Crown entity takes Allied properties

Crown Asset Management (Cam), the entity set up to handle assets from failed finance companies backed by the Government's deposit guarantee, will take up what is left of Hanover and United Finance property assets from Allied Farmers.

The deal sees Cam take the assets on to its accounts at their $13.5 million book value and pay $385,433 owed to a trading bank which had a claim on sections at Jacks Pt in Queenstown, according to a statement to the NZX.

The transaction will satisfy $13.1 million of the $18.7 million owed to the Crown agency, and any proceeds from the Jacks Pt sale will go towards paying down the rest of the debt.

Allied Farmers was selling off most of its assets to repay debt, and Cam had indicated it might offer more significant funding support when those were sold, the Hawera-based company said.

NZX Market Supervision granted Allied Farmers a waiver from having to seek shareholder approval as the size of the transaction exceeded more than half the stock's market capitalisation.

"If the funding facility was not provided the directors would need to seriously consider whether ALF could continue to trade, in which case significant value would be lost for shareholders, creditors and other stakeholders," Allied Farmers said in its submission to the regulator.

The property assets came as part of its disastrous acquisition of the assets of the failed Hanover and United Finance companies.

The Hanover and United deal was valued at $394 million when the assets were acquired in a debt-for-equity swap at the end of 2009.

In the latest accounts, the assets of Allied Farmers' Asset Management Services unit, where the former finance company assets are held, were valued at $22.4 million, down from about $37 million a year earlier.

Allied Farmers said it had unsuccessfully tried to sell the Jacks Pt sections, with buyers demanding a significant discount. The deal will let the blocks be sold in a gradual way over the next two to three years.

Cam ended up with the debt because of a related party loan between Allied Farmers and its failed finance unit. The Crown agency does not hold security over Allied Farmers' NZ Farmers Livestock joint venture, whose assets have been ring-fenced.

Allied Farmers shares closed up 16 per cent yesterday at 2.9c.