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Hanover board and Grant Samuel recommends investors accept Allied bid

Hanover board and Grant Samuel recommends investors accept Allied bid
The board of Hanover Finance, including co-owner Mark Hotchin, has unanimously recommended that investors in Hanover Finance debentures and capital notes accept the takeover bid from Allied Farmers, backing a report from Grant Samuel that said the bid was a better option than the current moratorium. The vote will be on December 16. We welcome our readers' comments and scrutiny of the full Grant Samuel report below. Here is the full statement below from Hanover Finance.
The Chairman of Hanover Finance, Hanover Capital and United Finance, David Henry, today confirmed directors have unanimously recommended that all classes of investor vote in favour of the Allied Farmers Proposal. Mr Henry said this followed careful review of Hanover, United and Hanover Capital's forward cash flow projections, the content of the Allied Farmers Proposal and the Grant Samuel independent expert report. "Directors have unanimously recommended approval of the Allied Farmers Proposal by investors at the meeting scheduled for 16 December 2009. "We are of the view that Allied Farmers has the potential to add real value enhancement to the Hanover and United loan and property assets that is not possible under the Debt Restructure Plan (DRP) currently in place. Mr Henry noted the Grant Samuel independent expert report stated the Allied Farmers Proposal is superior for Hanover and United investors than the status quo under the DRP, or other likely options. "The Proposal means Allied Farmers can take a longer term view in managing the assets and has a broader range of options to improve asset values. These potentially include: * an ability to provide ongoing funding support to complete property developments * an ability to negotiate with prior ranked lenders over borrower's assets in order to ensure an orderly realisation over time "We also believe Allied Farmers will be able to arrange new funding and use the proceeds from asset realisations to support the business, instead of using such proceeds to meet the short term repayments required under the DRP. "When the DRP was entered into, it was anticipated at that time by management and directors that the property market would stabilise and potentially show signs of recovery in late 2009 or early 2010. However, as the current directors indicated in a letter to investors in November 2009, market indicators have continued to move in a more negative direction and trading conditions in general, and the property market in particular, continues to be challenging. "This significant deterioration has meant Hanover's current estimates indicate we are no longer likely to achieve full repayment to investors under the DRP." Mr Henry said directors believed the Proposal is likely to be in the best interests of all classes of investors. He noted the Grant Samuel report commented that an alternative superior offer is unlikely and that the consideration being offered by Allied Farmers was fair. "Under the Allied Proposal, Hanover Secured Depositors will receive a total 78 cents of value, an improvement on the current estimate, and United Secured Stockholders 90 cents. This includes 6 cents already paid up to September 2009 under the DRP. "Subordinated Noteholders and Capital Bondholders will each receive, under the Allied Proposal, 30 cents of value. Hanover directors have previously advised that they were unable to forecast any repayment for these investors under the DRP."
Hanover EM Book Final

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