Beleaguered Allied Nationwide Finance says it didn’t make debenture maturity payments due yesterday, but hopes to today and has asked its trustee to extend a 14 day deadline set for the company to rectify a perceived Trust Deed breach which expires today.
(Updated to include trading halt on Allied Farmers shares).
Allied Nationwide, a subsidiary of Allied Farmers, said it hoped to make a further announcement later today. The company said it had continued to meet all its financial obligations, including repayment of maturing debentures until yesterday.
“However, as the capital and funding initiatives under consideration by the Allied group require third party commitments and (trustee) New Zealand Guardian Trust approvals which had not been received by last night, it has transpired that Allied Nationwide did not pay debenture maturities due for payment yesterday, the company said.
“Allied Nationwide expects to complete an initial transaction today that will result in payment of debenture maturities now due and has requested Guardian Trust both consent to this transaction and to provide a short extension to the deadline originally imposed.”
It expects a response from the trustee later today with a further announcement to follow.
This afternoon sharemarket operator NZX said Allied Farmers and Allied Nationwide, which has preference shares on issue, had requested a trading halt pending a further announcement in relation to Allied Nationwide. NZX said the announcement may not be made until after the close of today's trading at 5pm.
Shares in Allied Farmers, which acquired the Hanover Group's property and loan assets in a deal valued at NZ$396.2 million last December, were at just 2.6 cents each prior to the halt.
On August 6 Allied Nationwide pulled its prospectus after Guardian Trust said the company was in breach of its Trust Deed.
The Trustee provided Allied Nationwide 14 days, until 5pm today, to remedy the position.
"The board and management of Allied Nationwide did not agree with this view and believed that Allied Nationwide was in compliance with the relevant Trust Deed ratio of total liabilities to total tangible assets based on financial information as at June 30, 2010," the company said.
"This position was concurred with by the auditors, subject to completion of the audit. Despite this different view, Allied Nationwide, in conjunction with its parent, Allied Farmers, has been working to address the matters raised by the Trustee."
The Trust Deed ratio at the centre of the dispute sets out that the company must not let its total liabilities exceed 90% of the value of its total tangible assets.
Bryan Connor, general manager for corporate trusts at trustee Guardian Trust, told interest.co.nz yesterday that there were "a lot of things on the table" and to expect an announcement today.
Allied Nationwide, whose depositors are covered by the Crown retail deposit guarantee scheme until October 12, has about NZ$137 million worth of debentures on issue. In June Allied Farmers managing director Rob Alloway told interest.co.nz Allied Nationwide had about NZ$40 million worth of debentures rolling off between then and the expiry of the company's Crown guarantee. "A bunch" of that came off right at the end, Alloway added.
When Allied Farmers acquired the Hanover property and loan assets it said the deal should enable it to strengthen Allied Nationwide’s balance sheet through the contribution of “quality loan assets as an injection of capital.” It anticipated this would pump at least NZ$50 million of new equity into Allied Nationwide. However, Allied Farmers now says the assets it acquired from Hanover have collapsed in value to be worth just NZ$94.3 million at June 30.
About 16,500 Hanover debenture holders were issued about 1.9 billion Allied Farmers shares last December at 20.7c each.