Ratings agency Standard & Poors has cut Allied Nationwide Finance's credit rating to CC from B after the company suspended its prospectus from the market.
Allied Nationwide Finance, part of the NZX listed Allied Farmers group, said its rating remained on credit watch negative.
Allied Nationwide pulled its prospectus last
week due to its trustee's belief that the finance company had breached its trust deed.
The parent company has said it disputes the breach and is in talks to try to placate the trustee.
Allied Nationwide has 14 days from last Friday to rectify the situation.
S&P credit analyst Peter Sikora said the news that Guardian Trust believes Allied Nationwide is in breach of its trust deed, added significantly to liquidity pressures and raised the risk Allied Nationwide may face a cash shortfall while it's forced to repay all debentures that mature.
Separately, Allied Farmers has further slashed the value of the property and loan assets acquired from Hanover Finance and United Finance to $94.3 million from the $124 million estimate given on May 28.
The assets were valued at almost $400 million at the time of acquisition and the Allied shares received by the finance company investors were ostensibly worth about the same amount.
The additional impairment provisions and fair value adjustments are made up of $24.5 million on property assets and $57.8 million on loan assets.
The value of assets may be pertinent to Allied Nationwide because the parent company has suggested it may have to tip in some of the Hanover and United book into the subsidiary to placate the trustee.
Shares of Allied Farmers fell 7.9 per cent to 3 cents on the NZX, valuing the company at about $80 million.
Meanwhile Pyne Gould Corporation subsidiary Marac Finance has had its credit rating affirmed by Standard & Poor's as BB+, and its outlook improved from negative to stable.
PGC Managing Director Jeff Greenslade said the rating outlook was acknowledgement of the substantial progress made within Marac's business in the past year and reflected improving asset quality, strong liquidity, a robust balance sheet and capital base, and a good market position.
- NZ HERALD ONLINE with BusinessDesk
