The value of what was once Hanover Group's loan book has shrunk by close to 70 per cent in just six months and more write-downs could follow.
Last year Allied Farmers told investors the loan book of Hanover Finance and sister company United Finance was worth $396.2 million.
But yesterday
the company, which acquired the assets in December, said the loans were now worth just $124 million - a drop of 68.7 per cent.
Allied wrote down the value to $175.5 million in March but said as part of preparation for its June 30 year end financial statement further provisioning was needed.
This month Allied wrote down $105.4 million of property assets by $17.9 million.
Yesterday Allied Farmers managing director Rob Alloway said it had completed assessment on a further $69.1 million of loans or around 65 per cent of the loans book acquired from Hanover and would be writing them down by $33.6 million. A further $37.5 million in loans had yet to be assessed.
Alloway did not rule out more write-downs on those loans, saying: "We are unable at this stage to determine the extent of the impairment on these loans until we have received further information, such as updated independent valuations on underlying property securities."
Alloway said the write-downs reflected the challenges in realising the assets and blamed lower valuations for commercial development land, lower values for Auckland apartments and bankruptcy or liquidation of borrowers creating forced sales.
"The result of our assessment work to date is that the provisional fair value assessment of the net assets acquired ... require a further impairment provision of $51.5 million."
Alloway said the loan book's final position would be reflected in Allied's full-year results. Allied's share price yesterday closed down half a cent on 5.9c.
