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Allied Farmers set to write-off NZ$3.63m on former Hanover property Matarangi Beach Estates; Says HSBC faces 'significant' loss

Allied Farmers set to write-off NZ$3.63m on former Hanover property Matarangi Beach Estates; Says HSBC faces 'significant' loss

Allied Farmers says it expects to write-off its NZ$3.63 million carrying value for Matarangi Beach Estates Limited, acquired as part of its December 2009 debt-for-equity swap with defunct property lender Hanover Finance, in full and that HSBC as first secured creditor faces a "significant loss."

Matarangi Beach Estates was placed in receivership last November after HSBC cancelled the company's term loan facility, thereby requiring the facility which then stood at NZ$19.08 million including outstanding interest and fees, to be repaid.

"Allied Farmers (ALF) advises that it has today received advice from the Receivers (KordaMentha) of Matarangi Beach Estates Limited in Receivership (MBEL) that, based upon its analysis of the estimated asset realisations from MBEL, the first secured creditor will incur a significant loss and therefore it is unlikely that any funds will be returned to ALF after the realisation of all of the assets," Allied Farmers said in a stock exchange announcement..

"ALF’s current carrying value of MBEL is $3.63 million. Whilst the Board of ALF has yet to complete its review of the carrying value of its assets for the purposes of the 2011 financial statements, it is likely that the Board will write down the MBEL carrying value to zero."

Matarangi Beach Estates is the parent company behind a Coromandel coastal development. The assets of it and its subsidiaries include an 18 hole golf course and clubhouse, five luxury villas, residential sections, farm land, zoned development land, and unzoned development land. See the latest MBEL receiver's report from KordaMentha here.

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It is tough to take a loss on an investment ...... tougher still to hang on in there , and watch the equity dwindle towards zero .

...... after Allied re-listed on the NZX , the nominal share price was 20.7 cents . But trading quickly slammed the price down to  around 13 cents . And it stayed there for several weeks  . At that point investors could exit the Hanover debacle with over 60 % of their equity intact . A 40 % haircut is preferable to a 100 % Sweeney Todd throat slittting !

I suspect that many folk held onto their newly issued Allied stock , in the belief that they could achieve a 100 % return of their initial capital .

..... sad , but true , .. you gotta know when to hold them , you gotta know when to fold them .