Clearly Mr Market sees there still opportunities. Up 11.5% 2.9 cents on opening.

[winner69]

NBR jokers must read Sharetrader as even they are now asking how much borrowings do ALF really have and ask the same sort of questions that Lizard was asking over the weekend

Interesting because it raises the question og how much equity is there really left in ALF now ANF gone .... maybe not even enough to pay the bondholders Alan?

I wonder if anybody at ALF actually knows what the real story is .... or if they do didn't Shoeshine once use that word starting with a d

Still wondering whether Resimac was even interested in 'commiting' capital to ALF ... who was it just one big story

[winner69]

Serepisos apparently hasn't paid for the sponsership of the Wellington cup last year ... although he has got all the publicity plus more he wanted as the saviour .... Serepisos wanting the Wgtn City Council to help out the Phoenix ... wonder if Wellington Cricket has got the money for the ALLIED FINANCE Basin Reserve yet ... and no doubt plenty of Allied stuff on the the Porsche racing around the country most weekends

Jeez the rich have fun don't they ... at other peoples expense