About 4,500 Allied Nationwide Finance (ANF) depositors should receive the NZ$130 million they’re owed by the failed finance company by the end of the month.
Tipped into receivership by its trustee Guardian Trust on August 20 with McGrathNicol's Kerryn Downey and Andrew Grenfell appointed receivers, ANF is covered by the Crown retail deposit guarantee scheme.
A Treasury spokesman said Treasury and the receiver were now obtaining information about the company’s depositors and the amounts of money they’re owed. The receiver was writing to some depositors asking them to verify or correct the information on ANF’s register of debt securities, which was being audited.
Many depositors wouldn’t, however, receive letters because ANF already has sufficient information about them for the audit.
“Where letters are necessary, they were all sent out by the end of September. When the audit of the register is completed, the Treasury will arrange payment to depositors. We expect payments to be completed by the end of October,” the Treasury spokesman said.
ANF was a subsidiary of Allied Farmers, which acquired the Hanover Group’s loans and property interests last December.
The receivership was closely followed by that of South Canterbury Finance (SCF) on August 31. After SCF fell over, the Government decided the Crown would repay all depositors holding eligible debt securities issued by any Crown guaranteed companies that defaulted while protected by the Retail Deposit Guarantee Scheme. This decision means repayments will be made to depositors, in all Crown guaranteed finance companies that fail up until October 12, even those who may not have previously been eligible for repayment.
Meanwhile, Treasury points out ANF’s Perpetual Bonds are not eligible for repayment under the Crown guarantee. The bonds are subordinated unsecured debt and always have been excluded, from coverage by the Crown guarantee, says Treasury. The bonds, with a face value of NZ$2 million at June 30, were issued to Speirs Group as part of Allied Farmers' 2008 purchase of Speirs Finance for NZ$5.24 million.
The paid interest of 10% per annum and were due to mature in September 2013. After the ANF receivership, Speirs Group said in its annual results announcement it had created an impairment provision for the full NZ$2 million book value of the bonds as recoverability was considered doubtful.
The catalyst for the ANF receivership came on August 6 when ANF pulled its prospectus after Guardian Trust said the company was in breach of its Trust Deed. Guardian Trust was concerned ANF's total liabilities had exceeded 90% of the value of its total tangible assets, which was in breach of the Trust Deed.
The Trustee provided ANF 14 days to remedy the position. Ultimately ANF, which had about NZ$70 million worth of debenture stock to repay before October 31, couldn't overcome Guardian Trust's concerns.