Allied Nationwide loan book offers no good, says receiver

Kerryn Downey, one of the receivers for Allied Nationwide Finance, along with Andrew Grenfell at corporate advisory firm McGrathNicol. Offers for the failed company's loan book were not good enough, say the receivers.Photo /Steven McNicholl

Allied Nationwide Finance, the failed finance arm of Allied Farmers, has failed to attract good enough bids for its loan book, receivers say, as they try to claw back funds to repay the government retail deposit guarantee scheme.

Offers for its Speirs Securities securitisation vehicle's book also weren't satisfactory, although receivers Andrew Grenfell and Kerryn Downey of McGrathNicol say some potential buyers are doing due diligence, according to their latest report.

The loan books are primarily business and consumer finance, hire purchase agreements, and auto loans and were put on the block in their entirety in March this year.

The receivership had loan receipts and recoveries of $32.9 million in the six months ended August 19, adding to the $40.1 million in the prior six month period, from loans totalling $110.9 million in the June 2010 financial statements.

Allied Nationwide called on the government's deposit guarantee in August last year after it was forced to stop raising new funds when it breached its trust deed. The government paid out some 4,500 debenture holders $128 million, taking their role as creditor, and has been repaid $60 million from the receivers.

The finance unit's parent unsuccessfully tried to transform itself into a major lender when it took on the Hanover Finance and United Finance loan books in a debt-for-equity swap at the end of 2009. That deal ultimately soured, and Allied Farmers was forced to write off three-quarter of their $396 million value.

The report comes out a day after Finance Minister Bill English said the government will set up a special purpose unit to manage the distressed assets of the failed finance companies that called on the guarantee, with the bulk of the good assets already sold, and a $1 billion shortfall likely.

The government has received about $523 million from the recoveries, most of which has come from South Canterbury Finance. Combined with the residual $350 million in distressed assets, that still leaves a shortfall of about $1.13 billion on the $2 billion of taxpayer support extended under the deposit guarantee scheme.

The Treasury's handling of the guarantee received a pass mark in an Auditor General's report earlier this month, though Lyn Provost said the government department could have taken a more hands-on role in trying to prevent failures and minimise the cost to taxpayers.