ALF - Allied Farmers Limited

[Lizard]

With respect to Kees, doesn't matter what he thinks. The market has come in with a trade at 1 cent. Thats the current valuation of this stock.

Oh, get over it Mini. We've all heard that "the valuation is what the market says it's worth" line a hundred times. Personally, I don't think that excludes discussing some other method of valuation for those that believe the market is not 100% efficient! :P

[Kees]

dont have to justify market sets the price not downrampers or up rampers for that matter.

[Lizard]

Oh, okay. I thought you were saying that the shares were worth 1cps (and not, say, 0.4cps) for a reason. But seems your reasoning is that you might as well buy them at 1cps because that is what the last person was prepared to pay? On that basis, I guess there is no financial reason to discuss the merits of any particular shares, since they would all be priced correctly. Buying decisions are purely whether or not to be in shares at all (and after that, whatever form of dart-throwing you prefer)?

Not sure what the downramping/up ramping refers to. That I am attempting to move the market?

[Rusty]

There was only $4600 ALF traded today and it closed at 0.9c. So yeah I dont think there was much reaction to the news.

[minimoke]

Oh, get over it Mini. We've all heard that "the valuation is what the market says it's worth" line a hundred times. Personally, I don't think that excludes discussing some other method of valuation for those that believe the market is not 100% efficient! :P

Fair enough comment - though trying to value ALF is a near impossible job when you have holders who probably still believe they can maximise their profits despite being done over by Hanover and ALF management. This will bring some unnatural distortions to the market and consequently any valuation. Its an irrational and illiquid stock and any investment is frought as a buyer is unlikely to have a decent exit strategy.

[Lizard]

Yes, I can understand it is a share that people feel emotive about and am sympathetic. I didn't own Hanover or ANF debentures or ALF shares, but I had invested in them in the past and I did manage to get caught out on Strategic, St Laurence and Dorchester. Whether or not the Hanover-ALF deal was better or worse than alternatives (for either party) is speculation - rather like choosing which patch of quicksand would be better to stand on.

Where I was coming from is that it appears to me that (without saying so), they appear to be in a liquidation strategy. If that is the case, then usually the value is driven by NTA, less costs to liquidate. The only reason to move above that is if there is a reason to believe that the assets are under-valued on the books.

[Halebop]

...The only reason to move above that is if there is a reason to believe that the assets are under-valued on the books.

The true asset value position looks like a cr@p shoot to me...

[minimoke]

Taking MBEL as an example, I have no real issue with the disclosing it as an asset only (setting aside the actual valuation attributed which was recently $7m I think).

The debt within MBEL was and could never become a liability to ALF itself, and hence the minimum 'value' of MBEL to ALF was zero.

If they had disclosed it as, say, $26m of assets and $19m, then it would imply the maximum downside is $26m - that would have been misleading I think?

Alan.

How do you turn $45.8m into sand? Answer. Buy a beach property from hanover and watch it morph.

ALF announce today MBEL likely to be written down to zero.

(I wonder what Hotchin and Watson offered to buy MBEL for? It might have realised ALF something rather than this loss and the $3m approx they have forked out in interest and costs)

[Lizard]

REPORTING UPDATE

Allied Farmers Ltd (ALF) advises that it is in the process of completing its 2011 year end unaudited financial statements. These will be released on 29 August 2011. This process includes the receipt and review by the Board of independent valuations of the remaining loan and property assets acquired from Hanover Finance and United Finance in December 2009 (the “Acquisition”).

ALF is yet to receive all of the valuations, and nor has it made an assessment of the overall impact of these adjustment and some other positive adjustments. Accordingly, whilst it is likely that these valuations will result in further impairments of these assets, at this point in time ALF is not in a position to draw any conclusions as to the overall extent of the impact of these valuations.

The audit of the financial statements will be completed during the month of September, with final reporting due by 28 September 2011. Once the audited accounts are available, ALF will be able to calculate and announce the extent to which the Bonus Shares issued to those ALF shareholders immediately prior to the Acquisition will be converted into ordinary shares. Given the likely extent of the impairment of the acquired loans and property assets since Acquisition, the calculation is expected to result in a significant number of new shares being issued to those shareholders.

When that conversion calculation is completed, ALF will be able to calculate and announce (at the same time) the number of additional shares required to be issued to institutional and professional investors who participated in the share placement on 3 August 2010. Again, this is likely to result in a significant number of new shares being issued to these institutional and professional investors.

This will be interesting... isn't it the closer the Hanover assets get to having been worth $0, the closer to infinite the number of ALF shares issued to the bonus share holders? Could see this turn into a scrap over the accounting. Wonder who holds most of the bonus shares? I think GPG sold out before allocation? Alloway?

But hey, institutional investors who got the placement in Aug 2010 get some too... there's a price adjustment to their shares AFTER the bonus share holders have got their lot... funny, but I don't see any mention of that in the NZX announcement at the time and I'm not sure if they told the ALF holders when they offered them the rights issue.

Then again, perhaps everyone will agree by then that the infinity shares are worthless...

[Lizard]

Wonder who holds most of the bonus shares? I think GPG sold out before allocation?

Actually, just looking at the companies office, it is possible they were still in... although there were reports of them selling out in the days before the transaction, it is possible they were still shown as the registered holders. Ithaca share parcel is shown as removed on the 24th Dec and bonus shares were issued 21st. Hard to call, as I'm not certain that Companies office dates will match the registry.