Hobson's choice

Well it is done, just. Frankly you poor Hanover bond holders had a choice between losing more and losing even more. It remains to be seen which is the lose more option, but my bet is that the Allied Farmers option will be the lose more option.

Why is this?

Unproven management who don't really understand what Hanover euphemistically calls "assets." A company that was until this deal itself a failure, over $20m insolvent if you ignore goodwill and other intangible rubbish.

Also you have surrendered the $10m due from Mark Hotchin and Eric Watson to support the moratorium or what ever pig and a poke cash could be extracted form them out of receivership, Not to mention the cash backhander of $10m which neutralises the $10m put in a year ago.

Anyway time will tell.

So now all you debt holders are now shareholders, it is a new world for many of you with new rights, responsibilities and  risks.

You will have all received a letter that I wrote to you on the 10^th of December.

By way of background I wrote you this letter because I wanted to, it was not a Hanover set up. I felt that the noise around this transaction might be clouding your judgment and I wanted to urge you to vote economically based on your circumstances, not emotionally. What Hanover told me was that a number of you had indicated emotional reasons for your voting which was the mistake you made this time last year.

I have agreed to contribute to the costs of this mail out rather than meet the full costs, as Hanover decided itself that my writing to you would be a good idea. Don't be confused about this, they did it with honest intent.

It is easy to poke borax at David Henry and the other independent director as being puppets of Hotchin but this is unfair. The mess you are in is not of this particular group's making and frankly someone had to have a go at fixing it. It is the previous asleep in the chair directors that got you into this mess.

While we are at it, Simon Botherway is getting flack for his role in DNZ, and that too is unfair. The mess in that company has been met out upon you by Money Managers and Doug Somers-Edgar and the dopey constitution and management contract that they put in place on formation, Simon is just trying to fix it. This said he does need to have a good look at the performance of the manager before he agrees to buy out a contract that he might find grounds to cancel.

Anyway now you are shareholders you will need the Shareholders Association more than ever and there are some things that in the New Year you will need to do.

You must pressure the board of Allied to appoint some new directors who have appropriate experience and appetite for dealing with what is a troublesome block of assets. For this you will need at least 5% of  the share register behind you to call a meeting  and you need some names. I and the Shareholders Association can help you with both of these tasks, but as I have said before, you have to collectively want it. I have had 10 supportive responses so far to my letter to you. Over to you though, join if you want help.

For all of you it has been a particularly tough year and to prepare yourself to be an owner you will need the comradeship of others who understand this. We have 5 branches.  They meet at least bi -monthly. This support will help you understand what you now own.

Please do not leave this year without learning what has been an exceedingly expensive lesson for you. The lesson is this, when you part with money you need to know what you are buying because whether it is  debt or equity , you are buying something even if it is only a promise.

Flash advertising and big brand directors are not the "asset" you are buying. You must understand that when you lend money you in essence have to be prepared to own the asset, you must therefore pay attention to the quality of the asset, and more importantly the quality and integrity of the management.

Allied's board will also have to take note of this advise too. If you own a second mortgage which mostly this is what Hanover's assets consist of, you have to be prepared to take out the first mortgage and take ownership of the underlying property. The alternative is you get what you get, and in this market it will be close to zero.

And finally and this advise you will need to temper based on your personal needs.

It is clear that the share price of Allied will descend sharply if you all try to sell, simply because there are no buyers, unless of course Hotchin and Watson start buying. (At the time of writing the price is 14c).

Unless you absolutely desperately need cash for personal reasons, you would be better to wait and see how this pans out. BUT only if you get some new directors appointed quickly and perhaps even cull a few of the old ones.

If you don't need the cash, here is a neat way for you to average out of your exposure and at the same time be able to measure whether this deal was better or worse than the moratorium over time. As you know the moratorium promised you quarterly cash over the next 4 years.

