Allied Farmer shares plunge after trading halt lifted

Hanover co-owner Mark Hotchin selling the Allied Farmers deal to investors in Auckland last week. Photo / Richard Robinson.

Allied Farmers shares plunged 31 per cent, falling 6 cents from 19 cents to 13 cents after a trading halt was lifted just before noon.

These shares have been sold by existing Allied Farmers shareholders, since Hanover investors who voted yesterday to accept a $400 million deal to convert the company's loan book into Allied shares will not get their new shares till next week.

Many fear that a rush of disgruntled Hanover investors trying to cash up their newly-minted shares will send the share price plunging.

Settlement of the whole Hanover/Allied Farmers deal is not expected until tomorrow. After that investors will be sent a statement advising the number of shares issued to them and a shareholder registry number.

They will also be sent a "FIN number" that is needed before the shares can be sold.

Allied is taking over all Hanover's assets, and 75 per cent of investors had to agree for the deal to go ahead.

The final vote was 75.45 per cent in favour of the proposal.

Shareholders of Allied have already approved the proposal, which Grant Samuel described in a report to the equally supportive Hanover's board as "a backdoor listing of Hanover."

The deal will transform Allied into a finance company of vastly more equity paper, with 97 per cent held by the new investors.

Check the share price on the NZX here.

NZ HERALD