Hanover Finance, which has been defunct for more than a year having sold its finance assets to Allied Farmers in late 2009, has switched its old website back on to attack Allied's stewardship of the book.
The website features a letter to Hanover investors from chairman David Henry and director Mark Hotchin (see below) and says the site is "intended to provide a balance to the seemingly one-sided public debate around the assets" that formerly belonged to Hanover and sister company United Finance.
It's also aimed at providing a forum for investors who are unhappy at the continued decline in Allied Farmers' share price despite "many millions of dollars" being recovered in cash through the realisation of Hanover assets.
Hanover and its directors are now under investigation by both the Securities Commission and Serious Fraud Office.
Read Hanover's letter to investors below:
Over the past 12 months, the Board of Hanover Finance Ltd (Hanover) and United Finance Ltd (United) has been alarmed at the decline and continuing erosion in the value of the assets that were transferred to Allied Farmers (Allied) in the debt for equity swap in December 2009.
Increasingly we are being contacted by investors who share this view and are asking what action, if any, we are prepared to take. Allied is ignoring the plan they promoted to investors and ourselves in late 2009. It would appear that the financial difficulties facing Allied at that time were a lot worse than presented.
Further, the assets and cash that were to have been made available to Allied Nationwide Finance Limited to assist in improving its balance sheet and future prospects never materialised - a factor which no doubt contributed to Allied Nationwide Finance being placed in receivership causing substantial loss to investors.
As a consequence of its financial difficulties, Allied appears to have sold assets well below fair value; creating losses and further diminishing the value of the remaining assets that were transferred to Allied. Instead of using the proceeds from these sales to enhance and preserve shareholder value, Allied has used this money to repay its own debt.
We have seen more than $40 million in cash realised through the "fire-sale" of Hanover assets, yet none of this has resulted in an increase in shareholder value or a dividend distribution to you as shareholders. Also of great concern is a provision that gives the previous shareholders of Allied (including Chief Executive Rob Alloway) additional shares to "compensate" them for any reduction in the value of the assets transferred to Allied, further diluting the value of shares held by Hanover/United investors.
We have also seen the resignation of the Chairman from the Allied board which raises concerns about possible disunity and governance within that board.
We have observed a very deliberate and orchestrated campaign by Allied – through Rob Alloway – to deflect media attention from the issues within Allied and their mismanagement of the Hanover assets by promoting misinformation against Hanover and its director Mark Hotchin.
We are no longer prepared to sit aside and allow this to happen and will actively campaign on behalf of shareholders, including seeking to have Rob Alloway removed from the Board of Allied.
To this end, we are re-launching the website www.hanover.co.nz to provide information on the issues we consider have been so badly misreported, the promises which were made and have not been adhered to, and other material we believe will be of interest to you. We encourage you to visit the site and welcome your comments.
David Henry Chairman Hanover Finance Limited
Mark Hotchin Director Hanover Finance Limited