ALF - Allied Farmers Limited

[Stranger_Danger]

Surely not?

I genuinely fail to see the point of these two firms merging.

In both cases, they have huge problems to sort out. Why intermingle those problems?

Hindsight shows that these firms needed less size, less complexity - not more.

I must be "simple" but if this is for real, I am lost for words.

[Aeneas]

18 November 2009

Allied Farmers Signs Agreement with Hanover Finance & United Finance

Allied Farmers advises that it has signed an agreement with Hanover Finance and United
Finance, which subject to satisfaction of conditions, will result in Allied Farmers
buying the finance assets of those companies in a deal worth approximately $400 million.

This significant transaction is part of a new strategy, which will see Allied Farmers
dramatically increase the size of its rural services and finance businesses.

The agreement is conditional upon both Allied Farmers shareholder approval and the
approval of Hanover and United investors. The two-step process will result in Hanover
and United investors receiving Allied Farmers ordinary shares, and Allied
Farmersacquiring the finance assets of Hanover and United.

Allied Farmers, assisted by its external advisors, have carried out detailed due
diligence on the Hanover and United assets and have built up an understanding of the risk
and return profile
associated with them.

The intention is that a large proportion of the performing assets will be transferred to
Allied Nationwide Finance, increasing the size of the balance sheet and improving capital
adequacy.

A new subsidiary of Allied Farmers will be established for holding and managing difficult
assets. In the interim this subsidiary will be lead by Allied Farmers Managing Director,
Mr Rob Alloway, until a permanent appointment is made.

Given the uncertain nature of these assets, Allied Farmers has been careful to ensure the
fairness of the transaction to both our new and existing shareholders. Forexisting
shareholders, the transaction includes an adjustment mechanism which will realign
relative shareholding as at June 2011 if the expected recoveries from the acquired assets
do not meet expectations.
Asset realisations post transaction have the potential to flow significant cash into
Allied Farmers.

This will strengthen the company’s position medium term, and should provide the company
many opportunities for growth in the rural and finance sectors.

A Notice of Meeting for a Special Meeting of Allied Farmers shareholders will be sent to
all shareholders next week, with the meeting intended to be held early December and prior
to the
meeting of Hanover and United investors which is intended to be held in mid-December.

For and on behalf of the Board
John Loughlin
Chairman
For further information please contact:
John Loughlin
(027) 542 2405 OR Klaus Sorensen
(09) 3071722
(029) 2322576

[Stranger_Danger]

Does acquiring this crap impact on Allied's government guarantee?

Does the government guarantee then apply to the crap they acquire?

If yes (surely not), why doesn't an anarchist acquire a listed shell, then acquire every finance company, then let it blow up, just for fun?

[BRICKS]

EVER since ALF directors bought the timber mill thinking they could turn a loss maker into a goer along the way lost another million, so they went into finance just to fall on there head again now this as BRICKS has said before this mob love self destruction but they are going to pay for it in shares more like WALLPAPER..

[Doyle]

I wouldn't hold your breath on this one. Requires 75% approval from Hanover depositors. Alot of them are the sort of people who consider the sharemarket to be as inherently risky as gambling. A little bit of research on allied farmers share price history will be all thats required to turn most them off.

This whole exercise will turn out to be a white elephant, frankly don't know why AF bothered surely they can find some better finance assets around going cheap. All the publicity surrounding Hanover, and their board consistently doing the best to overprice fair value on dismal assets, will mean if this goes through it could only end up as a raw deal for AF shareholders.

[Doyle]

Does acquiring this crap impact on Allied's government guarantee?

Does the government guarantee then apply to the crap they acquire?

If yes (surely not), why doesn't an anarchist acquire a listed shell, then acquire every finance company, then let it blow up, just for fun?

Initially my thoughts are surely not as well, but of course it won't affect the guarantee at all. By doing this ALF will take hanovers liabilities and turn them into equity. In fact depending in the structure of the deal could improve ALF credit rating. Rediculous I know. The more I look at this Idea the more I think what are ALF thinking? Hard to say from a Hanover point of view until you see the detail but it's basically choosing between the lesser of two evils. I'm thinking this is ALF but have no doubt that Hanover depositors will stick with current management.

I wonder if Hotchin and Watson get shares as part of the deal? or get to reneg on the extra 20 million that they would likely have to provide under the current deal? Just the sort of incentive these boys would need to start promoting this deal as in the best interests of depositors.

[Doyle]

Update that,
reportedly the final deal will be worth apporximately78 cents in the dollar for hanover investors, what a disgrace. Allied finance paying 78 cents for assets that PWC valued at a maximum of 82 cents over five years. Take that 82 cents and discount it you get 60 cents. Thats the most Hanover investors should be paid and even thats favourable. 70 cents is the latest prediction from the men with the most rose tinted glasses available. 51 cents discounted. In reality more than investors should get given the absurdness of managements previous prediction.
(4 years 8% discount rate, probably should be more given the risks involved)

I guess there needs to be some accounting for the fact that shares arn't cash, so Hanover investors should probably being issued at around 60 cents. That would be a fair price probably a little to much.

But 78 cents well you would just about have to be functionally innumerate to turn that down. My bet is they will anyway.

This whole thing is a disgrace for ALF, a collapse over half the finance sector and this is the best deal they can find.

[winner69]

Yestredays story was only 900 million odd new shares would need to be issued ..... after todays action now ovwe 1.3 billion new shares

Interesting report from ALF this announcement about all this ... the scenarios only went down to an ALF share price of 30 cents

And they clarified the 78 cents Hangover investors might get back includes the 6 cents already paid ... so there is only another 72 cents in it for them if things go to plan.

And then explaining the 'bonus share' thingie this statement The adjustment works simply but the formula is complicated. ..... too right if what followed is just an indication

But suppose this sort of carry on happens if a $13 million company gets the printing presses out and issues a billion plus shares to buy distressed assets that one day may be worth something

Good on them for trying .... nothing vnetured nothing gained .... but makes a bit of mockery of the state of the NZX when such a deal propels ALF into the top 50 .... and the directors than take delight in saying that insto will then be foreced to buy the ALF shares as they are dumped by the Hungover investors ..... but then again they prob didn't do the sums of 1.3 billion by 10 cents would take it out of the Top 50

[winner69]

Good old solid NZ (iconic ... must be?) firm .... Allied Farmers Ltd, which celebrates its 120th anniversary this Friday at the Hawera A & P show with the launch of the company history: ‘Too Old To Be Secrets Now”, today outlined a new company strategy designed to transform the historic Taranaki based farm services

Suppose need all the hype they can generate
group.

[Balance]

Extremely good deal for ALF if ALF can get deal done.

Could be terminal if deal not done.

Watch and read the independent appraisal report carefully.