Receivers for Allied Nationwide Finance are waiting on a formal offer to hand over the failed lender’s assets to the government as part of the wind-down of finance companies that collapsed and were covered by the Crown retail deposit guarantee scheme.
McGrathNicol’s Andrew Grenfell said Treasury has been undertaking due diligence and is in preliminary negotiations over a potential sale and purchase agreement, in the fourth receiver’s report. The receivers have made two distributions of $14 million and $6 million since Aug. 19, taking the total repayments to the Crown to $70 million.
“The receivers expect to receive a formal offer from the Crown in the coming weeks,” Grenfell said in the report. “Until negotiations with the … for the remaining assets of the company are complete, the receivers are unable to assess the total return to the Crown from the receivership.”
Allied Nationwide called on the government’s deposit guarantee in August 2010 after it was forced to stop raising new funds when it breached its trust deed. The government paid out some 4,500 debenture holders $128 million under the scheme that guaranteed depositors’ funds.
Finance Minister Bill English has since said the government will take control of some $350 million of assets from the failed finance companies through a new entity called Crown Asset Management, to control fees paid to receivers.
Grenfell said the receivers continued negotiations with potential buyers of Allied Nationwide’s loan book, but “no acceptable offers have been received.”
Between Aug. 20 and Feb. 19, the receivership had loan receipts of $20 million and other income of $553,000, with total payments of some $2.4 million in the period. As at Feb. 19, Allied Nationwide’s receivership had $15.5 million of cash held at the bank, $6 million of which was repaid to the government after the balance date.
The receiver has reduced the number of Allied Nationwide staff assisting with loan collections as the portfolio has reduced, the report said.
The finance unit was a key plank in parent company Allied Farmers’ plan to transform itself into a major lender when it took on the Hanover Finance and United Finance loan books in a debt-for-equity swap at the end of 2009. That deal ultimately soured, and Allied Farmers was forced to write off three-quarter of their $396 million value.