So how about you sell enough shares each quarter to give you the same amount of cash you would have had under the moratorium?  Of course you will have to write off the 22 % you have already agreed to write off from the last year's cash. If you run out of shares then you know the deal was bad, if you have some shares left over at the end they are a bonus.

Don't forget you were supposed to get another 2c on your $ this month.

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Justice   #1   08:20 pm Dec 17 2009

"Well it is done, just. Frankly you poor Hanover bond holders had a choice between losing more and losing even more. It remains to be seen which is the lose more option, but my bet is that the Allied Farmers option will be the lose more option."

Totally agree Bruce! wow, must almost be a first?

Trustee   #2   08:45 am Dec 18 2009

Bruce, it is obvious that a large number of the Hanover investors are OAP's but do we or you really know who the investors in Hanover where. In another recent case it was discovered that over 80% of the investors where trusts and estates so that the actual investor was the Trustee. In that case the Trustee's sole interest was to hide the loses for as long as was possible. Has anyone ever asked for or got a breakdown of the investors in Hanover. I bet you weren't given the mailing list. Without this information you are only dealing in assumptions which can be extremely misleading.

Justice   #3   05:23 pm Dec 21 2009

Allied shares slip again!, ha, this is exactly what happens when greedy people who try to get their money back straight away without doing the hard investing yards. The share price goes for bottom and everyone panic sells. Maybe all these golden oldies should of gotten some share trading advice before saying "yes" to accepting shares that will soon have no value and take another company as victim

bruce sheppard   #4   06:38 am Dec 22 2009

Justice, You are priceless. I doubt that a single Hanover investor has been in a position to sell yet, the selling pressure is from existng Allied shareholders running for the doors.

These people are victims. The mail I am getting is gut wrenching stuff. They really have no idea what has happened to them , they have no idea of what a share is, and even less idea on how to sell them.

Justice what is your real name? Cause Justice is not your nature.

Jen   #5   01:40 pm Dec 22 2009

Just because Justice is not in the same position as the poor Hanover debenture holders doesn't mean he has to be so nasty and patronising. Unfortunately I can confirm there have been sales by the ex-Hanover shareholders of Allied but only by those who were existing share investors and knew how to make the sale prior to receiving their docs.

Ivan   #6   02:42 pm Dec 22 2009

Justice, you need to show a bit of compassion. Some of these people would have saved all their lives,and then been talked into investing it all, in crap Finance companies by ratbag, commission based financial advisers.Then let down by trustees who only cared for their fees. Be carefull one day "you" may be a victim yourself.

Justice   #7   10:44 pm Dec 22 2009

"Be careful one day "you" may be a victim yourself.”

You lot are just apologists for the naive who don't do their homework and I'm quite frankly I'm sick of it. '

'Self determination', self reliance, self responsibility are the principles I live by. If more in this country try living by those principles then maybe we would all have less to complain about. Quote: "Justice is best gotten and most gratifying through your own actions"

Compassion for stupidity? sorry, not my style

Justice   #8   10:54 pm Dec 22 2009

Funny that when these people were getting 11.5%pa+ from Hanover, well above banks rates you never heard a peep while most brought property after property during the so-called "boom" and borrowed heavily from banks. 11.5 % was paid based on 'risk' on the investment! Quite simple really so who couldn't work that out? Try a dose of honesty before talking compassion

Ivan   #9   09:56 am Dec 24 2009

Justice, you may want to do your homework before mouthing off. Hanover never paid more than 9.5%pa. Less than many other Finance companies at the time. Try a dose of reality yourself.

Paul Jones   #10   01:36 pm Jan 17 2010

It would be good if money grow on trees a great fairy tail, but how come the bad wolf gets to live in the posh house on the hill overlooking that big city. as the poorer get poorer, but for some can & did have great parties, but forgot invite all the poor sods or perhaps the invites got lost. Anyway I got my interest out & days later all was locked up. SO AS IT GOES it is the poor sod who ends up paying. I voted against this deal with Allied, so now the bright sparks have nothing to answer for. Can you advise me as to sell out the shares or wait!

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