Jeers for Hotchin as he faces Hanover investors

Hanover Finance co-owner Mark Hotchin faced jeers and tough questions from investors in the struggling company yesterday.

Rural services firm Allied Farmers is proposing to swap shares for Hanover's loan books in a $400 million deal that would give Hanover debenture holders a return of 78c for every dollar invested.

At yesterday's meeting in Christchurch investors were briefed on the offer by Mr Hotchin, chairman David Henry and general manager David Bryan.

Radio New Zealand reported that one of the investors, Janice Mabey, told Mr Hotchin that Hanover's failure had led to her splitting from her partner and she now lived in a caravan and struggled to afford groceries.

Another, who said she had no respect for people who shifted investors' money around and lost it, asked Mr Hotchin what made him any different from disgraced US financier Bernard Madoff. Mr Hotchin said he had also lost money and was sorry for their hardship. His apology was greeted with laughter and catcalls.

Investors also questioned whether they'd be better off if Hanover went into receivership, with some saying they did not have time to wait for share values to increase. They were told that receivership would be worse for investors, who were unlikely to get a better offer.

Allied Farmers chairman John Loughlin told the investors that the share-swap deal offered them an alternative to the current moratorium.

He said the transaction would turn Allied Farmers into an icon company that would deliver good returns to shareholders. More briefings will be held in the North Island next week before investors vote on the proposal on December 16. Allied Farmers shareholders vote on it on December 8.