Rural services and finance group Allied Farmers, which acquired the Hanover Group’s finance interests last December, is talking to a group of banks about restructuring its NZ$19.5 million Westpac loan, managing director Rob Alloway says.
The loan is part of Allied Farmers’ total NZ$50.3 million worth of bank borrowings, all of which was classified as current – due for repayment within 12 months – in Allied Farmers’ interim report coving the six months to December 31. The Westpac loan matures on July 1.
Alloway told interest.co.nz Allied Farmers was “quite happy” with where it sat in terms of banking covenants and was talking to a group of banks about the Westpac loan. Asked if this meant other banks might take it off Westpac’s hands, Alloway said that wouldn’t necessarily be the case.
“I’m just saying we’re restructuring our senior lending arrangements at the moment, which may or may not include Westpac.”
He declined to name any other banks Allied was talking to.
Allied Farmers also has NZ$30.8 million of additional bank borrowings secured over property assets acquired from Hanover and sister company United Finance. As of December 31, this was also classified as current. Alloway said, however, Allied Farmers was “quite comfortable” with the bulk of this, but was “eager” to retire the most expensive loans as and when it can.
“The first ones we retire are the most expensive ones in terms of property borrowings, where we’ve got very, very expensive facilities in place which we inherited from Hanover."
Late last month Allied said the finance interests it acquired from Hanover through a shares for debentures swap valued at NZ$396.2 million last December were now worth 69% less than that, or just NZ $124 million. Nonetheless, Alloway maintains he has no regrets about the Hanover deal.
“No, I don’t think we have (any regrets),” Alloway said. “We always knew that it was a particularly difficult loan book and the property assets that were attached to the deal were also quite difficult because they were heavily concentrated into one geography being Queenstown.”
“That said, I ‘m quite confident that when you look at revival of the property segment, Queenstown will be one of the first to fire. The fact that we last night signed a conditional deal for a considerable sum illustrates some of the confidence in that location,” Alloway added yesterday.
He was referring to a conditional deal Allied Farmers has reached to sell the 23.4 hectare stage 2 of Queenstown’s Five Mile development to an un-named buyer for a sum north of NZ$23.2 million plus GST, which was Allied’s book value for the asset as of December 31.
“Which is a good result we believe in this market given that the property is unzoned although it’s well through a (zoning) process,” Alloway added.
He wouldn’t name the buyer, saying Allied was respecting confidentiality. Nor could he put a timeframe on when a “handful” of conditions would be worked through, but said none of the conditions were financial ones.
As for the 16,400 Hanover Group investors, who were issued Allied shares valued at 20.7 cents last December which are now trading at about 5c, Alloway said the outcome for them would have been far worse if they'd been left where they were.
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