Allied Farmers sells troubled Queenstown Five Mile project

Developer Dave Henderson was loaned $72.4 million by Hanover to develop Five Mile. Photo / Supplied

Embattled financier and rural services business Allied Farmers yesterday announced the conditional sale of part of the Queenstown Five Mile project, realising a portion of the second-biggest loan from its Hanover legacy.

But Allied managing director Rob Alloway refused to name the buyer or say how much he got.

Allied purchased the assets of Hanover Finance and United Finance last year.

Christchurch developer Dave Henderson was loaned $72.4 million by Hanover to develop the $2 billion Five Mile mixed-use project at Frankton Flats on a 31 hectare site adjacent to Queenstown international airport where a new township was planned.

That was the second-biggest advance after Hanover loaned Nigel McKenna $88.7 million to build the troubled $1 billion Kawarau Falls Station hotel project outside Queenstown.

Henderson's project never got past preliminary earthworks, Hanover Finance put it into receivership and last year sold part of it to Tony Gapes' Queenstown Gateway.

Alloway said yesterday Five Mile's sale was part of a strategy that Allied had to realise assets and quit non-performing loans. He expressed delight at the sale to a domestic buyer. "We're working hard to sell some of these properties so we're pretty satisfied," he said.

Allied is dogged by a range of problems including its book of troubled loans from Hanover and United, a sliding share price which was yesterday at 4.7 and a credit rating downgrade this week.

Shares and ratings were aspects beyond his influence, Alloway said. "These are not factors we can control, other than working hard to run a good business," he said.

But he was smarting at the actions of Auckland developers behind the planned $160 million Pacific Point resort south of Suva, Fiji, who got more than $20 million from Hanover.

All deposits on sections were repaid in the last three weeks, a move Kevin Storey and Brent Gibson said they were forced to make after no further money was advanced to enable them to complete earthworks, reclaiming land off the coast. About 70 per cent of earthworks were finished but no building started.

Inability to renew a $50,000 earthworks bond forced their hand, they said, blaming Allied.

Yesterday, Alloway said Allied was taking legal advice.

"To be honest, I was a little bit surprised that the deposits had been returned which is in breach of the mortgage we have over that property. We have got Buddle Findlay, our lawyers, working on that at the moment. We need to have legal advice," he said.

Alloway said the legal advice was to ensure Allied fully understood all aspects of the contract and security.

"It's a loan of more than $20 million with interest accruing on a daily basis which is in default, it's huge numbers," Alloway said.

Alloway stands by his criticism of valuers who he castigated for figures put on properties in the loan book which Allied took over from Hanover and United.

"We have seen a wild range of valuations and it's up to an industry body like the Property Institute to regulate itself and ensure there not wide discrepancies of its fees or valuations," he said, adding that he would meet institute president Ian Campbell this month.

FEARSOME FIVE

Hanover's biggest loans last year were:
* Kawerau Falls, Queenstown $88.7m
* Five Mile, Queenstown $72.4m
* Jacks Pt, Queenstown $44.9m
* Kinloch Golf Course, Taupo $24m
* Industrial land, Silverdale $23.1m

Source: Hanover explanatory memorandum