Allied Farmers is due to pay Eric Watson and Mark Hotchin a further $5 million by the end of this month.

Allied managing director Rob Alloway said this week that payment was the final settlement on the deal between Allied Nationwide Finance over the Hanover Finance and United Finance loan books.

"We must be one of the few to owe them a substantial sum of money," Alloway said of Watson and Hotchin.

"It's a contract and part of the sale and purchase agreement," he said of the millions due to the two Richlisters, widely criticised for their lifestyles.

Alloway refused to say whether Allied planned to challenge that final payment or his view of that, given the huge writedowns in the value of the assets last month.

Allied's share price has halved since the December deal with Watson and Hotchin, from 10c to 5c, leaving the 16,000 Hanover/United investors who have not sold out in an increasingly deteriorating position.

Allied's market capitalisation now stands at just $103 million.

Late last year, Allied chairman John Loughlin said he expected the Hanover/United deal would increase Allied's credit rating. By issuing shares to enable the Hanover/United deal to go ahead, Allied expected to improve its fortunes significantly.

Allied would expand to such a great extent that it expected to be included in the NZX Top 50 index.

Loughlin said some of New Zealand's top fund managers would be forced to buy into the business to get a spread of shares in the country's best 50 companies.

But he was proved wrong. Allied is not in the Top 50 with the likes of Fletcher Building or Telecom. Its share price is well below the 52-week high of 44c.

Loughlin also said on November 18, in announcing the intention to buy Hanover and United assets, that due diligence had resulted in Allied "having built up an understanding of the risk and return profile" of the assets.

But on May 28, he revealed a 68 per cent writedown in the value of the assets and said worse might be in store.

"Allied is taking advantage of its ability to issue shares to achieve a significant increase in the size of its balance sheet in what represents a quantum leap for our company," he said in November.

Allied had been assisted by a team of investment bankers, accountants and lawyers to go over the Hanover/United assets before the deal and had built up a clear picture of them, Loughlin said then.

Allied's gearing ratios and capital adequacy would be increased after the deal, Loughlin predicted. But even back then, Loughlin revealed that only 20 per cent of the loans were "performing" and 80 per cent were "non-performing".

In the past few weeks, Alloway and Loughlin expressed disappointment about the biggest property Allied funded - Queenstown's Kawarau Falls Station multi-hotel project.

Last month, a statement from Alloway blamed the huge real estate writedowns on lower valuations for commercial development land arising from a tightening of funding for developments and a lengthening of realisation periods as a result of longer rezoning processes and delays.

Alloway also blamed lower valuations of Auckland apartments because of a lack of funding and oversupply. He also cited the bankruptcy or liquidation of borrowers resulting in forced sales rather than managed sell-downs.

Alloway said this week his faith in New Zealand's valuation profession was shaken.

But he was confident in the valuation team Allied had engaged to examine the state of the assets.