ALF - Allied Farmers Limited

[Alan3285]

ALF (ords) now trading at 4.8c each.

No impact on ALF010 though.

I still feel quite bullish on the bonds myself. Does anyone think differently, and if so, why?

Alan.

[Silverlight]

The bonds are tied to the fate of the company, if you believe ALF will be here in 18 months and still liquid then they offer a good return.

However their are 12.6m ALF010 notes on issue, ALF010 redeem on 15 November next year and convert to ordinary shares at 95% value of the 20 vwap of shares prior to redeption.

If ALF goes bust ALF010 holders rank behind $210m of Term deposits, and $103m of commerical paper.


ALF must survive and do well with the rest of the Hanover loanbook, to make good your return.

[Silverlight]

Just doing some digging through the terms on the bonus issue in the case of a shorfall.

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.

Does anyone want to check my math on this, or has this already been discussed?

Page 10 -11 Notice of Meeting 24 Nov 2009

[minimoke]

Does anyone want to check my math on this, or has this already been discussed?

Page 10 -11 Notice of Meeting 24 Nov 2009

WTF. And Hanover/ALF investors really understood all that!

[winner69]

Just as well there's no such things as share certificates these days .... some would need to buy a new unit in the retirement home to store them

[minimoke]

Just as well there's no such things as share certificates these days .... some would need to buy a new unit in the retirement home to store them

Or if the Outhouse ever needed wallpapering or extra soft tissue.

[Silverlight]

Just to monetize the position ALF holders are in, prior to the Hanover acqusition you could have bought 100,000 ALF at 20 cents on 16 December 2009, record date for the bonus securities.

If you then sold on the 17th, you maybe would have got 15 cents, so $20k position, closed out with a $5k loss, but still with the bonus securitiy entitlement. You would still have 10,000 bonus securities, so you in essence paid $5k for 10,000 bonus securities.

With a shortfall of the current $272m, the bonus securities convert at 1:149.67 shares, so you would receive 1,496,774 shares on 30 June 2011, if everything stays the same.

1,496,774 at 4.5 cents per share is worth $67,354.83.


If 564m shares do get issued, shares on issue will be 2,516,529,262, giving a future NTA of 3.725 cents per share.

[Morpheus]

This NBR article http://www.nbr.co.nz/article/bonus-s...xpected-119665
suggests the "asset value" must be recorded under GAAP accounting standards which was how they were at the time of the December transaction. A fair chunk of the write-downs to date are due to IFRS trickery so when the trigger point comes the value attributed to Hanover stuff may be more than what we are seeing now. But who knows.

[minimoke]

Just to monetize the position ALF holders are in, prior to the Hanover acqusition you could have bought 100,000 ALF at 20 cents on 16 December 2009, record date for the bonus securities.

If you then sold on the 17th, you maybe would have got 15 cents, so $20k position, closed out with a $5k loss, but still with the bonus securitiy entitlement. You would still have 10,000 bonus securities, so you in essence paid $5k for 10,000 bonus securities.

With a shortfall of the current $272m, the bonus securities convert at 1:149.67 shares, so you would receive 1,496,774 shares on 30 June 2011, if everything stays the same.

1,496,774 at 4.5 cents per share is worth $67,354.83.


If 564m shares do get issued, shares on issue will be 2,516,529,262, giving a future NTA of 3.725 cents per share.

Or is it - if you didn't sell you'd have your original 100,000 shares which are currently worth, @$0.045, $4,500


your 100,000 shares at $0.045 are worth $4,500. so you get 10,000 bonus shares so your 110,00 shares are worth $0.0409 each

Except with the conversion you have your original 100,00 shares plus the extra 1,496,774 giving a total of 1,596,774 shares. Theres still only $4,500 worth of value so each share is worth $0.0028 each?


Ner trus tmy math though - its too late in the day!

[Silverlight]

They weren't bonus shares, they were non listed bonus securities, that don't vest and convert until 30 Jun 2011, you received 1 for every 10 shares you own.

They are apparently freely transferable at the registry level, potentially you could send a letter to all holder offering to buy them at 10 cents, people might think that is good, not realising the current conversion ratio. Dun dun dun... who is that dodgy fulla in Australia who does that?