Allied chairman hits back at Hotchin bad news' claims

Rob Alloway. Photo / Dean Purcell

Allied Farmers' chairman Garry Bluett says Mark Hotchin is wrong to accuse his company of wrongdoing.

Hotchin yesterday questioned the motives of Allied management. He criticised managing director Rob Alloway, blaming him for the company's fall in value and said he should have stepped down.

"Not only has he written the assets off, he's announced nothing but bad news.

"I've never seen any company deliberately deliver bad news consecutively unless they want the share price low," Hotchin said.

Bluett said he was extremely reluctant to speak out but was aware of Hotchin's comments. These were unfounded and wrong, Bluett said.

Alloway was not available to comment.

With their investments already frozen Hanover investors were presented with a debt-for-equity deal in December 2009 in which they got Allied Farmers' shares and Allied Farmers bought the assets of Hanover Finance and United Finance. Allied shares were trading at 35c before the deal and yesterday were worth just 1.8c each.

When told in detail of Hotchin's criticisms against Allied, Bluett responded: "He would say that, wouldn't he? We're not the ones being investigated." "We didn't do the deals," Bluett said of the many disastrous loans extended by Hanover/United.

Allied was doing all it could in its attempts to retrieve the situation, Bluett said, and the criticism was unhelpful and not based on facts.

"We're trying to get some value. There's no value for us in doing it cheap. The quality of the assets is a lot worse than we were led to believe. It's not fire sale and anyway, some of the assets we've got some bloody good prices for, like Five Mile which we did quite well out of."

Allied sold that Queenstown property, started by Christchurch's Dave Henderson, to interests associated with Aucklander Tony Gapes for just under $50 million. Gapes said last year he paid Allied "around $20 million for stage one and $27 million for stage two".

Dave Henderson got a $72.4 million loan from Hanover to develop the $2 billion mixed-use project at Frankton Flats and this was Hanover's second-biggest advance after it loaned another Auckland developer, Nigel McKenna, $115 million to build the troubled $1 billion Kawarau Falls Station hotel project outside Queenstown.

Bluett also questioned Hotchin's motives for various media interviews.

Bluett said it was a bad time to be asking him about Allied and the Hanover/United situation.

"There are a lot of things going on at the moment: there are court cases and investigations," he said.

Hotchin indicated he had expected to move on after the Allied deal and was disappointed with the failure of that business.

"I've moved on and thought we'd given him [Alloway] a big opportunity and thought we'd set investors on the road that would give them the best chance of recovery.

"Since then, everything has been Hanover or my fault and we're back in this position where the company is struggling and the Mums and Dads are losing money flat out.

"He blew it," he said, describing transactions between Hanover, United and Allied as "the worst deal I've ever supported in my life. It's been very easy for Rob to throw it away. He is conflicted, he shouldn't be there".

Alloway has said he tried to resign but the board asked him to stay on. He has always said the Hanover/United deal would be "transformational" which turned out to be true but not at all in the way he hoped.

Yesterday, Allied's 1.8c share price gave it a market capitalisation of just $36.7 million.

additional reporting Karyn Scherer