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Allied Farmers faces another Hanover hit

Allied Farmers faces another Hanover hit
Allied Farmers is set to take another hit on the property and loan assets it acquired from Hanover Finance in December. Rob Alloway, Allied Farmers' managing director, said it was obtaining updated valuations on property and loan assets acquired from Hanover and sister company United Finance on December 18. This work was being done as part of the preparation of its June 30, 2010 financial statements and would this would include changes to the recorded provisional fair values of the remaining property and loan assets acquired by Allied. "Allied Farmers advises that it has received updated valuations from bank-recognised independent valuers for the remaining acquired property assets, resulting in an aggregate net decrease in their fair values from NZ$105.4 million to NZ$87.5 million," Alloway said. “These are a mixture of higher and lower valuations, and reflect the inherent uncertainty of the current market for property assets of this nature”. "The value of the acquired loan assets is likely to be subject to an increase in impairment provisions. This work is underway as part of the process of preparing the 30 June 2010 financial statements, and it is too early to determine the extent of the impairment”. Allied Farmers acquired Hanover's loan book and property assets by swapping Allied shares for Hanover debentures in a deal valued at NZ$396 million. On March 1 Allied Farmers wrote down the value of the Hanover’s loan and property assets in acquired by NZ$220.6 million, or 56%, to NZ$175.52 million.

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