ANFHA Allied Nationwide Bonds

Gidday

Anyone holding these puppys?

Yesterday the Gummint declined to pay out some SCF fixed interest NZ Debt market listed securities.

Do you know NZX are misdescribing ANFHA as Perpetual Preference shares when they are not? They are Perpetual Bonds and bonds are guaranteed by the gummint , Perpetual Shares are not.

Ask Chris Lee this question. He might be helpful.

From Allied Nationwide account Jun2009- They appear not to be covered- Sorry if that is the case as not wanting to be the bearer of bad news

17.2 PERPETUAL BONDS Number Number Number
Balance at beginning of period - - -
Additions due to amalgamation 13,539 13,539 -
Perpetual Bonds issued 2,000 2,000 -
Balance at end of period 15,539 15,539 -
Carrying value of at end of period ($000s) 15,539 15,539 -
These Perpetual Bonds have a par value of $1.00 per bond. These instruments have no set maturity date, are redeemable
only at the option of the Company and interest is payable on them at the discretion of the Company. They are therefore
equity instruments. The bonds rank equally with other subordinated debt on issue and rank behind all other liabilities of the
Company.
During the year to 30 June 2009 2,000,000 perpetual bonds were issued at $1 each.
The interest rate applicable on the bonds is reset annually on 30 September at the greater of 10% or the one year swap rate
plus 4.50%. For the period 1 October 2008 to 30 September 2009 the rate has been set at 11.52%.

Gidday

Debt to equity at the stroke of a pen?

Quote:

---

Originally Posted by Contrarian

Debt to equity at the stroke of a pen?

---

There are some rules around when these things qualify as equity etc. These are probably like the SCFHA which were issued as quasi-equity initially. I think from memory, the original SCFHA were rolled-over and rights to cumulative interest removed and made perpetual so as to meet definitions for equity under IFRS. Looks to me like ANFHA are issued in the same vein. I think there may be some rule as to how long they qualify as "equity" for, so there was always the suggestion that some of these perpetuals would most likely offer a repurchase/replacement issue at some stage as the advantage to the company was lost once they lost their equity status. I think governed by IAS 32 if you are interested...

Btw, where did the ANFHA's come from? I note they appear in the 2009 accounts "on amalgamation", so presumably something to do with Speirs?, but struggling to find the prospectus. The NZX shows them listed at 1 Oct 2008, which would be on amalgamation I guess? First NZX announcement I can find for them is the announcement that ANF is applying for the govt guarantee, so that is a bit misleading... especially since there is nothing obvious to say they are equity until the 2009 accounts (presumably at HY in end of Feb, although these aren't at the companies office, so can't be sure - perhaps wasn't clear until annual report a year later?).

Gidday


Perpetual Speirs Bonds are issued in perpetuity but may be redeemed by the Company at some future date. The interest
rate on Perpetual Speirs Bonds is reset annually on the 30th of September at the greater of 10.00% and the then one year
swap rate plus 4.50%. For the period 1 October 2006 to 30 September 2007 the interest rate applicable to Perpetual Speirs
Bonds is 12.08%. Perpetual Speirs Bonds are Subordinated Debt, as defined in the Composite Trust Deed dated 16 June
1986, and rank equally with all other Subordinated Debt on issue, including Subordinated Notes, and rank behind all other
liabilities of the Company but ahead of ordinary shareholders.
On 27 October 2006, at Special Meeting of Perpetual Speirs Bondholders, a majority of the Bondholders voted on a
proposal which allows the interest on the Perpetual Speirs Bonds to be paid at the discretion of the Company’s directors.
For this reason, from 27 October 2006, Perpetual Speirs Bonds are classified under the’“Equity” heading rather than as a
liability.