Alloway to remain at Allied, admits mistakes

Allied Farmers managing director Rob Alloway. Photo / Dean Purcell

Allied Farmers managing director Rob Alloway is to remain in charge of the company for another six months.

Alloway resigned from the executive in September and was to have stepped down from his managing director role in December.

But after its annual general meeting today the company said the board had asked Alloway to remain in the position until the end of his contract on June 30 next year.

The board said Alloway had agreed to the request subject to finalising terms.

Alloway will remain a director after leaving the executive position, while independent directors Garry Bluett and Jeffrey Keenan were re-elected at the meeting.

Alloway told shareholders at the company's annual general meeting in Hawera, the first since undertaking the debt for equity swap with Hanover, Allied was shifting its focus back to its core rural business, and would require significant restructuring to reduce debt.

It had been another tough year for the company, but it must continue to keep looking forward and focus on "what we have, and how we can make it perform", Alloway said.

"Mistakes have been made which the board and management acknowledge," he said.

One angry investor has today called on the company's directors to take a fee cut.

David Bryant told Radio NZ the company was a shambles and directors should take the lead and cut their fees.

Alloway said yesterday he was prepared to face up to tough questions of the company which has had to write down the Hanover assets by hundreds of millions of dollars and seen the collapse of its finance company Allied Nationwide.

"This is a business that has a number of issues. But it has also got a number of issues that have been addressed as well."

Alloway said the company would require significant restructuring to reduce debt, to arrest declining asset values, revenues and profitability and further consolidation was imminent, he said.

Alloway said Allied Farmers would participate and lead consolidation with a view to leveraging the company's strong position in livestock.

Allied's core rural services industry business continues to trade profitably, despite the collapse of Allied Nationwide Finance under the weight of Hanover's dud loans.

The Serious Fraud Office announced yesterday it was conducting an extensive fraud probe into Hanover's dealings, which Allied will assist with.

Alloway has previously accused Hanover principals of forgiving substantial loans in the weeks before Allied bought the Hanover portfolio for $396.2 million.

The assets have since been written down to $94.3 million.

The most dramatic writedowns relate to the Peninsula Road development in Queenstown, where the total original exposure of $96 million has been written off against both stages of the project.

Another project, called Melview (Kawarau Falls) has been written down by $20 million to a value of $1 million, according to tables presented at the meeting.

The company plans to reduce debt below $30 million by June 30 next year, which peaked at $79.7 million in December last year, and was down to $45.8 million by October 31.

Divestment of non-core assets would continue through 2011, 2012, Alloway said.

Alloway said yesterday he was prepared to face up to tough questions of the company at today's meeting, which has had to write down the Hanover assets by hundreds of millions of dollars and seen the collapse of its finance company Allied Nationwide.

"This is a business that has a number of issues. But it has also got a number of issues that have been addressed as well."

NZX-listed Allied shares were untraded this morning, having closed yesterday at 0.2 cents.

- NZ HERALD STAFF / BusinessDesk