Allied puts heat on reneging developers

Source / Bloomberg, Herald Graphic

Allied Farmers, which owns the troubled Hanover/United's loan book, is taking legal action against real estate developers reneging on loans worth millions of dollars.

John Loughlin, chairman, and Rob Alloway, managing director, said they had a number of causes of actions and demands for payment against developers for loans on properties here and in Fiji.

"We are using all means possible to make recovery from delinquent borrowers who seem determined to hide from their financial responsibilities," they said.

The outcome of the litigation could decide the fate of more than $500 million which 16,000 investors poured into Hanover and United, now converted into sliding Allied shares.

The money was often people's life savings or retirement funds.

"I have a team of legal people working on many, many actions on many, many fronts," Alloway said yesterday.

He is regularly meeting former Hanover/United investors who now own plummeting Allied shares, trading at just 5c, down on a 52-week high of 44c.

In December, when the 16,000 Hanover/United investors agreed to swap their investments for shares in Allied, shares were trading at 10c.

Since then, Allied has issued a number of grim updates, including revealing on Friday that the value of Hanover Group's loan book had shrunk by 68.7 per cent in six months and that more write-downs were expected.

Last year Allied told investors the loan book of Hanover Finance and sister company United Finance was worth $396.2 million.

But on Friday Allied said the loans were now worth just $124 million.

In March, Allied wrote down the value to $175.5 million but said as part of preparation for its June 30 year-end financial statement further provisioning was needed.

Alloway said yesterday former Hanover investors he met were disgusted about the lifestyle of the business co-founder Mark Hotchin, now reportedly leaving Hawaii for the South of France.

Alloway met one investor in Levin who held more than 7.5 million Allied shares as a result of the deal which saw Allied take over the troubled Hanover/United loan book.

"People like him don't deserve this. I have a responsibility towards these people," Alloway said, also expressing sympathy for Tony Ricciotti who put $700,000 into Hanover.

Ricciotti told a Sunday newspaper his savings were "money earned through a lifetime's hard work. I was a simple worker who saved his whole life and then poured it into Hanover. And all because of this son of a b****, I'm in hardship," he said, pointing the finger at Hotchin.

Allied appointed Ross O'Neill as its legal counsel and company secretary. He is a former Contact Energy corporate legal counsel and a former Kensington Swan partner.

In March, Allied appointed a receiver to Property Ventures, Dave Henderson's failed Five Mile development near Queenstown to chase a loan accruing $23,000 of unpaid interest daily. Allied instructed Grant Thornton and wants to recover $41.5 million.

Yesterday, Alloway also mentioned Hanover money loaned for Queenstown's' Kawarau Falls Station and two Fijian resorts: Pacific Point, which has hardly started, and Vatulele, a five-star resort which is operating.